How Does Homeowners' Insurance Compare to Home Warranties and Mortgage Insurance?

by Wendy Wiegand 05/30/2022

Homeowners’ insurance is a popular and widely recommended service for homeowners. It provides protection from certain types of incidents and can cover damage and losses to your property. It can also cover certain furnishings and assets besides the actual structure of the home. If you’re curious about homeowners’ insurance, how it works and how it compares to other forms of financial protection for homebuyers, we’ve put together the basics to help.

Homeowners’ Insurance Coverage

Homeowners’ insurance provides financial coverage for both interior and exterior damage to your property. It can also cover damage to your individual assets, as well as cover liability for injuries that somebody might get while on your property. Like all insurance, pay a deductible when you submit a claim. This deductible amount is your out-of-pocket expense for making the claim and the amount varies from one provider to the next.

Homeowners’ insurance policies have liability limits, which essentially cap the amount of coverage offered at a specific dollar amount. A common liability limit for homeowners’ insurance is $100,000, but you can often choose a higher limit as an option in your policy.

Homeowners Insurance vs. Home Warranties

Homeowners’ insurance might seem like coverage for everything in your home, but it still differs from home warranties. These warranties offer other specific coverage for repairs or replacement of home appliances like dishwashers, kitchen ovens and ranges and water heaters. Home warranties also include major systems in the homes like electrical, plumbing and central air. Home warranties provide extra peace of mind for homeowners who want to avoid expensive repair jobs.

Home warranties differ from homeowners’ insurance for appliances and systems because they cover repairs or replacements needed because of regular wear and tear. While a homeowners’ insurance policy might cover appliances damaged in a fire, it won’t provide you any coverage if your appliances break down over time because of regular use.

Homeowners' Insurance vs. Mortgage Insurance

Mortgage insurance is another type of insurance policy for homeowners that can be confused with homeowners’ insurance. Not everyone needs mortgage insurance, but sometimes a bank will require it if you are making a lower than usual down payment on the home. If your down payment is less than 20% of the home price, the mortgage lender considers you a higher risk investment. Therefore, you’ll need to supplement your down payment with mortgage insurance in order to protect the lender in case you default on your loan.

You can buy a homeowners’ insurance policy regardless of your mortgage terms and down payment amount. The major difference between the two is that homeowners’ insurance protects your interests and the mortgage insurance protects the lender. Both are regular expenses for you to pay but only homeowners’ insurance will provide you with any direct financial coverage.

Every homeowners’ insurance policy is different as is every provider. If you’re looking for homeowners’ insurance, it’s important to research your best option. Sometimes, you can add homeowners’ insurance onto existing policies. If you have car insurance, for example, it might be worth checking with your provider to see if they provide a special discounted deal. Regardless, the key things to remember are the differences between homeowners’ insurance when compared to mortgage insurance and home warranties. Knowing the facts will help you get the best coverage.

About the Author

Wendy Wiegand

As a premier real estate agent in Carlsbad, I’m here to provide you with all the resources and information you need to buy or sell real estate. I work with buyers and sellers in Carlsbad, Encinitas, Oceanside, San Marcos, Vista and the surrounding areas and I’ve had extensive training in the latest real estate marketing strategies.  I’m confident that I can offer you knowledge and tools most other agents can’t.

I believe in service, both to my clients and our community. When working with clients, you can be assured I am focused on providing the most comprehensive and dedicated effort so that you can achieve the best results possible when buying or selling real estate. I am also deeply involved in serving our community, as you and I all call it home. I have been a member of Rotary since 2003, have been an active member of the Carlsbad Chamber of Commerce since 2006, and serve on the board of the Agua Hedionda Lagoon Foundation. Perhaps my even deeper service to my clients and our community is Wiegand Realty’s participation in Business for a Cause.

Contact me so I can keep you updated on the latest real estate activities in our community and answer any questions you may have.

Thanks and I look forward to assisting in all of your real estate needs! 

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