Home Warranty vs. Home Insurance: The Difference Between Insurance and Home Warranty Plans

Avoiding repairs around the home is next to impossible. For homeowners, equipment and appliance wear-and-tear is a fact of life.

What can be avoided, however, is the frustration of having to pay more out-of-pocket for a repair that was assumed to be covered by an insurance plan – until too late.

Here, we highlight how a home warranty plan differs from the average homeowners insurance plan – and how understanding what's protected (and what isn't) is the first step toward peace of mind.

Protecting your lines and energy supply: How a home warranty plan differs from a home insurance plan

While a home insurance plan typically covers a specific system or appliance from unpredictable accidents, a home warranty plan protects the cost of repair to lines, systems or appliances affected by normal wear and tear. (Keep in mind that, unlike other equipment in your home, utility lines aren't easy to see – and aren't replaced until there's a failure.)

Imagine a water pipe bursting or a kitchen appliance breaking when you need it most, or even a utility line failing: You may assume your homeowners insurance policy will come to the rescue.

But while homeowners insurance may cover some of the items damaged from this event, it won't necessarily cover the repair to the failed pipe or line. And, depending on where that pipe or line lies, your utility might be off the hook, sticking you with the bill.

This presents significant gaps in protection for people who have only homeowners insurance. After all, it's a matter of when, not if, lines and systems will fail. As a result, the demand for service contracts and warranties – such as car and home services – has grown immensely.

Here's a quick overview of what's protected by a home warranty plan:

• Inside electric: Outlets, light switches, failed wiring in the wall
• Outside electric: Weatherhead, service entrance cable
• Inside gas: Failed piping in the wall, shutoff valve before appliance
• Outside gas: Failed pipe from meter to main
• Inside water: Failed piping in the wall or floor
• Outside water: Failed pipe from foundation to main/well
• Inside sewer: Failed piping in the wall or floor
• Outside sewer: Failed pipe from foundation to main or septic tank
• Furnace: Failed electrical components, motors and burners
• Air conditioner: Failed electrical components and motors
• Water heater: Failed thermostats, elements and burners

The gaps in your homeowners insurance plan – from line to appliance protection

First, let's look at what your home insurance does cover. These plans typically provide compensation for damage, loss or injury of property or personal belongings due to fire, theft, accidents or other listed perils.

It's incredibly important to secure a homeowners insurance policy, as it protects against unpredictable accidents that can be quite costly. (While financial security is on the rise, nearly 25% of Americans don't have any emergency savings.)

What homeowners insurance doesn't protect against are the more likely costs that come up as your home ages.

That's where a home warranty can step in to help protect your budget. Home services contracts, or warranties, provide for the repair of a protected line, system or appliance that fails due to normal wear and tear.

How a home warranty plan can fill coverage gaps

Although you may know that line and system failures are likely to come up at some point, it's hard to predict when these failures will happen – and an unexpected repair could be costly. Many homeowners find a home warranty plan is well worth the investment.

Consider this scenario: You walk outside and find water is bubbling up in your yard. What can you do? Who do you call?

For our home warranty customers, the first step is to call IGS Energy – and let us handle selecting and dispatching a reputable contractor to your home for the assessment and repair. If a protected line or system fails, our home warranty plans can provide thousands of dollars of protection – many with $0 out-of-pocket spend for the customer. 

To learn more about how a home warranty plan can fill the gaps in your homeowners insurance coverage – and keep your home running smoothly – check out our home warranty FAQs.