warranty vs insurance

I recently heard some some investors are buying warranty on their properties rather than insurance. I tried to do some research and it seems that the warranty route will allow you to maintain your property for far less than insurance. Does any one have experience or opinion about this?

Warranty and insurance. Insurance pays you if your property blows over or burns down. The warranty pays you if you have a toilet that blows up and needs to be repaired or the air conditioner is not cooling anymore.

Bluemoon is right…you absolutely, positively MUST have insurance…a warranty is a more debatable item.

In addition to insuring the structure you also need to be insured for “liability”…often, you can get an umbrella liability policy that will cover multiple properties. This will give you the same amount of coverage for each property but save you a few bucks in the meantime.


can you elaborate on being insured on liabilities?

You need to insured AGAINST liability…if a tenant trips and breaks his arm on your property and sues, your “liability” insurance will probably come into play.


Good point about the warranty not protecting you against a clumsy or sue-happy tenant. It seems that the only benefit about warranty is that it is easier to get the warranty company to pay for things that break. But if your property is completely destroyed or your tenant gets hurt, only insurance will save you. Thanks guys!!

I was confused at first but see now that you are talking about a “home warranty” and “home insurance”. Like people have stated, two different things. A must have is the … “home insurance” and possibly with a 1 Million dollar rider! just in case (which isn’t costly).

The “home warranty” is okay, but can be costly in purchasing it and then I’ve run into having to fight for the warranty provider to repair and/or install new items. They just don’t come out and fix things without question. Getting anything new installed is very hard. And the item must fail on its own - not be broken by tenants - if I’m correct. I’ve never used it for tenants.

Good luck.

To me a warranty seems like wasted money.

Not if you can get the seller to pay for it!!!


When they jack the price up to pay for it aren’t you ultimately paying for it? :wink:

That holds about as much water as the whole “Who pays the Realtor” discussion!


If you are purchasing a home from a desparate seller - I doubt he would want to pay for a home warrantee. Usually those sales are totally “as is” sales.

If you are using the home for rental - and want one - purchase it yourself.

I don’t see much value in them really. I’ve used them and had to fight to get repairs done correctly - it wasn’t worth it to me.

Insurance is a MUST!!! In fact, I don’t think you can even get a loan without a policy. And even if you could, you’d be making a big mistake not to have it.

I keep warranties on my properties, but have only had to use them for smallish repairs so far. But, new water heater, dishwasher, or AC unit can get really pricey, especially with installation, so having the warranty gives me a little peace of mind.

ARCHER - Have you ever tried to get an A/C replaced or water heater replaced. The companies here seem to come - fix, fix, fix and then fix again - and do everything they can NOT to replace any major item. That’s what I don’t like about them. The company’s subs get paid for each call they go out on so doing the easy thing of replacement isn’t in their bag of tricks.

I think an initial home inspection for major stuff - BEFORE you purchase is your best bet.

Personally, no. But a partner of mine has used the same warranty company on a different property and has had both the fridge and AC/Heater unit replaced with very little hassle.

As I said, I’v only used them for minor repairs. But I know the $50 service call I paid was much cheaper than the electrician’s/plumber’s rate that they would have charged had I not had the warranty.