The terms “warranty” and “insurance” have to do with protection. But what is the difference when it comes to your home?
Home insurance and home warranty are great things to have for your home, and they differ in the way that they protect it. As a homeowner, you should understand the difference between the two. Read on to learn more about what they each cover and why you should think about purchasing both.
What Does A Homeowners Insurance Cover?
Homeowners insurance protects your home from any damages or loss caused by outside factors. These include fire, weather-related accidents, vandalism or burglary. Should any of these events occur and cause damage to your home, your home insurance policy will cover the costs of the damage. Your insurance will help you rebuild your home or replace your belongings.
For example, if there was a severe seasonal storm with high winds that ended up knocking over the big old tree across the street right that crash lands on your roof, your homeowner’s policy would cover the costs of repairing or replacing the roof as well as the contents of your home that were damaged. However, if your oven suddenly stops working, your policy would not cover this expense.
Home insurance is mandatory, and your bank will usually only issue you a mortgage once you’ve secured a policy. Your policy is renewed annually, and it usually costs between $300 to $1,000. Like any other form of insurance, home insurance policies offer a deductible that you will pay when you make a claim, and after that, your policy will take care of any other costs.
What Does A Home Warranty Cover?
Home warranty covers the actual components that make up your home, such as the HVAC system, plumbing, electrical, kitchen appliances, washing machines and dryers. A home warranty is a service contract, which will provide repair or replacement. You can also have the option of adding in your swimming pool or spa, if you have one. These warranties typically have a contract of 12-months, and they are optional, as your bank does not need proof of one in order to give you a mortgage.
Home warranty is completely optional, but can be a smart decision. You can typically purchase appliance packages in order to drive the cost down.
If, for example, your washing machine stops working, you would call a licensed technician to assess the problem. If it is concluded that it stopped working because of wear and tear or any other reason that is covered under the terms of your service contract, your home warranty will cover the costs of repairing or replacing it. The only thing that comes out of pocket on your end is the price of the one-time service call itself. Any other costs are covered under the home warranty.
Your home warranty can potentially save you a lot of money down the line, as well as save you the time of looking for a licensed professional to take care of the issue. We all know that in life, things don’t last forever, and your plumbing or household appliances are no exception.
What Is The Difference Between Home Warranty And Home Insurance?
While your home warranty and home insurance definitely operate in similar ways, they do have some major differences. They both have an annual premium and a deductible, although a home insurance’s deductible is often higher than that of a home warranty.
The things that a home insurance and home warranty cover are where the main differences lie. Home insurance helps homeowners protect themself against any structural damage caused by outside factors and loss of personal property from fire or theft. A home warranty covers repairs and replacements of the home’s systems and appliances when they start to fail and deteriorate from old age and wear and tear.
Another big difference is that home insurance is required by all homeowners should they have a mortgage, and home warranties are optional and not required to get a mortgage.
Using a home insurance policy along with a home warranty plan will give you protection on almost every part of your home from inside to out. Together they can help protect your wallet from unforeseen circumstances and expenses that are simply a part of life.
Pay Attention to the Fine Print
Before signing any agreements or policies make sure that you understand exactly what is covered and what isn’t. All home insurance policies and warranties will differ company to company, policy to policy, and warranty to warranty. So when the time comes, and you need to use your policy or warranty, there will be no confusion about what to expect from your respective agreements.
Take the time to educate yourself about how home insurance and home warranties operate. Some home warranties do not cover everything, and with home insurance if damage is caused by neglect it could void your coverage. Look over your policies and warranties so you can be prepared in any event.
Your Home Needs Both a Warranty and Home Insurance
If you want to protect the structure and integrity of your home as well as all its contents, your safest bet is to go for both a home insurance policy and a home warranty. Having both could give you relief from worrying about structural and internal damage for years to come. If you have a home or are looking to buy your first home, you should consider the option of purchasing both a home insurance policy and home warranty. They will work together in tandem to provide protection on all parts of your investment.
Rhett Desormeaux is a content writer currently working with BreezeMaxWeb. He’s a passionate writer and loves studying ancient history, especially Bronze Age civilizations.