Buying a property is not an easy decision, but the outcome can be satisfying after finding the right one. However, decision-making does not stop after purchasing a new home. Homeowners have two options when it comes to protecting their property investment: home warranty coverage and homeowners' insurance. Having said that, it is crucial to understand the difference between the two. In essence, both policy products protect you from unexpected expenses, but they have different coverages and limitations.
What Is Home Insurance?
Homeowners insurance typically covers the interior and exterior of the property. An insurance policy for your home aims to safeguard the property from different kinds of damage or peril. It also protects homeowners from any liability in case someone was injured, or an accident happened on the property.
If you purchased your house via a mortgage, you would be required to get a home insurance policy. Depending on the insurance's terms and conditions, you may spend several hundred dollars up to a few thousands each year. When your house is damaged, for example, by a fire, you should file a claim against your home insurance policy. The insurance company will, after assessing the request, send you a check to settle the costs of the damage.
Home insurance policies usually offers coverage or protection from the following:
● Hail, wind, or rain
● Fires and explosions
● Theft or burglary
● Acts of God and other natural disasters
What Is A Home Warranty?
The purpose of a home warranty is similar to a home insurance policy in the sense that it protects the homeowner from unexpected costs. However, a warranty contract's purpose is to protect the property's appliances and systems.
The cost of a home warranty annual premium ranges from $300 up to almost a thousand dollars. If any of your appliances or systems inside the home break down, you will call the company that handles your warranty plan. After an assessment, the company sends a tradesperson or contractor to fix the machine or system. The homeowner pays a small amount to cover the service call fee. If the appliance is not repairable, the item will be replaced as long as it is included in the warranty contract. Before getting this type of protection, you may review Select Home Warranty plans for a better idea of coverage or limitations.
Your home warranty contract may provide repair or replacement coverage for the following:
● Home appliances, such as washing machine, refrigerator, oven, dryer, dishwasher, and many others
● Internal systems in your home, such as the electrical system, plumbing, and HVAC system including air conditioning
Home Insurance vs Home Warranty: What Homeowners Need
Based on the features of a home warranty and a home insurance policy, it is safe to say that both offer protection to your assets. Insuring your home and getting a warranty gives you peace of mind knowing that your investments will not go to waste even during an accident or a disaster.
Despite the similarity in purpose, the two policies have distinct differences, such as:
1. Mandatory
Unlike a home warranty contract, home insurance is mandatory, especially if you bought your home through a mortgage. A mortgage will likely be declined if the buyer does not purchase an insurance policy. Home warranties, although beneficial, are purely optional. Homeowners have the option to buy a guarantee for their belongings; if they go for this route, it can be purchased at any time. It means that a home warranty can be acquired immediately or even years after the house was bought.
2. Transferable
In case you transfer to a new home, you cannot use the insurance policy of your previous house. You are also not allowed to transfer ownership of the insurance policy. On the other hand, a warranty can be transferred from one homeowner to another. It is best, however, to check the limitations of the contract with the home warranty company to avoid any problems in the future.
3. Anticipation
Your home insurance protects the structure of your home from unexpected circumstances. A warranty policy, on the other hand, covers the repair and replacement of appliances and systems that are somewhat anticipated from aging or wear and tear. It is crucial to understand that home warranty and insurance policies are not all-inclusive; thus, read the fine print and make sure you fully understand what is covered or not in your home warranty and insurance policy.
Worry Less With A Home Warranty
A house is an expensive investment, thus its upkeep should be on top of your priorities. One way you can protect your investment is through acquiring a home warranty and an insurance policy. While the two have different sets of benefits, obtaining both will give you peace of mind that you are doing everything to take care of your property perfectly.
