How do warranties and insurance differ?
Owning a home is a big investment, and it’s natural that you would want to protect that investment.
Home warranties and homeowners insurance can both offer you that protection and peace of mind in different ways. Having a mortgage means you’re required to have insurance, but you may wonder if you should also have a warranty.
So, what should you know about these two types of home protection, and how do they differ?
Home Warranty
Home warranty companies offer various plans for homeowners. These plans cover the cost of repairing and replacing systems (such as your plumbing or HVAC) and appliances (such as your oven or dishwasher).
You would pay a monthly or annual fee to maintain home warranty coverage. If a covered system or appliance breaks down, you call your home warranty company and probably pay a flat rate for the service call. Then, your home warranty company will take care of the cost of repair or replacement. Like other kinds of coverage, home warranties typically have claim limits.
Homeowners Insurance
Homeowners insurance is property insurance that covers the structure of your home and your personal belongings. Insurance does not cover normal wear and tear; rather, it will cover repair or replacement caused by known risks, such as hail or theft. Homeowners insurance also includes personal liability coverage in case someone is injured on your property.
You will pay an insurance premium for your homeowners coverage. Like other types of insurance, your policy will have a deductible and coverage limit.
Do you need both?
As noted above, mortgage lenders require you to have homeowners insurance. Home warranties, on the other hand, are optional. If you want the additional layer of protection for systems and appliances, a home warranty can complement your homeowners insurance.
If you’re thinking about the type of protection your home needs, we’re here to answer your questions about insurance policies.
