Whether you’re buying your first home or your 10th, the situation is very similar. You fill out mounds of paperwork, schedule home inspections, negotiate over pricing and then consider the ways to protect your largest investment for years to come.
Two key ways to keep your home – and your wallet – protected are with homeowners insurance and a home warranty. What is the difference between homeowners insurance and a home warranty?
On the surface, they may seem similar, but in fact, each offers different services and levels of protection. An insurance policy on your home is a requirement if you’re purchasing your home with a mortgage loan while a warranty on your home is optional.
The basic difference is that with homeowners insurance, you’re largely protecting the structure of your house and your belongings in the event of a natural disaster or other calamity, such as a house fire. But a warranty covers major appliances as well as plumbing, electrical and HVAC repairs.
A standard home warranty typically costs anywhere from $300 to $500 a year. Homeowners can add on additional coverage for items like a swimming pool or spa. Also you can transfer the warranty to the new owner should you sell your house. That can make for a nice perk when you’ve put your home on the market.
When it comes to purchasing a warranty on your home, do your research. A number of companies offer warranties and policies can vary widely in terms of coverage, price and customer service. Take the time to shop around, get quotes and read other customers’ reviews of the companies.
Because warranties on the home aren’t required, many homeowners may opt to forgo this added coverage, especially if their home is just a few years old or brand new. Homeowners purchasing an older home with older appliances and older heating and air conditioning units, may find the home warranty is a valuable purchase. A new HVAC unit can cost thousands, especially if your home happens to have two units.
The warranty on your home purchase comes down to individual preference. If you’re purchasing your house with a mortgage loan – as most people do – then you’re required to have insurance on your home to protect your house against a major disaster.
Insurance policy on your home varies from state to state, but typically covers the physical structure as well as the contents of your home, including personal property like TVs, computer and furniture.
It also covers the damage from situations like fire, theft, vandalism and certain natural disasters, such as lightning, hail or wind damage. Homeowners insurance includes liability protection in the event someone is injured at your home and it covers your living expenses if your house is uninhabitable because of damage.
The cost of insurance for your home varies from company to company and also is based on the value of your home and where you live. Check the policy to see if it covers damage from flooding; many insurance policies do not and you may want to invest in an additional flood policy, or coastal insurance especially if you live in hurricane-prone areas.
As with all insurance policies, it’s important to shop around and request quotes from a variety of companies. Certainly you’ll be looking for an affordable insurance policy for your home, but you’ll also want to make sure it covers as many situations as possible.
Now that you understand the difference between homeowners insurance and a home warranty, you can make an informed decision about the best ways to protect your home and family.
Learn more about Manning Insurance Services‘ Homeowner’s Insurance Policies.