There is a difference between home insurance and a home warranty! When purchasing a new home, it’s important to do in-depth research on all facets of the homebuying process. One thing you will need to understand is how to best protect yourself and your investment if anything were to go wrong. Many clients mistake home insurance and a home warranty to be one or the same, so let’s take a look at the differences:
Home Insurance:
Homeowners insurance pays for any accidental damages and losses that are caused by fire, lightning strikes, windstorms, and hail, however, damage from earthquakes and floods is typically not covered. It also covers the replacement of personal property in case of theft or damage and liability if a person were to get injured in your home or on your property. According to American Home Shield, the average annual cost of a homeowner's insurance policy ranges between $300 and $1,000, and the bank usually asks you to obtain a policy before the mortgage is issued. Make sure to keep in mind that each type of coverage in the policy is subject to a limit and, in most cases, you will have to pay a deductible.
Home Warranty:
A home warranty is designed to cover the cost of repairs and replacements of larger appliances and crucial systems in your home that may fail or break due to age and wear and tear. This includes but isn’t limited to HVAC, electrical, or plumbing components, kitchen appliances, and your washer and dryer. With a home warranty, you have the option to pay premiums year-round or to pay them in full. While homeowner’s insurance is obtained upon purchase of your home. A home warranty can be purchased at any time during your ownership.