19 Apr Home Insurance vs. Home Warranties
When finally getting that dream home, it’s only natural for people to do everything within power and price range to protect it. Fortunately, there are various forms of protection including home warranties and home insurance. However, first-time homeowners may be daunted by the realization that protections such as warranties and insurance are entirely different yet necessary products. With a house being one of the largest investments in a lifetime, consumers must also make wise decisions when it comes to home protection.
A home insurance policy primarily deals with any accidental damage leveled at home under four primary areas: interior damage, exterior damage, personal property loss, and general liability. Like many other cases of insurance, the policy offers a homeowner a deductible for potential damage and enacts following a claim for repair or replacement in an accident. Once a claim is approved, a company deducts the payment made from a deductible and covers any additional costs itself. In many cases, a bank will require a homeowner to obtain an insurance policy when acquiring a mortgage to cover the damage. Nevertheless, purchasing insurance is often considered a wise precaution for an uncertain future.
Meanwhile, home warranties usually apply to the usual wear and tear of any home system component or appliance. Unlike insurance policies, home warranties tend to be elective with or without the need for a mortgage. However, home warranties are more often recommended for aging appliances or houses suffering from plumbing or electrical problems, but additional components can also be covered. Under certain contracts, warranties can also cover large systems like a pool or a washer/dryer in the case of a breakdown. Following a service call, which costs depend on the policy in question, a service contract company can quickly pay for the repair or replacement of a house appliance.
Both warranties and insurance policies come across similarly in offering payment and repairs for damage, but the range of both differs when it comes to cost and conditions. For example, a 12-month term contract for a home warranty purchase can cost between $300 and $500 while a standard insurance policy can cost up to $1000. Also, home insurance policies tend to be more heavily regulated, covering liability protection in the case of lawsuits. While home warranties are less measured, they also rely on a service contract between the buyer and the service company which tends to vary as well.
In summary, home warranties and home insurance policies usually offer coverage that directly opposes the other. Still, both purchases offer the homeowner a chance to avoid up to thousands of out-of-pocket dollars and the stress of finding a reliable repair system. For a safe and secure investment for the future, the best choice is almost always both.