THE DIFFERENCE BETWEEN HOME WARRANTY & HOME INSURANCE

When purchasing a new home, it's essential to do in-depth research on all facets of the home-buying process. You'd need to understand how to protect yourself and your investment best if anything were to go wrong. Check out the information on home insurance versus home warranty below to educate yourself on your options.

Home Insurance

Homeowners insurance pays for any accidental damages and losses 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 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. The bank usually asks you to obtain a policy before issuing a mortgage. Remember 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 must pay premiums year-round, even if you do not use it. It won't cover damages if appliances are not maintained correctly or if the damage is from a fire or other disaster.