Many Americans dream of owning a house. This is often the largest investment most people make. It can provide stability and the opportunity to build a middle class.
These costs go beyond the mortgage. Owning a home means paying large, unexpected repair bills. It is not uncommon for home repairs to be expensive, particularly if they involve major appliances and systems being replaced.
Good news: You don't have to pay for these expenses if you are smart. If you are faced with unexpected costs associated with home ownership, a home warranty may be able to provide assistance. You're not the only one confused about the differences between Home Insurance or Home Warranties. We'll be breaking down the differences in this review.
Home insurance and Home warranty...similiar, but so different
What kind of coverage they offer is the main difference between home insurance and home warranties.
What is home insurance?
What is a home warranty?
A home warranty plan won't cover you if a lightning strike sends a powerline or a branch crashing into your roof.
Home warranties are better thought of as "appliances insurance"--basically a cheaper way to purchase extended warranties for each appliance.
If major appliances or systems fail, home warranties may help to cover their costs. The specifics vary from plan to plan, but typically the warranty will cover appliances and systems you use everyday, including:
There are further differences between home insurance and home warranty.
1. Underwriting is required for home insurance
An insurance underwriter will visit your home to assess the risk that you should take when you apply for a plan. The home's age and location are important factors. These factors affect the premium and cost of the insurance policy.
Underwriting is not required for home warranties. While inspections may be required by some companies, this will not affect the premium that you pay. The home warranty plan covers the specific appliances and operating systems you have at the moment you sign up. It has a fixed price that does not fluctuate based upon an underwriter's assessment.
2. Automatic renewal of home insurance
Your home insurance policy will automatically renew as long as you continue to pay your premiums. Home warranties are usually set for a certain period and must be renewed every year. It is important to ensure that your contract does not allow for auto-renewal. There are many home warranty companies that offer discounts to new members. It is worth looking around if your current home warranty plan is ending.
Do You Need to Purchase Home Insurance as well as a Home Warranty?
If your home is damaged by fire or other calamities, you can get help from your insurance company. Such events can still take an emotional toll, but if your home is ensured you will have the financial support to rebuild and get things back on track. A burglary doesn't necessarily have to be devastating. However, it can leave you feeling violated and vulnerable. You won't have to worry about how to replace the stolen items with home insurance.
Even though you may not experience major damage to your home as often, a home warranty will cover the costs of repairs and replacements. A home warranty can help you avoid these costly expenses.
If you don't include your children, a house is often the most expensive and important investment that anyone makes. You can have coverage for the worst and avoid costly maintenance costs by purchasing home insurance or a home warranty.