It’s important to do in-depth research on all facets of the homebuying process when purchasing a new home. An important thing to understand is how to protect yourself and your investment in the best way in case anything were to go wrong. Both home warranty and a home insurance are types of protecting your huge investment in a house, however it is important to know and understand the difference between the two. We hope this information on home warranty vs. home insurance will be helpful as you educate yourself on the options available.
What is a 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. A home warranty costs several hundred dollars a year, paid up front (or in installments, if the warranty company offers a payment plan). A home warranty is optional and the benefits of purchasing one is dependent upon your personal circumstances. Talk to a reputable home warranty company in your area to understand more of what they have to offer.
What is Home Insurance?
Homeowners insurance pays for any accidental damages and loss that are caused by fire, lightning strikes, windstorms, and hail, however, damage from earthquakes and floods is typically not covered and require an additional insurance policy. Home insurance 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. The lender usually requires you to obtain a policy before the mortgage is issued. Keep in mind that each type of coverage requires you to pay a deductible and is subject to certain limits. This is important information to discuss with you home insurance professional and thoroughly understand. Not all home insurance policies are the same.
We hope this information helps you as you are considering the best ways to protect your long term investment in a house. Your real estate agent (hopefully us if you are in Northwest Indiana!) will be able to walk you through the process of when to order these things and other steps in the home buying process that you may not have experience with, such as inspections, surveys and more.
If you are in Northwest Indiana, be sure to contact us to help you with all your real estate needs. We make your goals top priority and work tirelessly for our clients.
Looking for other real estate information and tips? Check out our Resources page!