Buying a home is a big decision that requires a lot of thinking, planning and understanding. After all, you end up spending most of your savings in purchasing your dream house and maintaining it for the rest of your life. And with the help of a good Home Warranty and Home insurance company, the entire procedure becomes simpler and easy to manage. But when we talk about home insurances and home warranties, the two similar terms easily confuse the minds of most new homebuyers. And hence, it gets important that you understand the difference between these two terms and also how they help you in looking after your home.

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Home Warranty And Home Insurance – The Comparison

 Home Warranty  Home Insurance
Definition A Home Warranty is a simple contract and a type of insurance but is NOT a Home Insurance. Buying a home warranty is not compulsory and is only needed to take care of the wear and tear of appliances and systems instead of massive home disasters.  

Home insurance is one of the fundamental requirements of purchasing a home. And like all other insurance services available, it is compulsory. A house is considered as a valuable asset in the mortgage industry by companies who require the house for maintaining its worth, especially when the company needs to repossess the property due to failed repayments.

Coverage Home Warranty covers the small and large wear & tear of home appliances and systems. The warranty plans help repair or even replace the items or components when they are damaged.

 

Appliances included in normal warranty plans are: Washers & dryers, kitchen items, refrigerator, etc.

 

Systems included in basic warranty plans are: Plumbing, electrical system, heating and cooling system.

Home insurance policies help cover accidental damages caused to your home or your belongings due to natural disasters, fire, theft or an extreme weather.

 

A home insurance policy mostly covers these aspects:

–          Home interior & Exterior

–          Personal possessions during theft or damage

–          General responsibility of an injury caused to a person when on the property during the event.

Provided By Home Warranty companies Banks and Private Home Insurance Companies
Costing (Annually) Ranges between $350 and $1000 Ranges between $1000 and $3,500
Deductibles In a home warranty plan, deductibles are cheaper and range somewhere around $60 and $125 for every single service call.

 

Higher the premium amount, lower is the deductible.

Depends largely on the premium amount.

 

If you pay a higher annual cost of $3000, then you deductible will be $1000.

 

If you pay a lower premium of $2000, then your deductible will be as high as $8000.

 

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Should A Homeowner Buy Both, Home Warranty Plan And Home Insurance Policy?

Your home is your little piece of heaven on earth! And it is definitely worth protecting! Both home warranty and home insurance cover vastly different things in a house. They are both exclusive and offer great purpose for your home safety.

Home insurance is compulsory, whether you are forced to buy it according to the laws or a mortgage company. However, how regularly you make claims entirely depends on the state you live in, particularly due to its probability for theft, storms or other disasters such as fire or floods. In short, a good home insurance can help you save a money in the long run.

Home warranty, follows the same logic as that of Home Insurance, but in a little different pattern and weight. A home is complete and comfortable only because of the appliances and the home systems installed in it that work 24/7 to make your stay at home safer, cleaner and absolutely at ease. The only difference between these two services is the cost of damage suffered by your appliances/ systems and your home.

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The total cost of damage suffered by your appliances and systems is comparatively much less than the damage caused to your home’s structure. But with a lower premium amount and a lower deduction, this difference gets balanced. In fact, paying just $40 along with a service call fee of $75 sounds absolutely reasonable, especially when you get all your kitchen appliances, HVAC systems and plumbing covered by a good home warranty company. This not only includes repairing, but also replacement of items by a professional and licensed technician within a short timeframe.

Thus, it’s in fact a great solution to cover both your home and the appliances/systems, particularly when you rent your apartment. During this situation, we primarily think about the increased risk of thefts or fire as the main reasons for home damage. But what we don’t think about is the damage caused to the appliances/ home systems and their reduced lifetime.

The drawback of home warranties simply seems to be the positive point for home insurance. So, if there is a burglary, it will be investigated by the police and your home insurance company will not interfere with it. The damage suffered by your home and the items stolen will be reimbursed based on the police investigation, thus making the entire process simple stress-free.

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On the contrary, Home Warranty companies will fight, argue and be picky about the entire situation. Most home warranty companies have a very bad reputation of denying most of the claims depending on the age of the appliances or for not maintaining them properly. However, if you rent your home, both these topics will not be under your control, but will surely have a risk hovering on your home’s safety.

Home insurance companies, on the other hand quickly compensate most of your losses, while your home warranty company still may have an added risk to your claims. So, even in your claim has been approved and your leaking washing machine promised to be fixed, there are high chances of delays. In short, you simply need to try and avoid such home warranty cons.

Buying a Home Insurance and a Home Warranty

IF you have decided to buy both, a home warranty and a home insurance, make sure that you treat your home warranty company like your home insurance company. Keep both their standards similar and checkout the top list of home warranty insurance awards to find the best home warranty company for your home.

Start looking for a new home warranty company if you find your company unsatisfying or being unfair to your claims. Think twice before you make a deal with a home warranty company that work with contractors instead on in-house technicians. However, if you live in a state that has very few home warranty companies, try and research the available list of contractors working with them to check their reliability and reputation.

Despite of their clearly differentiated definitions and services, there are many people who fail to understand the difference between the two services. Reading a home warranty guideline is also a great way to understand the difference between both these services. Once you understand this difference, making your decision about them gets simpler. In fact you will now know more clearly whether you will need them both or just either one of them.

However, buying both the services, a home warranty and a home insurance will only increase the safety of your home, especially if you choose the right companies. But if only this was just as easier as said done! It is entirely your decision whether to choose both or either of the services. So, research well before you take your decision. After all, it won’t be much help to you if neither of the two services agree to help fix your broken system.

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