Home Warranty vs. Home Insurance: An In-depth Comparison
Priority 1 Lending
Priority 1 Lending
Published on June 15, 2023
Home Warranty vs. Home Insurance: An In-depth Comparison

Home Warranty vs. Home Insurance: An In-depth Comparison

Introduction:

Verify my mortgage eligibility (Jul 16th, 2024)

Understanding the difference between home warranties and home insurance is essential for homeowners, as both offer vital protection for your home, but in distinct ways. In this in-depth comparison, we will break down the differences and similarities, what they cover, their costs, and how to decide which one(s) you need.

Section 1: Understanding Home Warranties and Home Insurance

A home warranty is a service contract that covers the repair or replacement of major home systems and appliances that break down over time. This can include your HVAC system, electrical system, plumbing system, refrigerator, oven, and more, depending on your specific contract.

Verify my mortgage eligibility (Jul 16th, 2024)

Home insurance, on the other hand, is a form of property insurance that covers losses and damages to an individual’s house and assets in the home. Home insurance provides financial protection against disasters like fire, theft, and certain types of weather damage.

Section 2: What Do They Cover?

Home Warranty: Covers the cost of repairing or replacing major home systems and appliances due to wear and tear. This could include HVAC systems, electrical and plumbing systems, kitchen appliances, washers and dryers, and more, depending on the plan.

Verify my mortgage eligibility (Jul 16th, 2024)

Home Insurance: Covers the structure of your home, personal belongings, liability for injuries occurring on your property, and living expenses if your home becomes uninhabitable due to a covered disaster.

Section 3: The Costs

Home warranties typically cost between $300 to $600 per year for basic plans, plus service call fees for each repair. Enhanced plans covering more items can cost more.

Verify my mortgage eligibility (Jul 16th, 2024)

Home insurance cost varies widely depending on your home’s location, size, age, construction type, and more. According to the National Association of Insurance Commissioners, the average annual cost of homeowners insurance in the U.S. is about $1,211 (as of 2019).

Section 4: Deciding What You Need

Having both a home warranty and home insurance can provide comprehensive protection for your home. Home insurance is typically required by mortgage lenders and is crucial for financial protection against major disasters. A home warranty can be a sensible investment if you have older appliances or systems that may need repairs or replacements, or if you prefer the convenience and budgeting benefit of a service contract.

Verify my mortgage eligibility (Jul 16th, 2024)

Section 5: Tips for Choosing a Home Warranty or Home Insurance Provider

When selecting a home warranty or home insurance provider, it’s crucial to compare coverage, costs, and customer reviews. Be sure to read contracts thoroughly to understand what’s covered and what’s not. Consider your specific needs, budget, and the age and condition of your home and appliances.

Conclusion:

While home warranties and home insurance serve different purposes, both offer important protection for homeowners. Understanding the differences can help you make an informed decision about the kind of protection that’s most suitable for you and your home. In many cases, having both can provide a robust financial safeguard against a wide range of potential issues, from appliance breakdowns to major disasters. As always, ensure you thoroughly research and read all contracts before making a decision

Show me today's rates (Jul 16th, 2024)
Priority 1 Lending
Priority 1 Lending Metro Detroit's
Click to Call or Text:
(734) 720-8700