Homeowners Insurance Vs. Home Warranty Explained
When you’re buying a home, the thought of unexpected repairs can be pretty scary. You want to protect your home and your belongings in case something goes wrong. To do this, you have two options available to you: a home insurance policy and a home warranty plan. While they both serve the same purpose, they are actually two different products with two different functions.
What is a home warranty?
A home warranty plan is a service contract that protects you from unexpected costs when major systems and appliances break down due to normal wear and tear. A homeowner or renter can get a home warranty that covers repairs to major components of your appliances and home systems, such as water heaters, furnaces, air conditioners, dishwashers, garbage disposals, and more.
What is a home insurance policy?
A home insurance policy is one of the most important things a homeowner can purchase. Insurance is for damage that is not covered by a warranty that happens after you purchase the policy. Homeowners insurance covers losses due to major events that can result in damage to the structure of your home or the contents inside it.
This means it will pay for damages from normal wear-and-tear as well as acts of nature—floods, fires, tornadoes—or accidents like floods or fires. An insurance policy may also cover liability issues if someone gets hurt on your property or if something is stolen.
Why purchase both?
Buying a home is one of the biggest investments you will make in your lifetime. So it’s crucial to protect what belongs to you with valuable coverage. Both a homeowners insurance policy and a home warranty plan will cover your home, belongings, appliances, and systems in case they need replacement or repair. These two types of policies work together to provide protection and peace of mind should you ever need it.