The world of protective plans you can get for your newly purchased home can be both overwhelming and confusing. There are a lot of things that you can pay for to protect your home from damage. Most people tell you that you’ll be pretty happy if you get both homeowners insurance and a home warranty. But you may be wondering what the differences between these two popular products are. Today we hope to shed some light on the subject for you so you can move forward with confidence no matter what route you decide to go.
What is Homeowners Insurance?
Homeowners insurance is an insurance product that protects your home from covered perils. Usually, a homeowners policy will cover things like theft, fire, lightning, smoke, wind damage, hail storms, falling objects as well as a few items. Most of the time you can find a plan that covers a peril that isn’t covered by a standard plan, like floods for instance. There are some things that no homeowners insurance plan will cover like intentional damage and insect damage. For insect damage, you can usually get a service contract with a pest control company so you can take preventative measures.
Homeowners insurance also comes with a liability policy. This will cover any lawsuits that occur because of injuries that are sustained on your property like if someone trips over a garden hose and breaks their wrist. Most of the time it will also pay for any damage caused by your pets.
Homeowners insurance is a good idea because it can protect you financially from perils both caused by nature and by accidents that can happen around the home.
What is a Home Warranty?
A home warranty, despite its name, is essentially a service contract that covers the repair or replacement of units or systems that break down. Home warranties require you to maintain your units and systems, and will only cover replacement or repair if it broke down due to normal wear and tear.
The types of things that a home warranty company will replace or repair include HVAC systems, electrical systems, plumbing, washers and dryers, refrigerators, and many other appliances. It’s important to keep in mind that on top of needing to be well maintained, a home warranty only covers mechanical parts. That means if a dial breaks on your air conditioner you still have to replace it yourself.
Some home warranties have other limitations on what or how they’ll cover things. For instance, some companies have a cap on how much they’ll spend on repair or replacement and other companies have limitations on how many units or the size of units that can be covered. This is very important information to keep in mind when deciding if a specific plan is good for you.
A home warranty is a great idea provided you’re good at doing regular maintenance on your household appliances and systems. It can save you a good deal of money in the long run, and the fees for a home warranty plan are usually pretty low.
Knowing the Difference
While these two products are very popular, they do have a lot of differences. Both are good ideas if you’re trying to ensure that you have to spend as little money as possible when the worst happens. Most mortgages require homeowners insurance, but even if you’ve paid your home off it’s a good idea to make sure you’re covered so you aren’t entirely financially responsible if your house burns down. Knowing which products work best for you can make a whole lot of difference, and making sure that the products that protect your home are the best for you can make protecting your investment a whole lot easier.