Both home insurance and warranty are important in protecting your house from unforeseen circumstances. However, there are certain differences that make these two plans quite unique from each other.

While in most cases having a home insurance is mandatory for mortgage owners, a home warranty is optional and can only be taken at the person’s will.

What covers a Home Insurance?

A home insurance cover will protect your home and belongings from accidental damages caused by burglary, fires, storms and some natural calamities. Basically, there are 3 areas that can be covered under the plan and these include:

a) The interior and exterior of your house

b) Personal possessions in case of burglary, loss or damage and

c) Liability that may occur when someone is injured on your property

Typically, if you own a mortgage the bank will require you to renew your home insurance policy at least once in a year. The average cost for this is about $300 to $1000 depending on the kind of house you possess. Additionally, all home insurance plans have a deductible offer, which is the amount you’ll pay once a claim has been made. The cover will then meet any other extra costs.

For example, in case a kitchen pipe becomes faulty and floods your floor. An insurance adjuster will pay you a visit and complete a claim for repair or replacement of any damaged possessions in your home. Upon approval of the claim, your insurer will subtract the deductible sum and provide you a payment for the remaining balance to do repairs to your home. Additionally, this deductible can help in reducing your annual policy premium. The greater your deductible, the lesser your annual home insurance plan will cost.

What covers a Home Warranty?

A home warranty refers to a service contract that covers for mending or replacement of your appliances and system components, which become faulty due to ageing or typical wear and tear. This plan encompasses components found in your HVAC, kitchen appliances, washer/dryer, electrical and plumbing. It also covers larger systems such as your household spa and pool.

Most home warranties have a contract term of 12 months, and you don’t require a mortgage to sign up for the plan. Likewise, since the contract is purely elective you can apply for appliance and system combo coverage which costs around $75 per month, with extra coverage for items such as an additional refrigerator or pool area available for further costs.

In the event that your HVAC unit stops to works, a trained and licensed technician will visit your home to assess the problem. If it’s found that the system is dysfunctional due to ageing or wear and tear and that the damage is covered under the policies of your service contract, then the contractor will do the repair or possibly replace the system for just the price of your service call. A single service call may cost up to $125 and the home warranty firm shall pay the remaining balance.

A good home warranty can save you 100s of dollars in out-of-pocket investments, including the inconvenience of looking for a reputable service contractor to do the repairs.

Reasons why it’s recommendable to have a home warranty:

One of the greatest benefits of getting a home warranty is that it provides cushion against calamities that may otherwise affect your lifestyle. For instance, if your home’s heating system fails in the middle of winter, it will be covered under the policy plan so that you don’t have to endure the cold weather.

Furthermore, this cover is comprehensive and provides protection to various items in your house such as electrical systems, plumbing systems, kitchen appliances, heating/cooling units as well as the washer and dryer.

How much does it cost?

The typical coverage for a home warranty is anywhere between $50 and $1000, but the average is $600 dollars per year. The amount can be higher for comprehensive plans that cover larger items or more household possessions.

As a homeowner, proper budgeting and a thorough understanding of what items you need covered is necessary in choosing an affordable warranty plan.

In conclusion, a home warranty can safeguard your house from risks and damages that may otherwise affect your way of life. It’s an optional cover that is usually renewable on a 12 month basis.