Basic Differences between Home Warranty and Home Insurance

Home warranty and home insurance are both protection covers against damage and loss in a home and sometimes may be confused one for the other. However, the home warranty is a cover for home appliances and home systems usually for replacement or repairs in the event of a breakdown or failure due to age or standard wear and tear.

Home insurance protects the home against damage and loss due to fire accidents, covered natural disasters, and theft of belongings.

To get a more comprehensive understanding of what is involved under these two protection covers, a homeowner may read the useful guides on the internet that provide very invaluable insights.

What do they cover?

Home insurance is a package policy that includes cover for damage to your house, belongings, and personal liability. The policy covers any damage or injury suffered by others in your home under the liability clause and may include additional living expenses (ALE) for extra expenses incurred living away from home due to covered damage.

A home warranty is a cover for your home’s essential systems and appliances that are in good working condition at the time of signing the warranty. The coverage is limited to repairs or replacement of the damaged item at the same value.

What is the cost of each?

The cost of a home warranty varies according to the number of appliances and systems covered and the size of the property, among others. However, on average, the cost ranges between $350 and $600 per year with any extended coverage costing an additional $100 to $500 and a further $50 to $100 service fee per visit for repairs. You may get more updated figures from the high quality reviews on House Method guides.

Home insurance costs vary by zones and it is wise to check out the rates with your local insurance agent. The costs vary between a basic $400 and $3,000 per year and depend on the specific home insurance risks prevalent in different states.

Coverage limits

The home insurance coves damage and destruction to the house, theft, or loss of possessions, and personal liability. The policy does not include natural disasters or damage and loss due to acts of war. Coverage provides actual cash value, replacement cost, and extended replacement cost or value.

The home warranty covers standard service, repairs, or replacements of essential home systems and appliances. It is an advantage to a homeowner, especially for older items whose manufacturer warranty is expired.

Are they mandatory?

A home warranty is not mandatory but you will get the offer from the seller at the time of purchase and a suggestion to include it in the home buying package. There is no harm in taking one if it makes sense and you can spare the cash, but read the particulars carefully to know what it entails.

Home insurance is not a legal requirement but it is certainly a good protection to have for one of the most valuable personal assets anyone may possess. However, for those on a mortgage, the lender will insist that you take a home insurance cover as a condition for lending.

Any cost reduction

Resources on the internet, like from House Method, provide extensive guides on virtually every aspect of the home warranty coverage. You may use these guides to know what company offers the best package including discounts and claim integrity. Home insurance risks are assessed in multiple ways and how much discount or reduction on premiums you get depends on this threshold.