When you prepare to purchase your new home, your real estate agent may advise you to purchase a home warranty or even to negotiate with the seller to pay for a year of warranty coverage. However, you may also be aware that your new mortgage company is requiring you to pay for homeowners insurance.
At first glance, it may seem like overkill to have a home warranty as well as insurance coverage. Once you learn more about home insurance versus home warranty coverage, you can better determine what steps you need to take to protect yourself from financial losses related to property maintenance and repair issues.
Understanding Home Insurance vs. Home Warranty Coverage
As you compare home insurance coverage against the benefits of a home warranty, you’ll discover that they provide benefits for very different things. For example, a home insurance policy offers benefits for liability risks and for repairs related to significant damage or loss. That includes major storms, fires, theft and more. General wear and tear on the property, such as from an aging roof, are not covered.
Home warranty coverage, on the other hand, covers wear and tear repair costs on specific components. For example, if wear and tear results in the need for a new air conditioner compressor, your warranty coverage may pay for some or all of this service. Your insurance coverage would not pay for this type of repair work.
Determining Which Type of Protection You Need
Now that you understand the difference between homeowners insurance and a home warranty, you can see that you may benefit from both types of coverage. Be aware, however, that your home lender may require you to purchase homeowner’s insurance. The lender may establish a minimum level of coverage required, as well. A home warranty is usually optional.
Many homeowners choose to forgo a home warranty, but it can potentially save you a substantial amount of money. As you analyze which types of coverages you need, initially turn to your lender to determine what their requirements are. Then, determine if warranty benefits would be well-suited for you.
Setting Up the Home Coverage You Need
Understanding the difference between home insurance versus home warranty coverage is essential. Now that you more fully understand the differences between these two options, you may be ready to set up coverage and to begin enjoying the benefits that these plans provide. Spend time comparing the options and identifying your needs as first steps. Then take a look at some in-depth home warranty reviews to find the best provider for you.