Understanding The Financial Difference Between A Home Warranty And Home Owner’s Insurance
Tuesday, June 27, 2017, 6:00 AM | Leave Comment
Buying and owning a home is no small feat, and to make sure your investment in your home stands strong, you’ll need to watch your policies for it.
Your options include but are not limited to homeowner’s insurance and a home warranty; many people have both.
Before diving into either, though, it’s important to know the differences.
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The Insurance
Typically an insurance policy is mandatory, but since it covers accidental damage to your home and belongings, it tends to be necessary.
“Accidental” includes natural disasters as well as fires and storms, alongside thefts. This coverage pertains to the inside and outside of your home, in damages and liability problems. Like most insurance policies, you’ll pay a deductible every year.
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The Warranty
Warranties are contracts that cover repair or replacement for any appliances or system components that stop working, which can be vital to your living situation.
Companies like High Tech Home Warranties give you coverage when machinery like electrical components, A/C units, plumbing, and other components go awry; you pay per month for the warranty but won’t have to pay service costs.
Unlike insurance, a warranty is elective and unnecessary for a mortgage. It takes a lot to maintain a home, so although you don’t need to have a warranty, it’s a good investment.
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Regarding Your Finances
Warranties tend to be offered as 12-month contracts, and they feature relatively low monthly payments, though this varies by plan.
If you have the money to put into it, you’ll find yourself paying little or nothing for major repairs when they crop up.
Most companies offer additional coverage if you’re interested, but there are limits to what will be covered.
As mentioned above, an insurance policy is mandatory — you’ll have to pay for it regardless of whether you pick up a warranty. Depending on your mortgage situation, you might have to choose a policy based on how your lender prefers to protect assets.
Ultimately, though, your insurance is meant to protect events nobody can control. Stay up to date on every account.
Whether or not you add a warranty to your insurance, choose the plan that’s right for your home. Having both will cover most of your home, but depending on your living circumstances, both might not be ideal.
Accidents and unexpected breakdowns nonetheless happen, though; it pays to be prepared. Insurance and warranty can both spare you needless concern.
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