Investing in a home warranty or homeowners insurance helps you protect your home beyond basic steps like home improvement or organization. While warranties and insurance offer similar benefits, they provide different forms of coverage. Curious about the difference between a home warranty and home insurance? Let’s dive in and compare these beneficial policies.
What Is a Home Warranty?
Home warranties are agreements between a homeowner and a third party that promises to pay for some or all of the cost of repairs to a broken system (such as HVAC), appliance (like a dishwasher) or both. Warranties do not cover damage to the structure of a house or belongings inside, like furniture or clothes.
What Is Homeowners Insurance?
Homeowners insurance is an agreement between a homeowner and a third-party insurer covering damages from natural disasters, weather, burglaries or accidents. It may cover the following:
- Injuries that happen on your property.
- Furniture damage caused by a leak.
- Shed damage caused by an accidental fire.
- Deck damage caused by a fallen tree.
Why Do You Need a Home Warranty and Homeowners Insurance?
Looking at a home warranty vs home insurance, it is important to remember that most homes have an expensive problem that pops up at some point. Warranties and insurance ensure you do not have to pay the total cost of repairs or replacements when that happens.
What Do Home Warranties and Home Insurance Cost?
Costs vary depending on your unique circumstances. Home insurance is higher for older homes, for instance, while home warranty costs depend on your home's location and built-in service fees. Home warranties may cost $300 to $600 per year, while homeowners insurance averages roughly $1,400 per year for a $250,000 policy.
Are Home Warranty or Homeowners Insurance Required?
If you have a mortgage, your lender requires you to buy a home insurance policy. The lender has a lien on your home, so it wants the investment to be protected if the worst occurs.
You are not required to buy a home warranty.
What Are the Benefits of a Home Warranty Vs. Homeowners Insurance?
Investing in a home warranty makes sense if you purchase an older home where the appliances lack manufacturers' warranties. You may also want a home warranty if you do not like performing your home repairs. Also, vacation homeowners who live far away from their property may desire a home warranty for peace of mind to get repairs done quickly.
Benefits of home insurance include:
- Fulfilling the terms of your mortgage.
- Protecting yourself if someone gets hurt on your property.
- Guaranteeing you will not lose your investment if a life-changing disaster happens, like a fire.
Are you considering buying a home, or do you want better protection on a house you own? Contact us for more information about our home insurance policies. We also offer home mortgages, and you can use our mortgage calculator to calculate your monthly mortgage payment.
Insurance products are not federally insured and are not obligations of or guaranteed by Members 1st FCU, Members 1st Insurance Services, or any other affiliated entity.