Buying a home isn’t easy. It doesn’t come cheap, even if you remove the monthly mortgage payment. It is a huge responsibility that only stable individuals can take on.
Between the extensive repairs, home maintenance, and replacements that your property demands, your wallet can take a big hit. In fact, something as simple as water damage can set you back $1,185-$5,056 in repairs, according to HomeAdvisor.
Whatever the damage might be, it never hurts to keep yourself protected. You never know when a big bill might come rushing at you, so it is always good to play it safe. Now, both homeowners insurance and home warranty are great safety nets in this regard. But, which is better?
We want you to always make the best choices, so today, we’re looking at the difference between homeowners insurance and home warranty to figure out which is best for you!
Let’s dive right into it.
What Are the Main Differences?
For starters, while a home warranty is optional, mortgage lenders are required to get homeowners insurance before they apply for a loan. This insurance ensures that the structure of the property, as well as its owners’ personal property, is protected from accidents, theft, or natural disasters.
On the other hand, a home warranty covers your home’s appliances and systems for future replacement/repair needs.
Homeowners Insurance Cost and Coverage
Just as location is a deciding factor when gauging a property’s price, so is the case with the insurance. The premium average rate is estimated at $1,211 annually by the National Association of Insurance Commissioners. The annual rate is also determined according to the rebuild value and age of the property. A standard homeowners policy includes the following:
- Coverage for personal belongings
- Coverage for home structure
- Protection from liabilities
- Additional living expenses
Home Warranty Cost and Coverage
Typically, homeowners spend $300 to $600 annual on their home warranty, with an additional $50 to $100 in the service fee per visit. As mentioned earlier, a home warranty covers appliances and systems in your home, including:
- Air conditioning
- Oven, range, and cooktop
- Built-in microwave
- Washing machine and dryer
- Trash compactors
- Freestanding ice makers
- Garage door opener
- Pool and spa equipment (optional)
- Air conditioning system
- Heating system
- HVAC system
- Electrical system
- Water heater
- Plumbing system
- Smoke detectors
- Ceiling fans
- Garbage disposal
To Sum It Up
The next time you’re in the market for your homeowner’s insurance, do make sure to look into getting a home warranty. With minimal annual fees, you can give yourself that extra peace of mind in case anything breaks down in your home.