You may be surprised to learn that having both home warranty and insurance can be beneficial for homeowners. In this article, we'll explore the differences between these two popular protection options.
A home warranty is a contractual agreement between you and an insurer that covers repairs and replacements of specific home systems and appliances under a specified coverage period. Home warranties usually last for 1-3 years and are typically sold by third-party providers, such as GE Appliances or American Home Shield.
Home insurance, on the other hand, is a type of insurance that protects you against financial loss due to damages or disasters to your home. It's usually required by lenders when you apply for a mortgage. Homeowners' insurance typically lasts for 10-20 years and may also have specific coverage limits.
While both warranties and insurance can provide protection for your home, there are some key differences between the two. For example, having both a warranty and insurance can increase your overall cost of homeownership. However, it's essential to weigh the benefits against the costs to determine which option is right for you.
Another crucial aspect to consider is the coverage limits. Home warranties usually have lower coverage limits than homeowners' insurance, typically ranging from $500 to $2,000 per repair or replacement. Homeowners' insurance, on the other hand, can cover a wide range of damages and losses, including theft, vandalism, and natural disasters.
Ultimately, having both home warranty and insurance can provide peace of mind and financial protection for your home. However, it's essential to carefully review the terms and conditions of each option to ensure you understand what's covered and what's not. Consult with a licensed insurance agent or broker to determine which protection plan is best for your unique needs.