When purchasing a new home, it’s essential to do in-depth research on all the homebuying facets. You’d need to understand how to protect yourself and your investment if anything were to go wrong. Check out the information on home insurance versus home warranty below to educate yourself on your options.
Homeowners insurance pays for any accidental damages and loss caused by fire, lightning strikes, windstorms, and hail. However, damage from earthquakes and floods is typically not covered. It also covers the replacement of personal property from theft or damage and liability if a person were to get injured in your home or on your property. According to American Home Shield, the average annual cost of a homeowner’s insurance policy ranges between $300 and $1,000. The bank usually asks you to obtain a policy before the mortgage is issued. Make sure to keep in mind that each type of coverage in the policy is subject to a limit, and in most cases, you will have to pay a deductible.
A home warranty is designed to cover the cost of repairs and replacements of larger appliances and essential systems in your home that may fail or break due to age and wear and tear. The home warranty may include the HVAC, electrical, or plumbing components, kitchen appliances, and your washer and dryer. With a home warranty, you must pay premiums year-round, even if you do not use it, and it won’t cover damages if appliances were not appropriately maintained or if the damage is from a fire or other disaster.