Even if your house was in good condition when you bought it, it can get damaged and important systems can break down. Making repairs or replacing worn-out components can be expensive. If you’re not prepared for a hefty bill, you may be forced to use a high-interest credit card or delay a necessary repair, which will only make the situation worse.
Homeowners insurance and a home warranty both offer valuable protection from crippling bills. They serve different purposes and it’s important to understand the distinction to make sure you have the right coverage.
What You Should Know About Homeowners Insurance
If you have a mortgage, you’ll most likely be required to purchase homeowners insurance. A homeowners policy is designed to protect you from the unexpected. For example, it will pay for repairs if your roof is damaged by a storm or if your house catches fire. Homeowners insurance won’t cover damage caused by regular wear and tear or neglected maintenance.
A homeowners insurance policy won’t just pay for home repairs. It will also pay to replace personal belongings that are damaged or destroyed by a covered peril or that get stolen. In addition, the liability portion of your homeowners insurance policy can cover medical bills and other expenses if someone gets injured on your property.
Important Facts About a Home Warranty
You’re not required to purchase a home warranty, but it’s a good idea. A home warranty can cover the bill if an appliance breaks down or if you experience a problem with your HVAC, plumbing or electrical system.
Some home warranties only cover a handful of major systems and appliances, while other plans provide broader coverage. You may be able to purchase a standard home warranty and add extra coverage for a pool or other features at an additional cost.
If you have an issue, you can contact your home warranty company. A qualified service provider will come to your home, diagnose the problem and figure out if your warranty covers it. If it does, the damaged or worn-out appliance or feature will be repaired or replaced. You’ll only pay a flat fee, as defined in your contract.
Homeowners Insurance and a Home Warranty Can Shield You From Major Financial Losses
No matter how well you maintain your house and how careful you are, things are bound to go wrong. Appliances can break down and storms and natural disasters can wreak havoc. Those types of events can lead to staggering repair bills that the average homeowner can’t afford to pay out of pocket.
Homeowners insurance and a home warranty can cover bills for a wide range of issues. Knowing that you won’t have to worry about a large and unexpected bill can give you peace of mind. Since homeowners insurance and a home warranty provide different types of coverage and apply to different situations, it’s wise to have both.