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What's the Difference Between Home Warranty and Home Insurance?

Main Treasure Valley Life

A house is an investment, and a very expensive one at that. As a homeowner, you have to contend with wear and tear on the house and its systems, in addition to making sure that the home is covered in case of emergencies. This is where home warranties and home insurance come in. In this blog, we will define these two coverages.

These are very common real estate FAQs that we get asked, so we wanted to define them here.

What is a home warranty?

A home warranty is insurance for the systems and appliances in a home. These are most common in brand new houses, with new appliances, systems, and materials. If the A/C or heater, dishwasher, or dryer breaks, or the roof leaks in a certain time period, the cost of replacement and repairs is covered under the warranty.

If you are planning on moving into an older home, be sure to ask the current owner to show you repair receipts and warranties on the home’s systems and appliances. This will help you determine the newness of the systems in addition to finding out what is still under warranty from the manufacturer, repairman, or builder. Having a home warranty is important in general, but especially so for first-time homebuyers, who likely sunk most of their savings into the down payment and closing costs. A surprise repair bill of thousands of dollars can quickly lead to financial trouble.

What is home insurance?

Home insurance is much like renters insurance, but for your home. Home insurance generally covers fire, theft, bad weather, and some personal injuries. In this sense, home insurance is more important than a home warranty. Living in the hurricane-prone south or tornado-prone midwest is a no-brainer when it comes to having home insurance, due to the liability of a natural disaster potentially damaging or destroying your home. Here in Idaho, the biggest natural disasters we worry about are wildfires, particularly in the mountains and foothills. In many cases home insurance payments are built into the monthly mortgage payments.

It is important to note that home insurance does not fully cover your home constantly; rather, the value is determined on a case by case basis by an insurance adjuster who takes into account the amount of damage to the home, property, and personal belongings.

Here are other real estate FAQs we have answered.

Posted by AndrewS at 7/23/2020 12:04:00 AM

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