Home warranty and homeowner’s insurance are often confused because they sound like they could be the same thing. However, they’re not.
It’s better to think of them as complements to one another. Both provide protection for you and your real estate investment, but in different ways.
Home warranty is an optional policy that covers major systems – plumbing, heating, electrical – and appliances of a home. In the event one of these covered items fail during the coverage period, the warranty company will repair or replace the item.
Homeowner’s insurance covers against damage and loss caused by natural acts such as fire, wind, hail, and a fallen tree. Theft or vandalism are also covered. Comprehensive insurance policies can also cover damages from accidents that occur on the property, such as someone slipping off a wet roof.
Why Buyers Would Buy a Home Warranty
- Safeguard your budget against expensive system and appliance failures.
- Maintain peace of mind that covered repairs will be resolved quickly to save you time and money.
- Protect your real estate investment by insuring items not covered by your homeowner’s insurance.
Why Sellers Would Buy a Home Warranty
- Help sell your home faster by offering this coverage to potential buyers.
- Set yourself apart from other sellers by providing the buyer with budget protection against unexpected home repairs.
- Minimize the risk of cost and delays during the listing period.
Learn more about home warranty coverage and costs by visiting American Home Shield (affiliate link).
The Significance of Homeowner’s Insurance
Most lenders require homeowner’s insurance policies since it will protect their financial investment in the property if any major, damaging events occur. Be sure to talk to your insurance provider to discuss exactly what is covered in your policy and determine if additional coverage is required. For instance, in California, it is wise to purchase earthquake insurance, which is typically is not covered by a standard homeowner’s insurance policy. If your home is located in a floodplain, your lender may require you to have flood insurance.