Owning a home is one of the greatest investments you can make, so protecting your investment should be a top priority. A great way to do this is to get home insurance and a home warranty. Understanding the difference between the two can be tricky, so here’s a quick breakdown.
Home Insurance
Home insurance is almost always required by whichever lender or mortgage company works on your loan. Home insurance policies renew yearly, and the average annual cost in Austin is around $1000-2000. Buyers usually pay this cost with the rest of their mortgage payment on a monthly basis.
The big things that home insurance covers are accidental damage to your home due to theft, fire, storms, and some natural disasters. Flood protection is a separate insurance policy, so be sure to look into that if you live in a flood-prone area.
If one of the above scenarios were to occur, you could call your home insurance company, file a claim, and once the claim is approved they’d cover all repair expenses after your deductible. When shopping for policies keep in mind that the higher your deductible is, the lower your monthly policy cost will be and vice versa.
Home Warranty
While home insurance insures your home in the event of an accidental event, a home warranty will insure the systems and appliances in your home from age and general wear/tear.
Home warranties are completely optional, and generally start around $500 per year. If something goes wrong with your HVAC, plumbing, electrical, dishwasher, washer/dryer, etc. you can contact your home warranty company to come repair or replace it for (typically) a flat service fee.
Home warranty plans are highly customizable, so you can pick and choose what you’d like to have covered. Having a home warranty helps twofold; it can save you a ton of money if something breaks unexpectedly, and can take the hassle out of having to find a contractor to make repairs.
As you can see, home insurance and home warranties are both important and serve different purposes. When you’re making an investment as big as a home purchase, it just makes sense to protect it. For more information on buying a home in the Austin area, click here.