Homeowners Insurance and Warranties: The Details and the Differences

Appraisals, insurance, inspection, warranties…there are so many terms used within the home buying and mortgaging process, you might feel as if you are learning an entirely new language.

The thing is, most of these things are necessary, and all of them are worth understanding. It’s easy to get confused about the difference between one and another, but just a little knowledge will go a long way.

boston home loanIf you’re wondering how homeowners insurance and home warranties differ, here’s how to tell them apart—and what you need to know about each one.

Homeowners Insurance

Home insurance policies cover what are called perils—damage and destruction caused by outside events and natural disasters, with the exception of earthquakes and floods. Typically, events such as fires, vandalism, theft, and hail damage are covered.

Homeowners insurance also protects you, the homeowner. Should someone get injured while in your home, you are not liable.

Home Warranty

The warranty, on the other hand, covers repair or replacement of major systems and appliances within your home when they break. Normal wear and tear cause things to fail within the home, and the warranty covers those expenses. For instance, [pullquote position=”right”]if your central air system breaks, the home warranty will save the day.[/pullquote]

Similarities and Differences

What they both have in common is a) you’re saved from extremely high out-of-pocket costs when problems occur; and b) they both have deductibles which need to be met.

However, it’s important to remember that they are not at all the same thing, and purchasing one has no bearing on the other. For the most protection, it’s best to buy both.

For either one, the exact coverage will depend on the specific insurance company, premium paid, and policy terms. Talk to your prospective policyholders about what’s covered. And remember, your mortgage broker can help answer questions and guide you to the right choices for you and your budget.

If you’re buying or selling a home in the Boston area and are in need of a mortgage, or have any mortgage-related questions, contact me at any time for advice or help.

Phil Ganz (117 Posts)

Philip D. Ganz is a Boston Mortgage Broker and Boston Home Loan specialist. For information, expertise, consulting, or advice about home loans, refinancing mortgages, or commercial property loans, contact Phil with no obligation: 617-529-9317

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