Homeowner's Insurance vs. Warranty and why it matters

The path to homeownership is both a massive and confusing undertaking. With so many steps and hurdles, very few adults can claim to understand each step fully. Most first-time homebuyers—along with some of the most seasoned buyers—rely on experts to help them wade through the process and determine what is a must and what is a waste of time, money, and other resources. Homeowner’s insurance

Requirements

While it may not be required by law in Virginia to purchase homeowner’s insurance, you will be hard-pressed to find a lender willing to give you a loan without proving you have a policy established. On the other hand, a home warranty is an optional, elected expense. It plays no role in loan-ability and is usually purchased after the home. So what's the difference?

Differences in coverage

Homeowner’s insurance protects you, your structure, and your belongings from the burden of an assortment of unforeseen events—think weather, fire, theft and vandalism. Whereas a standard insurance policy provides coverage to repair or replace your home and its contents in the event of damage, increased coverage policies could also cover medical expenses and the loss of use. Homeowner’s insurance is intended to lessen the blow caused by the unpredictable; it will not cover normal wear and tear; termite, insect or rodent damage; rot and mold; or any issue chalked up to improper maintenance.

A home warranty, on the other hand, can be purchased yearly to help offset the cost of  servicing, repairing, or replacing major appliances and whole house systems. It acts as a financial buffer should one of the big-ticket items in your home breakdown! It can also extend the protection you get from those manufacturer warranties after they run out. From plumbing, and HVAC issues, to water heater and roof leaks, a home warranty can help make unexpected headaches a little more bearable. Warranties will not cover cosmetic damage, damage from improper use, neglect or pre-existing conditions.

There's really no comparing homeowner’s insurance to a home warranty; not only is one required while the other optional, but their coverage differs completely. At the end of the day, there's really no definitive answer on whether or not you should add a warranty to your homebuyers shopping list. Our suggestion is to do your research and do what's best for you and your new investment!