When purchasing a new Lake Havasu City home, smart buyers do in-depth research on all facets of the homebuying process. One thing you need to understand is how to best protect yourself and your investment if anything were to go wrong. Check out the information on homeowners insurance versus home warranty below to educate yourself on your options.
Homeowners Insurance vs Home Warranty: What’s the Difference?
First of all, homeowners insurance pays for any accidental damages and loss caused by fire, lightning strikes, windstorms, and hail. However, it typically excludes damage from earthquakes and floods. Those require separate policies. (Make sure to talk to your insurance agent about them if you believe you might need them.) Homeowners insurance also covers the replacement of personal property in case of theft or damage. If a person gets injured in your Havasu home or on your property, homeowners insurance covers this as well. According to the insurance website The Zebra, the average annual cost of a homeowner’s insurance policy for a $400,000 Arizona home costs about $1737. Your lender usually asks you to obtain a policy before they finalize your mortgage loan. Each type of coverage in the policy includes a limit. Also, in most cases, you pay a deductible as well.
A home warranty is designed to cover the cost of repairs and replacements of larger appliances and crucial systems in your home that may fail or break due to age and wear and tear. This includes HVAC, electrical, or plumbing components, kitchen appliances, and your washer and dryer. A home warranty also requires you to pay premiums year-round, even if you never use it. Plus, it does not cover damages if appliances were not maintained properly or if the damage is from a fire or other disaster.