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Home Warranty Versus Home Insurance

Buying a house or condo comes with tons of paperwork and countless details, and sorting through everything takes considerable time and effort on the owner’s part.

When deciding on how to protect a home and the personal items within it, one of the most important details is understanding the difference between home insurance and home warranties.

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Both home insurance and home warranties “cover” aspects of the home and there is some overlap between the two products, so it’s easy to get them confused.

However, warranties and insurance offer different protections to the homeowner and those protections will only cover damages in some instances. Therefore, having a firm understanding of the benefits and limitations of each product, as well as understanding is a home warranty worth it, is vital to making an informed decision.

We’ll go step-by-step through the finer points of home insurance and home warranties, comparing them along the way, so homeowners can make the right decision on what will adequately protect their assets.

Home Insurance vs Home warranty: what’s the difference?

Home insurance is used to protect the home and personal belongings from a set of perils named in an insurance policy, such as natural disasters and theft.

A home warranty, or housing warranty, is used to protect home appliances and home systems when they break down so that the appliance or system can be repaired or replaced using the home warranty instead of the owner shelling out the cost.

Every insurance policy and home warranty changes from company to company, so these definitions may not always hold true. Reading over the fine print is always important before signing up for insurance or a warranty.

In the table below, we’ll break down each general aspect of home insurance and home warranties and compare home warranty vs home insurance.

Home Insurance Home Warranty
What does it cover? dwelling, personal belongings, personal liability home appliances, home systems
What does it cost? U.S. average annual premium is $1,211 U.S. average annual cost ranges from $300 to $600.
How does one submit a claim? Over the phone or online Over the phone or online
Does the lender require it? Usually required to receive mortgages Generally not required
Are there coverage limits? Yes, in most cases Yes, in most cases
Is there a deductible? Yes, in most cases Yes, in most cases
How can I make the cost of my coverage lower? Raise deductibles, qualify for discounts Raise deductibles, qualify for discounts

As the above table shows, there are quite a few differences and similarities between home insurance and home warranties. Below we’ll expand on each section so homeowners will have a good idea of what to look for when shopping around for insurers and home warranty companies.

What does it cover?

Home insurance generally covers the structure of the main dwelling, personal belongings and personal liability, which comes into play if the policyholder gets into legal trouble. Some policies may also protect home appliances and systems from perils covered in the policy, but home insurance does not generally protect these assets from wear and tear.

Home warranties protect home appliances in the case of a breakdown or general wear and tear. So if an appliance like an oven or a home system like a heater is getting old and stops working, the home warranty would pay to fix or replace it while home insurance usually would not. Some home warranties can also be expanded to protect external structures like swimming pools.

What does it cost?

The cost of both home insurance and home warranties varies quite a bit depending on the specific product and which company is offering it. The more comprehensive the coverage and the higher the coverage limit, the more expensive the product will be for the owner.

How does one submit a claim?

Submitting a claim for both home insurance and home warranties can usually be handled over the phone. And now many companies offer online service for people to file claims via the company website. Many home warranties do require people to file a claim within a certain timeframe, usually 24 hours, in order to be eligible for coverage.

Does the lender require it?

Most mortgage lenders will require the homeowner to get home insurance before the lender will approve the mortgage. Home warranties are not commonly required by lenders.

Are there coverage limits?

Both home insurance policies and home warranties have coverage limits and the limit of each coverage should be clearly spelled out when signing up for a policy or warranty. Coverage limits can usually be increased—in both warranties and policies—for an additional cost.

Is there a deductible?

Both home insurance and warranties have deductibles that must be paid before the coverage kicks in and pays the rest. Deductibles in home warranties are usually much lower when compared to deductibles from home insurance policies.

How can I make the cost of my coverage lower?

There are a number of ways to lower the cost of coverage with both home insurance and home warranties. Usually, companies will have multiple tiers of insurance or warranties available to choose from so homeowners can decide on the amount of coverage that is right for them.

Discounts for things like online billing and good credit history are commonly offered by home insurers and warranty companies, and qualifying for these discounts helps to reduce the cost of a warranty or policy quite a bit. Make sure to check with the company to see what discounts are available.

Raising deductibles is another way to lower the cost of coverage. Generally speaking, the higher the deductible, the lower the cost of coverage.

Bottom line

While closely related, home insurance and home warranties offer protection in separate instances, and understanding the difference between the two is essential to getting the right coverage for a home.

Homeowners often ask whether or not a home warranty is worth it. Well it depends. The first thing to do is check the fine print in the home insurance policy. A close inspection of the policy will determine if there are any gaps in coverage that need to be filled. If the home insurance policy doesn’t offer adequate protection of home systems and appliances, then looking into a home warranty could be the right path.

The post Home Warranty Versus Home Insurance appeared first on The Simple Dollar.

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The Best Mobile Home Insurance

According to the Manufactured Housing Institute, roughly 22 million Americans live in a mobile home. Purchasing a mobile home is a great investment for people who are looking to downsize or reduce their living expenses. But before you move in, consider getting mobile home insurance to protect your home against damage and theft.

Manufactured home insurance is similar to traditional homeowners insurance. Most mobile home insurance policies cover the structure of your home, your personal belongings and basic liability. Certain events are covered under your policy, and you’ll have to meet a specific deductible before the insurance will pay for a claim.

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Best mobile home insurance companies

Purchasing mobile home insurance can be a difficult process if you’re not sure where to start. There are dozens of insurance providers on the market, so how do you know which company will give you the best value?

To simplify your insurance shopping experience, we put together a list of the best mobile home insurance on the market today. To evaluate these companies, we looked at price, policy offerings and customer reviews.

  • Allstate
  • American Family
  • Farmers
  • Foremost
  • Geico

These manufactured home insurance providers are the top insurers on the market. However, different companies are better suited to different types of homeowners.

Best mobile home insurance company for retirees: Allstate

Many people downsize their living space as part of retirement. If you’re over 55 and retired, Allstate is your best option for affordable mobile home insurance. The company offers a 10% discount on premiums for retirees.

Best mobile home insurance company for discounts: American Family

With a policy from American Family, there are a variety of ways you can save on your premium. The company will lower your premium if you set up autopay, enroll in paperless billing, pay your policy in full, have home safety features installed or have bought your home in the last three years.

Best mobile home insurance company for non-smokers: Farmers

Farmers doesn’t offer many discounts on its manufactured home insurance policies. But one of the discounts they do offer is geared towards non-smokers. In most states, Farmers customers can save money on their premium if everyone in their household hasn’t smoked in the past two years.

Best mobile home insurance company for extra coverages: Foremost

Foremost is a little-known insurance company, but according to its website, it’s the market leader for mobile home insurance in the United States. In addition to basic coverages, Foremost mobile home insurance offers a number of add-on coverages for extra protection. Customers can choose to get coverage for trees, lawns and shrubs, additional living expenses, debris removal and food spoilage.

Best mobile home insurance company for basic coverage: Geico

If you’re looking for a bare-bones policy at an affordable price, Geico is a good option for you. Geico offers mobile home insurance policies through Assurant, and while the policies aren’t anything special, they will give you the coverage you need to protect your home and belongings. Geico also makes it easy to get a quote online.

Do I need mobile home insurance?

Technically, mobile home insurance is not required by state law. With that being said, it’s hard to get away without having it. If you have a mortgage on your manufactured home, the lender will probably require you to have a minimum amount of insurance before you can get approved. Similarly, most mobile home parks will require insurance before you can legally put your home there.

Even if you’re in the rare situation that doesn’t require insurance, you will still probably want it to protect your home and belongings.

What do mobile home insurance policies cover?

If you’ve ever had traditional homeowners insurance, you’ll notice that mobile home insurance is similar to a more traditional option. Here is what is covered under most mobile home insurance policies:

  • Dwelling: Dwelling coverage protects the physical structure of your home.
  • Detached structures: Most insurance policies also cover structures that aren’t connected to your main home. This includes fences, garages or sheds.
  • Personal property: Personal property coverage pays to replace the items inside your home if they get damaged by a covered peril or if they’re stolen.
  • Liability: Liability coverage pays to protect you in a lawsuit if someone gets injured on your property. It will also help you pay for damages that you cause to someone else’s property.

Typically, the covered perils for a mobile home insurance policy are the same for each provider. Expect all basic policies to cover damage from fire, wind, explosions, theft, snow and ice and vandalism. Earthquake and flood damage are not covered under mobile home insurance policies—those require a separate policy.

How much does mobile home insurance cost?

The cost of mobile home insurance depends on your circumstances. Based on the sample quotes we received for each of the five providers on our list, the average annual cost came out to $1,000 per year. Our sample quotes were for a single, 26-year-old female living in Austin, Texas.

What factors affect the cost of mobile home insurance?

Besides your deductible, there are a variety of factors that impact how much you’ll pay for mobile home insurance. Insurance companies take into account personal factors, like your gender, age, marital status, employment and credit score. The price will also differ based on where you live, and if you’re in an area that’s at risk for severe weather. Lastly, certain factors about your home affect the price, like how old it is, what it’s built with and the size.

Different insurance companies use different calculations to determine your rate, so get several quotes to find the best option for you.

Mobile home insurance is as important as traditional home insurance. By getting this type of insurance, you are protected from the costs of damage and liability. Talk to insurance providers to get coverage and the peace of mind that your assets are taken care of.

The post The Best Mobile Home Insurance appeared first on The Simple Dollar.

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