The terms “warranty” and “insurance” imply that the people who buy them will be protected in some way. These two words, on the other hand, mean completely different things when it comes to home security. Every homeowner needs to grasp the distinctions between a home warranty and home insurance for several reasons.
You might be asking yourself what the various differences are between a home warranty and home insurance if you own or plan to buy a home. After all, both protect your investment—and your wallet—in the event that something goes wrong. Home warranty and home insurance plans, each provide different forms of protection. Knowing what each one covers can assist you in determining whether you require both.
Be sure to continue reading to learn more about the numerous differences between a home warranty vs home insurance in Canada.
Homeowners that are looking for home insurance quotes can make the process quicker and easier by working with a reputable brokerage, like Surex.
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What Is a Home Warranty in Canada?
A home warranty is a unique type of policy that pays for the service, replacement and/or repair of specific household items, like appliances and home systems, if they break down unexpectedly due to an unavoidable defect, wear-and-tear, or other similar issues.
You get a flat rate on residential service calls in exchange for a monthly or annual fee. Warranties are completely optional and usually cover your home’s essential systems (like electrical and plumbing features) as well as common residential appliances.
These policies are for a set period, and payment can potentially be made annually, monthly, or all at once. Depending on what appliances and items you want covered and how much you (or the sellers of the home you’re buying) are ready to spend, the price can vary dramatically. The more extensive the warranty, the larger the overall cost.
Various home warranties cover the entire house, while others only cover a handful of individual systems. You’ll probably need extra coverage or a larger plan if you want coverage for septic tanks and pumps, as well as more specialized appliances (like a garbage compactor or a fired outdoor oven). In the course of the property buying process, sellers (and at times, builders) may provide warranties as special incentives to potential home buyers because having a warranty gives the buyer much needed peace of mind.
Property owners can also buy one on their own for the exact same reason, either when they first purchase the house or later. It’s a common misconception that warranties are only available at the point of sale.
How Does a Home Warranty Work in Canada?
Home warranties only work when something breaks down and needs to be fixed in a home, so even the best house warranty is useless if you never use it, so if something in your home breaks down, contact an insurance company at their earliest convenience to discuss the problem at hand and confirm your coverage.
If the repairs are covered, one of the company’s partner professionals will be sent to your home and to do the necessary repairs.
What is Home Insurance in Canada?
A house insurance policy protects you, your home, and your personal items in the case of an unforeseeable event that’s beyond your control, such as a fire, a storm, or an unexpected bodily injury on your property. Homeowners pay a monthly fee for the coverage and a predetermined deductible, similar to a car insurance policy.
The cost of your home insurance policy is going to vary depending on a number of factors, including the home’s location, square footage, age, and whether or not it has safety measures.
Though individuals mix up a home warranty with home insurance, the two are completely different.
The purchase of a homeowner’s insurance policy is not required by law. Home insurance, on the other hand, is something nearly every homeowner should factor into their budget because you can’t get (or keep) a mortgage without it.
If a homeowner’s mortgage no longer exists, they technically no longer need coverage when the home is paid off. That being said, most homeowners keep their coverage because paying off your mortgage does not free you of home-related dangers.
How Does Home Insurance Work in Canada?
Home insurance coverage has absolutely nothing to do with the group or individual who sold you the house, and it won’t cover the cost of a dishwasher that breaks down for no apparent reason. Because it was created to protect you from a post-catastrophe financial ruin, there may never even be a need to use it.
Payment will be made by cheque (or direct deposit), and you can use the funds as you want to complete the repair. You have the option of hiring any contractor you like, You can also either do it yourself or keep the money and let the harm accumulate. It’s entirely up to you.
A tree falling on your house, damage from extreme weather, robbery and theft, water damage, fire and smoke damage, and other events can lead to the filing of a homeowner’s insurance claim.It’s important to note that these are all specific events that lead to home damage, not descriptions of the harm itself.
Home Warranty vs. Home Insurance — What’s the Difference?
The home warranty vs insurance debate has been going on for years — but the differences are rather simple.
A home warranty policy works similarly to a home insurance policy. Both have a yearly premium and deductible, albeit the cost and deductible for home insurance is often significantly greater than the premium and deductible for a home warranty.
What they cover is the main difference between a home warranty and home insurance. Home insurance covers the structural damage and personal property loss in the event of an emergency such as robbery or fire, whereas a home warranty will cover repairs and replacements of a home.
Another distinction between a home warranty and home insurance is that homeowners are often required to have home insurance (if they have a mortgage on their property), whereas a home warranty plan is not.
Home Insurance vs Home Warranty in Canada
Homeowners need both home insurance and a home warranty. If the house’s structure is damaged, the owner will not be responsible for the hefty costs. If a system or appliance fails due to regular wear and tear, a home warranty can assist cover the cost of repairs or replacement. These policies cover different aspects of a home and, when combined, can protect a homeowner’s budget against expensive repairs.