Understanding the Main Differences Between Home Warranty Coverage and Home Insurance
Today, homeowners are savvier than ever before. Many people find every method possible to save money and reduce the cost of repairing and replacing major home appliances and systems.
Something that has grown in popularity as homeowners become more aware of the cost of repairing and replacing this equipment or appliances is the home warranty. However, there is still a bit of misunderstanding about what the difference is between a warranty provided by a home warranty company and traditional home insurance. In some situations, homeowners are not overly thrilled to purchase home warranty coverage because it is going to overlap with the insurance they already pay for, which would make it a waste of money.
While modern home warranties and traditional home insurance policies will operate in a similar manner, they don’t have much in common beyond that. If a homeowner currently has homeowner’s insurance, they can buy a home warranty without having to worry about paying for coverage that is redundant. Keep reading to learn more about the differences between home insurance and a home warranty, which will help a homeowner figure out if the warranty is something, they should invest in.
The Basics of Homeowner’s Insurance
The first step is to start with the homeowner’s insurance. This is a type of policy that is designed to provide protection for the home and everything inside. The coverage extends to these things if certain events occur. The events must be listed in the policy for the damage or issues to be covered.
Even though a homeowner does not have to purchase home insurance to buy a house, almost all homeowners have invested in this. Beyond insurance being a smart investment for an investment as big as a house, there are some banks that are unwilling to provide a person with a mortgage unless they have provided them with proof of insurance coverage. There are other lenders that include insurance coverage into the cost of the home.
Even though the terms of the insurance policies available will vary, with standard coverage, a person has full protection for their home. They will also receive coverage for their personal items and other structures on their property. These policies will also provide coverage for any type of liability if damage occurs to a neighbor’s property. It is important to note, though, that the homeowner’s insurance policy is only going to pay out if specific circumstances are present. Most standard insurance policies will only cover losses or damage that are caused by any of the following natural events -; theft, fire, hail, wind, and lightning.
In some cases, policies will provide coverage if some type of natural event, such as a flood or earthquake occurs. While this is true, this type of coverage may cost more, too. Insurance is not going to usually repair or place a person’s items if they have suffered damage because of general use.
Understanding What Home Warranty Insurance Covers
A home warranty may also be called home warranty insurance. However, this is somewhat misleading. Home warranties are not an insurance policy exactly. A better description of a home warranty is that it is a service contract.
For a home warranty, the homeowner is going to pay a premium, just like they do with their insurance policy. What is offered in return is that a warranty provider will make arrangements for a technician to visit the home to provide the service or repairs needed, or to replace the systems or appliances that are listed as covered by the warranty that is purchased.
Where home warranties differ from insurance is that the warranty will not usually cover the home’s structure. Instead, it is going to provide coverage for appliances and home systems. Some of the things that the typical home warranty will cover include water softeners, electrical systems, sprinkler systems, HVAC systems, electronics, plumbing systems, septic systems, washing machines, ovens, dryers, ranges, dishwashers, and cooktops.
Keep in mind, the list above is not exhaustive. Home warranties can be purchased to provide protection for almost anything. It will even provide home services in some cases, such as pest control, re-keying services, and carpet cleaning.
There is also a critical difference when comparing the homeowner’s insurance and a home warranty. For example, a home warranty is only going to cover items that happen to malfunction because of cases of wear and tear. Usually, a home warranty is not going to extend coverage to items that are damaged because of abuse or misuse. Also, they do not cover any personal property that is lost because of natural disasters or theft. Keep in mind, that these are the things that homeowner’s insurance is designed to cover.
Appliance Warranty vs. Home Warranty
When someone begins to research different insurance policies and warranties, they may also encounter something called the appliance warranty. Sometimes, these are synonymous with the home warranty discussed above.
It is important to note that most appliances -; regardless of if they are small or large -; will come with some type of manufacturer’s warranty. These warranties may last for a few months up to a few years. They are the guarantee for a company that the product they have sold is going to work properly for a specific amount of time. In some situations, the appliance warranty may actually refer to the actual manufacturer’s warranty.
After the manufacturer’s warranty is expired, it is possible to purchase a home warranty from another person or company to receive ongoing coverage. As a result, there are some people who use the word appliance warranty to refer to the service contract or the home warranty for a certain appliance.
Get the Right Policy for the Protection of Appliances and Home Systems
When it comes to home systems and appliances, getting the right warranty coverage is essential. Take some time to find a quality company to ensure that the best possible warranty coverage is purchased for the appliances or systems in question. This will pay off in the long run.
