Homeowners Insurance and Home Warranty – Introduction and the Differences
When you decide to buy a home for yourself and your family, it is one of the biggest investments you will ever make in your life. It only makes sense to protect this investment. This is not only a smart decision but also a practical one. A smart homeowner will try to obtain a homeowners insurance as well as home warranty.
Homeowners insurance and home warranty are separate and distinct concepts. While both of them are good protection plans to have during an emergency, they offer different kinds of protection. A home insurance policy is not a home warranty and vice versa. Purchasing both of them will cover any damage to your belongings, home, system components, and appliances if they require repair or replacement. However, understanding the difference between them may get tricky. Let’s understand each concept and how they differ from each other.
What is a homeowners insurance?
A home insurance policy offers cover for any accidental damage to your home or belongings the belongings inside it. Such damage may be caused due to storms, theft, natural disasters, or even a fire. Under such a policy, the four primary areas covered are the exterior of the home, the interior of the home, personal property in case of loss, theft, or damage, and the general liability that you may incur when someone else is injured on your property. Generally, a homeowners insurance is mandatory if you have purchased your home via a mortgage. The bank issuing the mortgage will need you to obtain homeowners insurance before it issues you a mortgage for your home.
What is a home warranty?
A home warranty is a service contract. Through this, you can be entitled to replacement and repair of your appliances and system components if they fail to operate due to standard wear and tear or due to age. For example, electrical, HVAC, kitchen appliances, and plumbing are generally covered under such a warranty. Typically, these warranties offer a contract term of one year.
The difference between homeowners insurance and home warranty
Both of these concepts provide cover in case unexpected circumstances were to arise. However, the main difference is that in the case of a homeowners insurance, there are certain exclusions about the mechanical breakdown and regular wear and tear. For example, if your air conditioning unit fails or your microwave oven breaks down, the replacement or repairing cost for these items will not be covered by a homeowners policy. However, the damage resulting from this, such as water damage from a broken pipe, may be covered.
This is what makes a home warranty unique. It is specifically designed to provide cover for several situations and circumstances, which are not usually covered by a homeowners insurance policy. Therefore, it is very interesting for many homebuyers.
What is covered under a home warranty?
Some examples of what might be covered under a home warranty are given below. The costs of service, repair, or malfunction may fall under a warranty program. Be sure to ask for specifics of the home warranty program you are purchasing to ensure that you are covered for the exact situations you need. Here’s what a home warranty covers:
Procuring a home warranty and homeowners insurance from the same insurer
There is a major advantage in procuring a home warranty endorsement to a homeowners policy via the same insurer. It can save you a lot of time, while also minimizing the efforts. If your emergency situation requires you to obtain coverage from your home insurer as well as your home warranty insurer, you only have to deal with one insurer. In addition to this, you may possibly have to make a single claim.