Home Insurance and Home Warranties

It’s only apples and oranges, right?

Lately, we’ve been getting a lot of calls with questions regarding coverage for repairs to home appliances or home systems.  Many people aren’t aware that their standard homeowners insurance policy does NOT cover the replacement cost or even repair of important systems in their home such as electrical, heating , cooling systems, kitchen appliances, hot water heaters or clothes washers and dryers due to wear and tear.  To avoid confusion, disappointment or frustration, let’s compare the difference between home insurance and home warranties.

First of all,  a Standard Home Insurance Policy will cover your home in the event of a damage caused by any of the common named perils such as fire and smoke, lightning, windstorms, hail, explosion, vandalism, damage from a aircraft, car or vehicle, theft, or falling objects, weight of ice, snow or sleet, and water damage (H2O: see previous blog).  The main areas covered under your home insurance policy are for the exterior and interior of your home,  your personal property and for general liability protection.

THE DIFFERENCE:

So we can see that home insurance provides coverage to your home from disasters. Then there are Home Warranties.  A home warranty is basically a servicing contract that provides repair or replacement of your home systems or appliances inside of your home that fail due to age or everyday wear and tear.  They are annual contracts that can be purchased by private companies on the internet.  These contracts can be purchased at any time even if your home or appliances aren’t brand new.  Even though home warranties are not required, they can certainly be beneficial in rounding out your total home protection and save you $$$ in the long run. 

FYI:  Most insurance agents aren’t contracted to sale these types of warranties, however the internet can be your best friend when searching for a home warranty contract that fits your needs.  If you’re buying a home, a home warranty can be written into the purchase agreement, or at minimum, sometimes the title company or lender can offer suggestions of good home warranty companies you can look into.