What differentiates home insurance from a home warranty?
As a homeowner, you want to do everything in your power to protect your home. To accomplish this, you may be looking into homeowners insurance and home warranties. While these options will both offer coverage for your home, they do so in very different ways. To help you make an informed coverage decision, here are the main differences between home insurance and warranties:-
- Home Insurance
In the most basic terms, a home insurance policy is designed to cover accidental damage to your home and belongings. Typically, homeowners insurance policies will include a list of covered perils, such as fires, storms, theft, vandalism, and certain natural disasters. There are four main types of coverage included in standard home policies: dwelling, personal property, personal liability, and loss of use. It’s also important to note that home insurance policies include a deductible; the amount that the policyholder must pay towards a claim before they can access their insurance coverage.
When you purchase a home, your mortgage lender will require you to secure some minimum level of home insurance coverage. You also have the ability to customize your homeowners insurance policy by adding other forms of coverage and adjusting your coverage limits and deductibles. Adjusting your coverage options, coverage limits, and deductible amounts will all affect the cost of your premiums.
- Home Warranty
A home warranty is a service contract that covers the repair or replacement of certain home systems or appliances that may fail due to age, wear and tear, or some other type of internal malfunction. Oftentimes, home warranties provide coverage for your home’s HVAC, electrical system, plumbing, kitchen appliances, and washer and dryer. Home warranties are an optional form of coverage that is not required by mortgage lenders.
So, how does a home warranty work? Say, for example, that your HVAC system stops working. In this case, a licensed and pre-approved technician will come to your home to assess the issue. If the technician determines that the system stopped working due to an issue covered in your service contract, they will make the necessary repairs or replace the broken parts completely. You will pay a small portion of the repair costs (usually around $125), and your warranty will cover the rest.
Please keep in mind that home warranties will only repair or replace the systems and appliances that are specifically listed in the contract. Additionally, you will not have coverage if a listed system breaks down due to external issues such as fire, storms, and so on. Instead, warranties only provide coverage for the damages caused by mechanical, internal issues.
This is what differentiates home insurance from a home warranty. Are you looking for the right homeowners insurance policy? For assistance with all your coverage needs, contact an insurance professional at Westwood Insurance Agency today.
