The difference between a home warranty and your homeowners insurance is that the home warranty will protect the things that allow your home to function properly when they begin to wear down while the homeowner’s insurance will protect the home and your personal belongings from sudden, accidental loss and not due to normal wear and tear or negligence.
Table of Contents
A home warranty has also been referred to as home maintenance insurance. You can have this coverage for a fee charged either monthly or yearly in order to protect appliances or systems that allow your home to function at its best capacity. These systems may need to be repaired or replaced after a certain period of time due to damage brought on by wear and tear over the years.
Contracts such as these will protect your systems to include your major appliances, plumbing systems, electrical wiring, HVAC systems, and many more areas that allow your home to operate at a functional level, preventing failures due to typical wear and tear. This coverage is not provided by a standard homeowners insurance policy.
A home warranty is basically a complement to a home insurance policy. If you lose a garage door due to a fire, homeowners insurance will most likely reimburse to have the door replaced. If your garage door opener stops working, the home warranty will kick in to have it repaired or, if need be, a new one put in when repairing doesn’t do the trick. The home warranty has very little to do with things as far as structural coverage for the home or issues with liability and they won’t put a new roof on your house.
With home insurance, you aren’t required by law to have it as you are with car insurance. Although not required by law, if your mortgage is not paid off, your lender will insist that you have sign up for home insurance. It is something that is very beneficial as far as the protection of your home is concerned.
If your home should be destroyed in a fire and you lose all of your belongings, the home insurance carrier is able to reimburse you up to the limits of your policy to rebuild and replace what you lost. Otherwise, you would be stuck taking care of your loss out of pocket. Even instances of minor damage to the structure can run into the hundreds of dollars causing you financial hardship if you don’t take the time to invest in a good homeowner’s policy.
Life Span of Typical Home Appliances
While it is a basic necessity to have homeowner’s insurance, a home warranty is at your discretion based on the age of the systems and appliances within your home. If you’re unsure of the age of or when things were last replaced, it’s a good idea to take out the warranty to be safe. Here is an idea of what the lifespan of a few items run:
- Refrigerator (standard) – 14 years
- Washer – 12 years
- Water heater – Between 8 and 12 years
- Dishwasher – 12 years
- Electric range – 16 years
- Central A.C. – Approximately 15 or 20 years
The plus with having home warranty is that the providers generally have a list of licensed contractors that they use for their work so you know you’ll be getting a reputable, reliable person to take care of your equipment.
Home Warranty and Homeowners Insurance
Having a combination of a home warranty and a homeowners insurance policy will leave you in a secure financial position. Anything that happens within your home whether it be functional or structural, you’ll know that there will be protection to cover repairing or replacing either through the warranty or the insurance. If you’re not sure which one is going to cover what, a simple phone call to your insurance agent will allow them to explain to you what is covered under which plan.
Home insurance and home warranties work similarly to one another in the sense that where there are exclusions, you can generally tailor fit your policy to fit your specific needs and requirements with both. You can get extensions or endorsements with either of them. You want to make sure that you get ‘brand-for-brand’ replacement value with your home warranty same as you want replacement value with your home insurance policy.
Having a home is probably one of the most prized possessions that you will ever own in your life and protecting your assets is critical. The best way that you will be able to do that is to invest in both a home warranty plan and a homeowner’s insurance policy. Purchasing both is going to protect the home plus all of your possessions along with the appliances and the system components that make your home work. They allow you peace of mind.