What's the Difference between a Home Warranty and Homeowner Insurance?
As many of us know, owning a home can require continuous and sometimes expensive repairs – from structural roof damage to home appliance repairs; from sewer line to central air conditioning repairs. Which is why as a homeowner, it’s imperative that you be covered by home repair plans or home warranties and your homeowners insurance.
Within the homeowner marketplace, there are numerous options for coverage and numerous companies vying for your attention (and your hard-earned money.) But how much do you really know about the options being marketed to you?
- Do you know the difference between home warranties or home repair plans and homeowners insurance?
- Does your homeowners insurance policy cover buried sewer line repairs or home heating repairs?
- Does a home warranty give you protection against electrical wiring system repairs or water heater breakdowns?
Homeownership responsibility can be complicated, so please read on so you can better understand the differences.
Homeowners Insurance Explained
Homeowners insurance typically covers damage that is deemed accidental and occurs to your home and belongings due to theft, storms, fires, and in some cases, natural disasters. In general, there are four primary areas that are typically covered: 1) the interior of your home, 2) the exterior of your home, 3) personal property in case of theft, loss or damage, and 4) general liability that can arise when a person is injured while on your property. It’s also important to point out that basic homeowners insurance typically does not cover damages due to normal wear and tear.
A homeowner insurance policy is usually mandatory in connection with a mortgage -- banks typically require one. Most insurance policies are renewed yearly and offer a deductible -- which is what you are asked to pay when (and if) a covered claim is made. It’s also good to know that most home insurance companies use credit-based insurance scores to set premiums and eligibility for coverage. Meaning, the better your credit score, the lower your premium.
Home Warranties and Home Repair Plans Explained
Home warranties or home repair plans are a type of service contract that can cover the repair and/or replacement costs associated with damages due to normal wear and tear. For example, home appliance repairs, major systems (such as heating and cooling), and potentially other components of a home. A home warranty or home repair plan may also cover plumbing or electrical work needed from normal usage. These warranties or plans are not mandatory and are offered as optional to the homeowner.
Coverages vary significantly from company to company and do not cover all home repairs. Typically, the damages covered by a home warranty or a home repair plan are not covered by basic homeowners insurance. Which is why some homeowners opt to buy this type of coverage and some companies suggest that you keep good maintenance records. The reason being if you can’t show you’ve taken care of items covered by a home warranty, some companies might refuse to repair things if they break.
Home repair plans can also cover maintenance, unexpected breakdowns, and replacements for major covered systems such as: heating and A/C repair, plumbing, electricity repairs, sewer line repairs, furnace, boiler, water heater, and even certain household appliances (when they are damaged by normal wear and tear). This can be valuable protection that many homeowners choose to have in order to have peace of mind knowing they are covered.
Finally, an emergency home repair service plan can potentially help you save money. It can also help alleviate the stress of trying to manage the daunting task of having repairs completed in a timely and efficient manner.
When you are looking for a home warranty or home repair plan, be sure to keep this top-of-mind:
- Look for an affordable plan with no deductible.
- Choose a company that employs licensed, vetted plumbers, electricians, heating and cooling technicians.
- Check to see if parts and labor are guaranteed for one year.
- Look for companies that offer a 24/7 emergency hotline.
- Search for BBB (Better Business Bureau) accredited companies.
It’s a fact of life, things break. It’s unavoidable. Having the peace of mind that comes with homeowners insurance policies and home warranties or home repair plans can make it easier to deal with life’s unexpected home emergencies.
See how TotalHome Warranty from HomeServe can help with the costs of covered repairs.