What is the Difference between a Homeowners Insurance Policy and a Home Warranty?
Homeowners insurance and home warranties are both designed to help you in the event that you experience a loss or damage to your home and/or your belongings.
A homeowners insurance policy covers many things in the event of a disaster including: the structure of your home, your personal belongings, and other structures on your property in case of fire, theft, wind storm, lightning, falling of a tree, vandalism and many other damages. Homeowners Insurance also protects against a claim or lawsuit that result in bodily injury or property damage to others caused by an accident on your property or by your personal activities anywhere.
A home warranty is an annual service contract which lasts one year, not a policy. It usually does not carry a deductible, but a service charge every time a service professional comes to your home. The cost of a home warranty is usually $250-$600 per year, and the cost of the service call will run between $25-$75 per visit and per item. It is a form of coverage that you can use to supplement your homeowners insurance policy and will protect you from the cost of repairs that your homeowner’s policy doesn’t cover; it can pick up where your homeowner’s insurance leaves off. There may even be a possible overlap in coverage between homeowners insurance and home warranty. Check with your insurance agent and home warranty representative regarding the details of each of the coverages.
A typical home warranty covers things such as: air conditioning, heating, plumbing, major appliances, and things that a standard home insurance policy would not cover For example, if your washing machine leaks and water damages the floor, your homeowners insurance policy may cover the damage to the floor, but not repair or replace the washing machine, your home warranty, would cover the repair or replacement of it. Another example is if your water heater exploded and caused damage to the walls of your home, your homeowner’s insurance would cover the cost of fixing the wall, while the home warranty would replace or repair the water heater.
Remember that home warranties are not substitutes for a homeowners’ insurance policy and that each company will not offer you the identical coverage. Each homeowner insurance policy and home warranty is vastly different. Specific disasters and/or exclusions will vary on each individual homeowners insurance policy. If you have any questions about your policy, contact your insurance agent or home warranty representative.