As a homeowner, it is only natural that you want to protect your home and your belongings from damage. However, when you go to seek protection covers, you may come across home insurances and home warranties, and this leaves you confused. Are they the same, or are they different terms describing the same thing?
It is very easy to confuse the two of them, even though they are different from each other in their coverage. Both are also very important if you own a home. Therefore, it is vital to understand the differences so that you can make better choices regarding your home coverage and get some piece of mind.
What are home warranties?
The first thing to get out of the way – home warranties are not the same as home insurance covers. Home warranties. According to the Home Warranty of America, a home warranty is a one year cover that will cover any repair costs for the major appliances in your home, which include refrigerators, washing machines, dryers, and sometimes swimming pools. It covers home systems as well, mainly plumbing, furnaces, and electrical wiring repair, and some other systems can be covered – like your air conditioning.
When you purchase a protection plan for your household appliances, it is a good way of making sure your house remains protected at all times. All warranty plans like one guard home warranty are different, as each will have their own scope of coverage and predetermined levels of protection.
The basic home warranties tend to cover many appliances within the home, while advanced covers will protect some other appliances, including some that are outside your home but within your compound.
When an item that the warranty covers breaks down due to one reason or another, the company providing the warranty will send a service provider to your home to find out the exact problem. If the damages are minimal, they can be resolved on the initial visit. If the damage is serious, then the home warranty company needs to approve any repairs before they happen.
This process ensures they also cover the repair costs, or replacement if the damage is extensive. Every visit by the provider also accrues charges, known as service fees – and these will vary depending on the terms of the warranty company.
Every warranty contract is unique, as there are certain items you will pay for while others are not covered. The general rule is that home warranties will only cover items that are within the foundation of the home, except in the case of certain exemptions such as swimming pools, septic tanks, and wells.
The good thing with a home warranty is that it enables you to save your money. Repairing household items and systems is such a hassle and can break your bank account because of their high cost, but home warranties will reduce this cost, as the company will cover a fraction of the cost. The only thing you pay for is the service fee, as well as the cost of the warranty – all at a lower cost.
You may not know this, but home warranties increase your home’s value in the market. When you are looking to sell your home, buyers will be attracted because your home has a warranty cover – and the cover is easy to transfer once you get a buyer. It will also give potential buyers confidence, as the chances of surprise repairs are lower.
What is home insurance?
Also referred to as homeowner’s insurance or HOI in the United States, this is a type of property insurance policy covering private homes. It combines a variety of personal insurance protection – including loss of use, losses that occur in your home, losses of the personal possessions of the homeowner, or even certain accidents that can happen within the home or at the hands of the homeowner.
Homeowner insurance covers also give you financial protection against any disasters that may occur. Standard policies will, therefore, ensure your household items, as well as the house, is covered.
Most banks need a home insurance cover before they can give you a mortgage. This cover will cover the cost of repairs from external calamities such as vandalism, wind, lightning strikes, fires, theft, and hail. It will cover the foundation of your home, reduces the liabilities from involvement by third parties, and protects your personal possessions.
Similar to a home warranty cover, you renew a home insurance cover every year, and it is usually more expensive, ranging from $300 to $1000. In the occasion you file a claim for the policy, you will pay a deductible fee and then the policy will take care of the rest.
Similar to home warranty visits, the insurance company sends an insurance adjuster to your home, and note the damaged items on a replacement claim. The insurance company will then examine the claim, and if they approve it, they deduct part of the cost and take care of any repairs using the remaining money. Your yearly policy cost will, therefore, determine the deductible fee you pay.
Is it worth it to have both?
Because they cover different things and aspects of your home, it is good to have both to ensure the best protection for your home.
A home insurance policy will usually cover personal property, the contents and structure of the house, living expenses in case a disaster renders your home inhospitable, falling objects, lightning and other major disasters, liability claims if someone else suffers an injury on your property and sues you – and sometimes they can cover jewelry depending on the plan.
On the other hand, home warranties cover heating and electrical systems, plumbing, household appliances and sometimes air conditioning as well as other house systems.
The home is among your biggest investments, so when you have a home insurance cover in addition to a home warranty, it can give you extra piece of mind and ensure your home is always taken care of.