Your home is your most valuable asset, but without the right protection, it can quickly become a burden. Most homeowners assume their insurance protects them from all sudden and unforeseen expenses. However, an insurance policy does not provide blanket coverage for every accident or breakdown, such as a malfunctioning air conditioner or furnace.
The cost of diagnosing, repairing, or replacing these systems can add up quickly. A seemingly minor problem can wind up costing thousands of dollars in parts and labor. Unfortunately, because many Americans don’t understand the difference between a home warranty vs. home insurance, most homeowners are not protected from these types of expenses. As a result, many wind up paying for major repairs out-of-pocket when they don’t have to.
Home Warranty vs. Home Insurance
The main difference between a home warranty vs. home insurance is that home insurance protects you from things that might happen while a home warranty protects you from things that will happen.
Home insurance provides coverage from disaster, fire, vandalism, and burglary ‒ what the industry refers to as perils. Floods and earthquakes are considered acts of God and are typically covered by separate policies. In the event you become the victim of such an incident, your policy will pay for your:
- Home Structure. If your house is damaged, your insurance will help you rebuild.
- Personal Possessions. Your insurance will replace any clothes, furniture, electronic devices, or appliances that were lost in the disaster.
- Liability. If someone is injured on your property, you could be held legally responsible for their medical bills. However, if a lawsuit is filed, your insurance will cover any damages you’re required to pay.
- Living Expenses. After a disaster, it’s often unsafe for you to return home until work crews have had a chance to repair or rebuild. When this happens, your insurance company will pay for temporary shelter (e.g. a hotel) until your house is livable again.
However, home insurance won’t pay for accidents caused by wear and tear. If your electrical system goes out because of old, dilapidated circuitry, you’re liable for the costs. And, as every homeowner knows, nothing lasts forever. Repairs are necessary at some point. And what’s more, they’re rarely cheap.
Benefits of a Home Warranty
All appliances have an operational lifespan. It might be ten years. It might be thirty, but at some point, they will wear out. That’s why a home warranty is so valuable. It ensures you’re covered when something breaks.
Generally, there are three types of home warranties:
- Appliance Plans. Protect your home appliances. Any machine that assists in household chores, such as your oven, refrigerator, washing machine, etc.
- System Plans. Protect your essential home systems (furnace, air conditioning, electrical wiring, etc.). The basic hardware that makes your house livable.
- Combination Plans. Protect both your appliances and home systems. They may protect all of them or only some, based on the coverage you choose.
Like home insurance, home warranties come with a monthly payment, though you’ll pay less than you do for insurance. They also have deductibles. Plans with low deductibles usually have higher monthly fees and vice versa.
However, home warranties have an additional service fee you pay whenever a technician visits your home. These fees vary depending on your plan and are only paid once.
Home warranties have three main benefits. First, they provide discounted repair services. For a small annual and one-time fee, you can repair or replace a system that might cost thousands. (For example, replacing a furnace can set you back $6,500.) However, they only protect against wear and tear. Malfunctions caused by faulty parts, poor maintenance, or improper installation generally aren’t covered.
Second, they save you the headache of finding a reliable contractor. Home warranty companies vet local repairmen, to ensure they have the skills to restore your home quickly and competently.
Finally, home warranties can be transferred to new owners. If you’re thinking of selling your home, this can be a huge advantage. Buyers can rest assured, knowing they won’t have to pay for major repairs immediately after they move in.
Do You Need a Home Warranty?
Legally, homeowners do not need to purchase home insurance or a home warranty. However, mortgage companies normally won’t issue a loan without proof of insurance. As a result, every buyer needs to purchase it to finance their home.
By contrast, no one needs to purchase a home warranty. It’s not a requirement of mortgage companies or HOAs (Homeowners’ Associations). However, they’re a prudent investment for anyone purchasing a home with an older HVAC system or homeowners who can’t afford costly home repairs.
Protecting Your Home with Homesential
A house isn’t just a place to live. It’s an investment. In order to protect its integrity, homeowners need a home warranty as well as home insurance. They work together to shield you from high repair costs to both the structure and its systems.
Purchasing a warranty through Homesential covers the most important equipment in your home. Furnaces, air conditioners, and electrical circuitry keep your house safe and functional throughout the year. Make sure they’re working properly with our bundled protection plans. Contact us today and take the headache out of home repair.