Home Warranty Vs. Homeowners Insurance
Both home warranties and homeowners insurance are designed to provide you with some type of protection for your home and the contents in it. While these are similar types of protection, homeowners insurance covers different items than a home warranty. It is important to understand how each one works so that you will know who to call if you experience breakage, damage or a loss of any kind.
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Home Warranty
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A home warranty is a type of coverage that is offered by a home warranty company against certain systems inside a house. This type of coverage also can provide protection against appliances breaking down. Electrical, plumbing, heating and air systems all may be covered under a home warranty. Many of these are not covered under a traditional homeowners insurance policy. For example, if your pipes get clogged, the service may not be included in your homeowners insurance, but a homeowners warranty may cover it.
Homeowners Insurance
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Homeowners insurance is a different type of coverage that is required in order to get a mortgage. Homeowners insurance covers large losses that occur to the structure of the house or to the contents as a result of damage. For example, if a water line breaks and ruins your flooring, the walls and many of your possessions, the insurance policy would cover the loss. If your house was destroyed by a fire, the insurance policy would pay.
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Deductible
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When you experience a loss, you will have to pay a certain amount of money with both a homeowner's insurance policy and a home warranty. With a home warranty, you will generally have to pay only the cost of the service call for the professional that comes to look at your problem. The amount depends on the company and type of service. With a homeowner's insurance policy, your deductible may be much larger, such as $1000 or $2000.
Warranty Problems
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Homeowners have to be careful with a home warranty because there are problems associated with them, explains the MSN Money webiste. For example, you do not have any control over the contractor who comes to your house when something breaks. These policies are loosely regulated and there may be loopholes in the contract, which can end up costing you more money than you thought. Also, the contractor may repair something, instead of replacing it, to save money.
Marketing Tool
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With new and resale houses, the seller may include a home warranty with the purchase. This can be used as a tool to help sell the property. When buying a new home, getting a home warranty makes sense. You do not know what could go wrong with the house because no one has ever lived there. If there are serious problems, you should be able to find them within a short time while you are still under warranty.
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