There is a lot of confusion amongst homeowners between the differences of a home warranty and homeowners insurance. Unfortunately this confusion has lead to many people footing the bill for things in the home which they believed were covered under their homeowners insurance policy following a problem which they have in the home. Companies like First American Home Warranty however offer a very different option from insurance, and it is vital that homeowners understand the difference between these two policies, and understand why they may need both.
What is Home Insurance?
Homeowners insurance is a policy which covers the structure of the property and a the personal possessions of the homeowner and those living within the property. This protection is offered in cases of fire, theft, floods and any adverse weather such as snow, hail, wind, and even other issues like falling trees. In some cases these policies can also offer cover of personal possessions outside the home as well.
What is Home Warranty?
Conversely home warranty is a policy which is designed to cover the internal systems and the appliances within the home. If the homeowner has an issue with a system inside the home or an appliance, instead of calling up the repair company, they will instead call upon their home warranty to ensure that such an issue is fixed, by a contractor chosen by the home warranty company
The Key Differences
To understand the key differences between these types of policy it is best that we look at some examples of issues which a homeowner may face, and see how both policies will be able to help. Let’s assume that there are multiple pipe leaks after a cold snap, resulting in flooding to various areas of the home, causing damage to flooring, gadgets, furniture and potentially electrics too. In this kind of a situation the homeowners insurance policy will be able to cover the costs of the replacement of flooring, furniture and those gadgets, but it will not support in the repairs and review of the plumbing system which caused the problems. A home warranty will not help with the replacement of these items but it will address the electrical and plumbing systems in the home, ensuring that they are fully reviewed and completely repaired.
Which Do I Need?
In all honesty homes need both home warranty and home insurance, generally speaking home insurance is obligatory, especially with those looking for a mortgage, with home warranty plans being considered as an ‘optional extra’ for homeowners. To ensure that your property, your possessions and the systems within it are fully covered against any potential problems which may affect the home, it is vital that a homeowner has both policies. Before buying compare prices, check out reviews from previous buyers, focus on customer service, plan type and read what the experts are saying.
It is important to anticipate any potential issues in the home such as natural disasters, fires (take California as an example!) floods, leaks and other perils caused by weather or by those in the home. Issues do happen and when they do you’ll be pleased that you made the decision to cover yourself.