A home warranty covers the service, repair, or replacement of your home's main systems and appliances for a typical one-year period. This type of guarantee is issued by a home warranty company and is different from home insurance, which provides financial protection in the event of a disaster or accident. There are other parts of the home that are covered by the home warranty, but each specific plan is a little different. The fundamental difference between warranty and insurance is that insurance covers unexpected events that cause damage, while guarantees cover expected events, such as aging and the definitive breakdown of appliances and systems.
Home warranties help cover costs when an important home appliance or system breaks down. Home insurance, on the other hand, covers your home and personal belongings against theft and other hazards, and also provides personal liability coverage. If you have a mortgage, your lender may require a home insurance policy. Of course, even if it's not mandatory, it makes financial sense to protect your investment with a good insurance policy.
Some home guarantees cover all systems, while others only cover specific items. If you want coverage for things like septic tanks and sump pumps, or more specialized appliances (such as a garbage compactor or LG Styler), you probably need additional coverage or a more substantial plan. To help you decide if you should get a home warranty along with home insurance, check out this chart to see how you can get the coverage you need. In other words, a good home guarantee and a good home insurance policy complement each other and, together, provide strong protection for your investment.
Every homeowner must understand the differences between home guarantees and home insurance for many reasons. Home warranty companies generally have different plans available that provide coverage for all or some of these items. Let's see what a home guarantee is, what is home insurance and what are the differences between the two. When something is damaged by a disaster that is covered by the home insurance policy, the homeowner will call their home insurance company to file a claim.
Then, as long as the damage is covered by the homeowners insurance policy, the home insurance company will send a check to homeowners. Home guarantees look like a similar product, after all, almost everyone has been offered an extended warranty for an appliance or a car, but the protection provided by a home warranty has a different scope than the protection offered by a homeowners insurance policy. If you have a homeowners policy and a home guarantee, the answer is both your home warranty provider and your home insurance provider. Home insurance policies don't cover a home's actual systems and appliances if they break down, so if your HVAC system needed to be replaced because it had aged and worn out, your home insurance policy wouldn't pay to replace it.
Homeowners need both home insurance and a home guarantee to protect the structure and home systems and appliances. For example, if you're buying a home with a mortgage, you'll be asked to take out home insurance. Before buying a home warranty or home insurance policy, read the fine print to learn exactly what it will cover and what it won't cover. Homeowners insurance has nothing to do with the people you bought your home from, and you can't use it to cover the cost of a dishwasher that randomly decides to stop working (as you could with your home warranty).
Another difference between a home guarantee and home insurance is that homeowners insurance is generally required (if they have a mortgage on their home), while a home guarantee plan is not required. .