Unlike homeowner’s insurance, which only protects your home against major disasters, home warranty insurance covers repairs and replacements of appliances and home systems due to normal wear and tear. The main stipulation is that everything must be in good condition when you enter into the home warranty in order for the cost to be covered.
For example, if your oven suddenly quits working due to age, home warranty insurance can cover the cost of replacement or repair as long as it was working properly when the warranty began. You can’t, however, enter a home warranty after the oven breaks and expect it to be covered by insurance.
If I Have Homeowner’s Insurance, Do I Need Home Warranty Insurance?
These two insurances protect different areas of the home but can work together to make sure your home is fully covered.
Homeowner’s insurance will cover the cost of repair caused by natural disasters, such as storms or fires, as well as provide liability insurance if someone gets injured at your home. Homeowner’s insurance is usually mandatory.
Home warranty insurance protects against normal wear and tear on appliances and home systems, such as heating and cooling. It is not required but is often a good idea.
To explain the difference between homeowner’s insurance and home warranty insurance, let’s use the oven example again. If the oven quits working due to normal wear and tear, the home warranty insurance will cover it’s replacement. If the oven catches fire, homeowner’s insurance will cover the cost of repair to your kitchen.
When is Home Warranty Insurance Recommended?
Home warranty insurance provides buyers and sellers of new homes peace of mind. A home warranty contract generally lasts for one year, which protects the buyer if an appliance fails soon after purchase. From a seller’s perspective, offering home warranty insurance is often a good way to attract buyers.
However, any home is eligible for a home warranty, regardless of how long you have lived there.
How Does Home Warranty Insurance Work?
If you notice that an appliance or home system isn’t working properly, call your home warranty provider. They will set up an appointment with a technician to confirm that the issue is due to typical wear and tear and will guide you in the best steps to either repair or replace the item. There’s usually a service fee for the appointment but all other costs of repair and replacement are covered by your warranty.