A home warranty, similar to home insurance, is a vital part of protecting yourself and your home. Homeowners who are covered by both a home warranty and insurance policy, are well prepared for any unexpected circumstances.
Home construction professional Dean Buescher from New Braunfels, Texas is an independent consultant and Manager of Vintage Estate Homes. He takes the time to provide an overview of home insurance policies and warranty coverage, and why you need both.
Home Insurance — Coverage for what MIGHT happen.
Home insurance is a requirement for most home owners, and your lender will likely insist on it before they extend financing for your home.
The standard home insurance policy will apply to four key areas of a home: the interior, the exterior, personal property in the event of theft, damage or loss, and liability in the event that someone is hurt on your property. Home insurance policies are renewed on an annual basis and cost in the ballpark of $300 to $1000 per year.
Home Warranty — Dean Buescher’s suggests getting coverage for what WILL happen
A home warranty stipulates who maintains responsibility for repairs or replacements of home systems or appliances that stop working due to age, wear and tear or a combination of the two. For example, HVAC, kitchen appliances, electrical / plumbing, etc. may all be covered under your home warranty policy.
Most home warranties cover an extensive list of home systems and appliances. Different from homes insurance, it is not mandatory to obtain a home warranty and they are typically only purchased as 12-month terms. There is no deductible for service, but rather a small service fee. Typically, the cost does not vary with a property’s age, nor does the square footage often affect the price.
Home Warranty and Home Insurance; You Really Need Both
Think of home insurance and a home warranty as two separate avenues of coverage that work simultaneously to provide the best protection possible. For example, if a water pipe inside your home is leaking, depending on the source, the repair may be covered by only one of the policies mentioned. The home warranty may provide coverage from the pipe itself, but not the corresponding damage caused by the leak. Other the other hand, your home insurance policy could cover the damage caused by the leak, but not the repair or replacement of the leaky pipe.
Ultimately, a home warranty is a contract between a homeowner and a home warranty provider that provides discounted repair services for a home’s major components.
According to Dean Buescher, home insurance exists to protect you from the things the may happen, while home warranties exist to protect you from the things that will happen. With both, homeowners can rest assured that they have the proper coverage.