Difference between Home warranty and homeowners insurance

 
If you are out to purchase a home, an essential aspect you must include in your expenses is a homeowner’s insurance policy. You might ask why! The answer is very simple. Even though you surely don’t expect to see your house on fire or being thrashed by the Katrina, such an incident just might happen. Since these “just in case” calamities might put your valuable asset (home) at risk, you must be prepared to protect yourself from every such perils. To provide adequate protection from these potential risks homeowners insurance is just the perfect solution at hand. While you enquire about homeowners insurance another possible phrase that crops up on the same front is home warranty. A homeowner’s insurance and a home warranty are somewhat similar on several fronts with only a few recognizable differences in view.

 
Now, before you take a step further to purchase the insurance, it is rather necessary to get a clear idea--what it is all about? A homeowner’s insurance offers cover for personal belongings as well as your entire house in case of fire, theft, wind storm, lightning, vandalism, falling of tree and many other damages. However, such insurance does not offer you cover for maintenance and regular repair cost. For maintenance and repair works of your home and home accessories such as the plumbing system, electrical wirings, floorings and tiles you have home warranty at your disposal. Home warranty offers cover on the cost of the regular wear and tear incurred by the homeowner such as A.C. unit, heater, electrical systems and plumbing.

Inevitably, there can be a possible overlap in coverage between homeowners insurance and home warranty. Thus, you must have detailed knowledge about the intricacies of the individual covers and their potential point of difference. In case of homeowners insurance the coverage offers insurance for personal property (as mentioned earlier) e.g. clothing, furniture, jewelry, etc however, only up to a certain value. You can also get cover on the contents and structure of the house. The insurance is claimed in times of disasters or calamities while you are still living in the house and it faces damages due to any calamity. Notably, the appliances present in your house can possibly be covered only in times of natural disasters such as storm or flood or in certain special circumstances. At times a neighbor stepping into your house might fall down and get hurt, and he decides to sue you. What is your possible rescue in such circumstances? Now, here’s some good news, your home insurance can offer your cover if your neighbor intends to sue you.

On the other hand, a home warranty is not just like any other insurance policy; rather it resembles a service contract, which is sold to cover certain systems in the house. Your home warranty coverage can include systems such as plumbing, heating and other significant electrical appliances. The basic policy engulfs the upkeep or repair and replenishment of some important appliances including dishwasher, heating/cooling system, oven, water heater, refrigerator etc. You would be hard pressed to find a company which offers you the best coverage at the minimum possible price. One simple fact to keep in mind is that every company essentially will not offer you the identical clauses. Just as some companies might cover microwave oven, drier and washing machine, others might not cover these items. Likewise, a company might include roof maintenance in the basic coverage.

 
The very next question that will strike you is do I need an insurance or warranty? Well, yes you might need a home warranty but you can’t also go without a homeowners’ insurance policy either since your home is the most valuable possession you have. In fact often it turns out that a policy is what you can have for the peace of mind, especially in the event of any disaster when your home or the possessions get damaged. The best part of a homeowner’s insurance is the liability coverage, where your policy can protect you from a suit filed by your neighbor when the latter gets injured in your home premises.

 
Besides, it is also true that you might view a home warranty as a luxury which is often not true. Certain necessary repair costs might just show up when finances are tight and you are not in a position to postpone the repair work, such as a damaged plumbing system or water seeping out of the roof. Thus, a home warranty in this case (make sure you have paid your entire premium) will only cost you a service call.