Pretty much all homeowners have heard of home insurance, but not all of them know what a home warranty is. Homeowners' insurance and a home warranty are not the same things. This article will cover what a home warranty is, what types of coverages are offered, and will hopefully help a person decide if this type of service is needed in their life.
What is a Home Warranty?
Home insurance covers accidents and disasters, such as a home fire, a flood, or a complete structure loss. A home warranty, on the other hand, covers specific parts and pieces of the home, not the entire home. This type of warranty covers only what's set out in the warranty contract, so be sure to read the small print and see what your warranty covers and what is excluded.
The warranty will also have a service fee or deductible for each incident or repair, just as other types of insurance do. This means that, if the warranty company has to send a repair tech to the home to look at and fix n appliance, the homeowner will have a set fee that they pay for each incident. This fee is usually a lot smaller than a person would pay if they had to cover the entire repair or replacement out of pocket.
What Items Do Home Warranties Cover?
While no two warranties may be the same, there are some typical items that are listed as covered items with home warranty companies. These items are usually:
- Appliances, such as refrigerators, dishwashers, washing machines, dryers, built-in microwaves, ovens, trash compactors, garage door openers, and ice machines.
- Home systems, such as heating systems, air conditioning systems, plumbing systems, electrical systems, the water heater, smoke detectors, ceiling fans, and doorbells.
- Add-on items like well pumps, swimming pool pumps, septic tanks, re-keying services, and more.
What Items do Home Warranties Typically Not Cover?
Home warranties cover specific items that die or break on their own. They don't cover items that were intentionally damaged or broke from negligence. Warranties also don't replace items that are just old.
For example, this type of warranty won't replace a refrigerator just because the owner decides that the one they have is not as cool as the newer ones on the market. If the current fridge dies at no fault of the owner, and the refrigerator is listed as a covered item, the warranty company may pay for the repairs. If it can't be repaired, the homeowner may be given the fair market value of the current fridge—not enough cash to buy a new, top-of-the-line smart fridge.
Other things that aren't covered are cosmetic damages and anything pre-existing. This means that, if the family dog jumps up on the front of the washing machine and scratches it, the warranty company won't pay to buff out the scratch. If, on the other hand, the entire machine stopped working on its own, then that could be covered.
Doesn't Home Insurance Offer the Same Coverage as Home Warranties?
Many people assume their home insurance covers everything a home warranty would cover, but this isn't true. Home insurance may cover someone driving through the garage door by accident, but they won't cover repair costs for a garage door that suddenly stopped working on its own. Home insurance won't replace a washing machine that died and stopped working on its own, but washing machines are usually covered under a home warranty.
Compare the home insurance policy to the coverage of a home warranty and the differences will stand out. It's also a good idea to speak with the insurance company and the warranty company and see which covers what. Home insurance and home warranties are two very different types of coverage.
What's The Timeline on a Home Warranty
Home warranties won't cover any pre-existing conditions, so don't expect a replacement for that basement fridge that died ten years ago. Many warranty companies also have a waiting period in place to help prevent people from signing up for a warranty for something that recently broke. Before signing on the dotted line, ask about the warranty waiting period and how long the coverage will last.
Many times, a year-long policy is standard. This means the homeowner has the warranty contract in place for twelve months from the date they sign and pay. After a year, they can choose to renew the policy and have an additional twelve months of coverage or cancel their policy and do something different. Make sure the length of the warranty is listed in the contract.
Is a Home Warranty a Smart Buy?
A home warranty can be a smart buy for many homeowners. When deciding whether to purchase a home warranty, there are a few questions to ask. If the AC unit goes out and dies completely, is it in the budget to buy a new one? An AC unit can cost thousands of dollars. If the homeowner can't afford to pay the full replacement cost, they should consider purchasing a home warranty.
Keep in mind that not all home warranties are created equal. Look for a warranty that covers as many items and appliances around the house as possible yet is still affordable. Take note of any deductibles, maximums, and exclusions. If the warranty hardly covers any home items and has a huge deductible, it may not be a smart buy. Shop around to make sure the warranty being considered is the best one being offered.
Home Warranties Can Help a Person Sleep at Night
In conclusion, many people decide they need a home warranty. Having a home warranty can help a person sleep at night because they know, if something major breaks down, they don't have to cover a new appliance or a total repair out of their pocket. Warranties come in many price points, and different companies offer different levels of coverage. By shopping around and reading the small print, a person can make an informed decision and find a warranty that covers the exact items they want to be protected.