Home Warranty Coverage Vs. home insurance coverage
When everything is working as expected, a home can offer a place for peace and relaxation. But owning a home can also require ongoing and expensive repairs, from fixing a broken appliance to replacing a damaged roof. Depending on what needs to be repaired or replaced, and why, a home insurance policy or home warranty can help provide protection.
While home warranties and homeowners insurance policies can help cover your home, they don’t offer the same types of protection. Here’s a look at some of the differences.
What does a home warranty cover?
A home warranty can help cover the repair or replacement of a broken appliance. A home warranty may also cover what the Federal Trade Commission (FTC) calls “limited labor and materials” coverage for specific house parts in a new home. This Old House notes that a home warranty can also cover plumbing or electrical work.
What is excluded from home warranty coverage? According to the FTC, home warranties may not include components “covered by a manufacturer’s warranty.” If your new furnace breaks down, then you probably have to discuss a repair with your furnace system manufacturer.
A home warranty is not a blank check for repairs or replacements. According to the FTC, a home warranty may also have rules regarding how homeowners can make a claim, and could also outline how an item, such as a furnace, will be repaired or replaced. Some warranties may specify which repair companies can complete a repair.
While a home warranty can be a worthwhile purchase for a homeowner, Michigan State University Extension notes that “home warranty coverage is never required.”
What does home insurance cover?
While a home warranty can provide coverage for an appliance that has stopped working, what if someone steals your belongings or your home is damaged by fire?
A typical homeowners insurance policy can help pay to repair your home or replace your personal property after a covered event (also known as a crime) such as theft or fire. However, homeowners insurance will generally not provide protection if, for example, your air conditioner or other appliance breaks down or is defective.
Homeowners insurance typically also comes with liability coverage , which can help pay for legal fees or medical bills if you’re found liable after a visitor is injured in your home.
It is important to note that coverage limits will always apply. Your insurance provider can help you determine if you have enough protection in case you experience a loss.
A home warranty and home insurance policy offer different types of coverage that can give you peace of mind when considering certain scenarios.