When searching for the best financial protection for a home and its belongings, many homeowners view the choice as a home warranty vs home insurance. However, this is a mistake as home insurance and home warranties are two insurance coverage policies that cover different issues. As well, both contracts are important for reducing the risk of financial loss, and they even protect against turning homeownership into an overwhelming financial burden.
Home Insurance is required by your mortgage company or home equity lender before they will finance a mortgage. Homeowners insurance provides financial coverage in the event of a natural disaster or accident, which is often listed as a ‘known peril’ in the insurance contract. Homeowners insurance policies offer broad coverage with specific exclusions. It basically financially covers a home’s structure and belongings in case of such events as:
- Theft and vandalism
- Tornadoes, hurricanes or earthquakes
- Floods, fires, windstorms, lightning, hail or failing objects like a tree
- Personal property
- Liability claims from third-party injuries that take place on your property
- Living expenses if your home is deemed uninhabitable
A Home Warranty Does Not Replace Home Insurance
Long term use of home appliances, electronics, and systems can be a risk for normal wear and tear causing unexpected mechanical break downs. A home warranty covers service, repair, or replacement of your home’s major systems and appliances. A home warranty company issues this type of agreement. A home service agreement provides protection against unexpected repair costs for your appliances, electronics, and systems that would not normally be covered under a manufacturer’s warranty or homeowner’s insurance.
Basically, a home warranty complements home insurance by covering damages that home insurance policies do not cover. Home warranties cover items, parts, and specific events that are listed in the contract. This includes:
- Central air conditioning and home heating
- Interior electrical system
- Plumbing system
- Water heater
- Range/Oven/Cooktop
- Refrigerator
- Dishwasher
- Washer and Dryer
- Garage door opener
- Ceiling fans
- Electronics
Home Warranties or Home Service Agreements, are optional and cover the cost of repairs or replacements for a number of home systems and appliances. The warranty guarantees to the homeowner that if something that is covered by the home warranty plan stops working or breaks down ( such as through normal wear and tear) then it will be repaired or replaced by the warranty company, subject to the terms and conditions of the contract. A home warranty is usually transferable and can be passed along from one owner to another.
A home warranty is not required by a mortgage company or home equity lender. However, a home service agreement plan can cover certain exclusion gaps in a home insurance policy to reduce financial risk. So, it should not be an either/or decision when choosing home warranty versus home insurance. A home warranty is part of a comprehensive home protection plan. For instance, ARWHome plans offer coverage for current, aging home systems and appliances, regardless of make, brand, age or model in order to protect against possible future repair costs. Homeowners have the ability to pick and choose which home appliances and systems they want their plan to cover.
If you have home insurance, buying a home warranty is an extra layer of financial protection. At ARWHome,we are a one-stop shop providing coverage not only for major home appliances and systems, but also for new and existing home and computing entertainment products. Homeowners have the ability to pick and choose which home appliances and systems they want their plan to cover. There are no long-term contracts so you may hold a policy for as little or for as long as you would like. Homeowners have peace of mind knowing they have a home warranty to complement their homeowners insurance.
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