What Is the Difference Between the Homeowners Insurance & the Home Warranty? A homeowners insurance policy and a home warranty both provide peace of mind -- an assurance that youll be insulated from financial harm if something bad happens to your home. Where they differ is in the something bad that they protect against. Insurance kicks in when disaster strikes your home. A warranty comes into play when something isnt working properly. Homeowners Insurance Homeowners insurance reimburses you for financial losses suffered when some calamity befalls your home -- such as a fire, a tornado, a burglary, a car crashing through the front wall, or even an airplane crashing through the roof. The typical insurance policy covers both the structure of your home and your personal possessions. Home Warranty A home warranty is essentially a service contract for a home. Home warranties generally cover the homes major appliances and systems, such as heating, cooling and plumbing. The warranty guarantees to a home buyer that if something in their new home thats covered by the warranty isnt in proper working order or breaks down, it will be repaired or replaced. Insurance Issues Any homeowner with a mortgage will be required by the lender to have insurance. When buying a policy, key considerations include what kinds of hazards are covered and which arent, whether the policy will pay for living expenses if a calamity leaves the home unusable and whether the policy will pay the full cost of replacing destroyed property, as opposed to simply reimbursing you for the actual cash value, which may be far less than replacement cost. Warranty Issues New homes often come with a builder warranty, in which the person or company that put up the house promises to take care of problems. A distinguishing feature of builder warranties, as opposed to those sold for used homes, is that they also cover construction materials and workmanship. Warranties for pre-owned homes are typically paid for by the seller, who purchases it from a warranty company. That company then hires local tradespeople and contractors to do the work. Homeowners can find themselves quarreling with their warranty company over whether a faulty item is actually covered by the warranty, and whether items should be repaired (often the warranty companys preferred option) or replaced (the homeowners).
Posted on: Sat, 16 Aug 2014 23:09:40 +0000
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