Home warranty and homeowners insurance

Wondering what is the difference between home warranty and home owner insurance ?

Homeowners insurance covers personal belongings and the entire house in case of burglary or natural disaster such as fire, lightning, tree fall etc., but it does not cover regular maintenance and replacement costs of appliances, and that is where home warranty coverage picks up. Home warranty is a wear and tear insurance against equipments and appliances such as heater, A.C. unit, plumbing and electrical systems.

What does homeowners insurance cover, and when?

Personal property, furniture, clothing, jewelry etc. up to some value
Structure and contents of the home
Your living expenses if the home is not in a living condition due to natural disasters
Appliances are covered as well, but only in the event of natural hazard or special circumstances.
If someone visiting your house gets injured while in your property (slipping on the icy drive way for example) and if you are sued, you are covered by homeowners insurance.
It protects you from a variety of events, including fire, lightning, tree-fall, burglary, storms.

What does home warranty cover, and when?

Basic coverage includes the repair and replacement of major appliances such as Heating/Cooling system, Water Heater, refrigerator, Dishwasher, Range, Oven etc. Plumbing and electrical system are also covered
Optional coverage varies across insurance companies. Some companies cover Clothes Washer, Drier, Microwave oven, and roof maintenance in the basic coverage, but other companies charge extra.
Coverage is generally effective 30 days from the date of buying the policy. But please be aware that claims can be denied be insurance companies for various reasons, including what they “maintenance negligence”. Please read Thigns you must know before buying home warranty article for more details

Finally, homeowner insurance is required by your mortgage company, but home warranty is optional and may not be necessary for all home owners. Please read Do I Need Home Warranty article if you are considering it.

Posted on August 15th 2007. Tags: Home Warranties, Home Warranty, Homeowners Warranty | No Comments »