When buying a home, so many new terms are thrown at you and sometimes your realtor and lender think you know what the heck they're talking about. Some terms are interchangeable and it can get super confusing to keep them straight.
So, what is the difference between homeowners insurance and a home warranty and do you really need them?
Owning a home is the one of the greatest investments you'll make in your life. Protecting your assets is not just smart—it's essential. The best way to do this is to have both a homeowner’s insurance policy and a home warranty. Purchasing both will cover your home, belongings, appliances and system components in case they need replacement or repair. But understanding the differences of the two products and why you need them can be tricky.
WHAT DOES A HOME WARRANTY COVER?
A home warranty may help cover the repair or replacement of a broken appliance. A home warranty may also cover what the Federal Trade Commission (FTC) calls "limited coverage of workmanship and materials" for specific parts of the house in a new home. A home warranty may also cover plumbing or electrical work.
What's excluded from home warranty coverage? According to the FTC, home warranties may not include components "covered under a manufacturer's warranty." If your new furnace breaks down, then you would likely have to discuss a repair with the manufacturer of your furnace system.
A home warranty isn't 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 might also delineate how an item, such as a furnace, will be repaired or replaced. Some warranties might specify which repair companies may complete a repair.
While a home warranty may be a worthwhile purchase for a homeowner, home warranty coverage is "never required."
WHAT DOES HOMEOWNERS INSURANCE COVER?
While a home warranty may provide coverage for an appliance that's stopped working, what happens if someone steals your belongings or your home is damaged by fire?
A typical homeowners insurance policy may help pay to repair your home or replace your personal property after a covered event (also known as a peril) such as theft or fire. However, homeowners insurance typically will not provide protection if, for instance, your air conditioner or other appliance breaks down or is defective.
Homeowners insurance typically also comes with liability coverage, which may help pay legal fees or medical bills if you're found responsible after a visitor is injured at your home.
It's important to note that coverage limits will always apply. A local insurance agent can help you determine whether you have enough protection in place should you experience a loss.
A home warranty and a homeowners insurance policy offer different types of coverage that may give you peace of mind as you consider certain scenarios. To learn what your homeowners insurance policy may help protect — and what it may not — talk with your local insurance agent.
Reach out if we can assist you!
Aundrea Beach-Greco
Mortgage Advisor, CMPS
NMLS 333739
(702) 326-7866
info@aundreabeach.com
www.AundreaBeach.com
CMG Financial - NMLS 1820
8337 W. Sunset Road, Suite 300
Las Vegas, NV 89113
Office (702) 777-1306
