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Home Warranty is not Home Insurance. Learn the Difference!

It’s possible you have heard about home insurance a lot and you have probably heard about home warranty once or twice. In your mind, you have probably assumed that insurance and warranty are used interchangeably so they are the same thing. You are wrong!

Jumoke bought a washing machine a year and three months ago and she has been using it without any issues. A few months back, her sister encouraged her to subscribe to home warranty but she waved it aside. In her defense, she already had home insurance. Suddenly, the washing machine began to malfunction and stopped working altogether.

Jumoke reached out to the manufacturing company and they let her know that her warranty has expired. It’s still the middle of the month and Jumoke does not have a lot of money so paying someone to repair her washing machine is not even an option. How is she going to survive without her washing machine?

A home warranty is a singular contract that a homeowner has, taking care of repairs and replacement of appliances or systems within a home usually for one year. This ensures that a homeowner would not stress financially should any of their household appliances develop an issue. The average home warranty plan covers a home’s electrical, plumbing, heating and air conditioning systems and appliances.

Home appliances under an umbrella

Home Warranty / Home Insurance – The Difference

A home warranty is created to protect a home’s appliances and systems from deterioration that is caused by wear and tear. Home insurance on the other hand is concerned with the damages that can be brought upon a home due to unforeseen circumstances such as fire outbreak, earthquake, climate-related damages, etc. Home warranty ensures you do not worry about things like a faulty washing machine because all you will need to do is file a complaint and a trusted personnel will be appointed to fix up the faulty appliance. Easy right?

Home warranty mapped out

A homeowner does not need multiple home warranties in order to protect his/her home. A homeowner has the liberty to subscribe to a home warranty plan from the various plans that a home warranty company has to offer based on which is most comfortable and affordable for them. It is important to note that this determines the level of coverage or protection that is given.

Homeowners are usually required to pay a trade call fee. This refers to a small amount of money a homeowner pays in order to have a trusted personnel come to their home to fix an issue. The amount is clearly stated on every contract. It is also important to be thoroughly clear on what the home warranty covers and what it does not, if there are any limits and deductibles.

Homeowners need to understand that not all breakdowns of appliances are taken care of by home warranty. Every plan states what and what is not covered. Every home warranty coverage plan can be customized to meet your needs.

In some situations, homeowners may be lucky enough to get home warranty for free when they newly buy or lease a home and this is because some real estate agents may include it as part of the value-added service they give when they sell or lease a home to a client. Usually, this is only for the period of one year and it only involves basic coverage.

Animated house with warranty stamp on it

Before you pay for a home warranty, ask these questions…

  1. Are there limits for each coverage and are there certain parts of covered appliances that are left out?
  2. Is there a limit on how many service calls?
  3. Do you have to use their own service personnel or do you have the option of choosing a service personnel by yourself?
  4. Is there a waiting period?
  5. What kinds of damage are excluded? Be sure to ask for examples to be cited in order to make sure you fully grasp the length of coverage.

Have you ever subscribed to home warranty? What was your experience like? Share with us in the comments.

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