Home Warranty vs. Home Insurance. What Is the Difference?
Home insurance and home warranty are two coverages that are typically mistaken for each other. Let’s clarify the differences between a home warranty and insurance.
Home insurance is a plan that covers loss and damage caused by external factors such as burglary or natural disasters. Lost goods can be replaced by filing a claim with an insurance company.
Home warranty plans cover the natural wear and tear of home appliances and systems.
For example, if someone breaks into your home, your insurance will cover all losses incurred by the burglary. But if your oven experiences a malfunction, a home warranty will be applied to deal with the issue.
Homeowners have to pay a home warranty deductible every time they repair an appliance or a system. Compared to the warranty policy, insurance plans typically have no deductibles.
Home Warranty Claim Requirements
To submit a successful home warranty claim, it has to fulfill certain requirements. Not all claims are approved by the company. There are a few reasons why home warranty providers might deny the coverage, and here is a list of the most common ones.
- Lack of regular maintenance
- Improper installation of systems and appliances
- The warranty issue filed before the initial waiting period
- Violations to safety code
- Natural damage to the systems and appliances caused by the inappropriate handling or use
- Exceeded home warranty coverage limit
So, what do you do when your home warranty denies your claim? You can file an appeal against the company. Keep in mind that you might need some additional documentation to support your request. In the meantime, you will have to take care of all urgent repairs and replacements yourself. In case the appeal is upheld, the company will reimburse all the expenses.
To avoid the denial of a home warranty claim, make sure you know how long you should wait before you can file a claim. Also, don’t forget to read the fine print on the contract.
Home Warranty Pricing
The most common home warranty plans are either an only-appliance coverage plan, an only-system coverage plan, or a combination of both. The home warranty cost entirely depends on the company. The number of systems and appliances covered determines the monthly fee.
On average, homeowners can expect to pay between $350 – $600 per year. We’ll go into detail on different home warranty prices a little further down in our guide.
Is a Home Warranty Worth It?
When buying a new home, the chances of getting a home warranty with the purchase are pretty high. It acts as reassurance and a kind of safety precaution against unforeseen system and appliance damage. But is a home warranty worth it?
Let’s take a closer look at the pros and cons of the home warranty.
Pros:
- Gives peace of mind and reassurance to the customer
- Takes care of the unpredicted expenses and repairs
- Provides homeowners with company technicians
- Guarantees money saving
- Protects against possible complaints after the house sale
Cons:
- Doesn’t provide a coverage for all the home items
- Doesn’t cover poorly maintained or improperly used systems or appliances
- Different home warranty companies incorporate different sets of terms and conditions with multiple gray areas
Is a home warranty worth it? Yes, it is. Homeowners save a lot of money in the long run when they invest in the home warranty.
