When you own a home, you likely want all the protection you can afford. While a policy could feel like more than enough when you’re paying the bills, only when disaster actually strikes does its value hit home––you never want to be left wishing for more. This is where the topics of home insurance and home warranty converge. Let’s get into the details. What Is Home Insurance? Homeowners insurance is an insurance policy that is designed to provide financial protection in the event of a disaster or accident on your property. Your home’s structure and belongings are typically covered in case of a “known peril,” or a specific risk or circumstance that’s listed in the contract. These might include weather events, fires, or floods but can also cover theft and vandalism. Plans will vary in scope, with a basic homeowners policy kicking in only for major issues, and “all-risk” coverage compensating for accidents on any scale that cause damage to your home or property. Think spilling paint or a caustic chemical and ruining your new flooring––a solid homeowners plan will make that right with fewer exclusions. Home insurance also has a built-in level of liability coverage. That can save you if your dog bites a neighbor or your child’s friend gets hurt on the play equipment. And legal recourse is vital if you have certain structures or pets on your property. But no matter the level of coverage you choose, if you own a home, you absolutely need solid homeowners insurance. Generally at least a basic policy is required by mortgage and home equity lenders, but from time to time it’s worth revisiting to be sure you’re adequately protected. Besides your home structure and personal liability, homeowners insurance also covers personal belongings and furnishings and can provide temporary living expenses if you can’t live in your home while damaged portions are repaired. Clearly, there is a lot to be gained and protected on several fronts when you have a homeowners insurance policy. What Is a Home Warranty? The key word here is warranty. Think of those extended warranty plans that come with high-ticket items––they repair or replace that item, under certain circumstances, time frames, and sometimes up to certain price limits. Basically the same general parameters are true here, but in reference to your home’s major systems––HVAC, plumbing, and electrical––and appliances––refrigerator, dishwasher, stove, washer, dryer, and water heater. Your roof and potentially even mold remediation can also be included, depending on the warranty company. Optional add-ons like pool pumps, septic tanks, and well pumps might also be available. Coverage should provide for service, repair, or replacement of your home’s major systems and appliances. You may also have yearly maintenance calls included, during which technicians inspect your appliances and systems and ensure that everything is in good working order or alert you to potential problems. Just be sure to read the contract thoroughly to verify that it includes the specific appliances and systems you have in your home. How Are Homeowners Insurance and Home Warranties Different? Now, you might be thinking, but aren’t appliances and home systems covered by my home insurance, too? Yes, but also, no. As with many things, it depends. For example: Let’s say your dishwasher stops working because it needs a new part––that falls on a warranty service. But if your dishwasher causes an electrical problem and starts a fire, damaging part of your home, that falls within the scope of home insurance. If an event is covered by insurance, then a warranty won’t chip in, and if it falls within the realm of a warranty, then insurance likely doesn’t cover it. A key point of difference between home insurance and home warranties is that one is based on strict inclusions, the other, on exclusions. One is very limited, the other is broad. To put that plainly, home warranties have very specific parameters for coverage, and only certain systems and occurrences are included in coverage. By contrast, home insurance has a broad range of potential scenarios and situations that can be covered. So companies often take an exclusionary approach and list situations or criteria that are not covered. Another difference is that as long as your home insurance bill is paid, it will often renew from year to year, for the life of your time spent in that house. On the other hand home warranties generally run a shorter course and may require you to be more attentive to be sure that you’re up-to-date and covered. Do You Need Both Homeowners Insurance and a Home Warranty? Home warranties are by no means a replacement for home insurance, but they can work wonderfully as complementary coverage options. There are naturally going to be gaps between what insurance will cover and what falls in the realm of homeowner responsibility––things like replacing and maintaining appliances and home systems. These have a lifespan, and you’ll eventually need new items. A home warranty can offset unforeseen financial burdens that might result if one or more appliances or systems fail. Instead of one large upfront payment, you’re paying throughout the year so that when the inevitable happens, you can quickly replace or service the unit that’s gone bad. So a warranty is an extra layer of protection, and it can work very well alongside your homeowners policy. If you weren’t required to have a homeowners policy when you bought your home, we’d recommend starting off with a customized policy that fits your needs. Then evaluate your situation and go from there. If your home systems are aging and will likely need to be replaced soon, then a home warranty plan could be a great option to stave off steep replacement costs. That’s especially true if manufacturer warranties have expired. Another benefit of a home warranty is that you don’t end up wasting time, effort, and money searching for the right pro for the job and verifying that they’re trustworthy. Instead, the warranty company will do all the vetting for you, and assign a technician to your case. Depending on your situation, that alone could be worth it. But the opposite is true as well––if your appliances and home are new and manufacturer warranties are still intact, then it probably isn’t the time to opt for a home warranty. Do what makes sense for you. And for both homeowners policies and home warranties, reading the fine print is crucial. At least for your insurance coverage you have some help––Zinc is always on standby, ready to translate and field your questions. If you’re in the market for a new home and aren’t sure which homeowners policy best fits your needs, get in touch and we’ll do the legwork. We’re partnered with top-notch insurance providers to create a custom homeowners policy that addresses your needs. Reach out today to learn more and ask away!
