Buying a Home Warranty in Addition to Your Homeowners Insurance

Most new homeowners know they will need a homeowners insurance policy to protect their home; but many are aware of the benefits of having a home warranty plan as well. You can use a home warranty as an additional coverage to protect yourself in the event that something relatively minor goes wrong inside of your new home.

Home Warranties Are Not a Replacement for Homeowners Insurance

It is very important to remember that the home warranty is not in any way a replacement for a homeowners insurance policy. It will only cover minor repairs to the appliances and systems that have been installed in your home.

How a Home Warranty Works

A home warranty is essentially a service contract that covers certain appliances and systems in your house that would not normally be covered by your standard homeowners insurance policy. The warranty will pay for either the repair or replacement of an appliance or installed system that malfunctions after you purchase your home.

Sometimes, the real estate agent that sells the house to you will cover the cost of a one-year home warranty to give you peace of mind. In other cases, the seller will throw it in as an incentive. It is seen as a valuable resource for the first time home buyer.

The home warranty gives the buyer a sense of security in their purchase, especially when a home inspection has not been performed before closing. Sometimes the little things that go wrong in a home are what cause buyers to regret a home purchase.

What a Home Warranty Covers

Let's be clear-this home warranty will not cover you for major repairs to your home, such as a roofing issue, a natural disaster that knocks out a wall, or any other structural problem; that is the purpose of homeowners insurance. A home warranty is solely for the repair of appliances and certain systems that have been installed in your home.

Talk with your home warranty provider to see if they require that any appliance or other item protected under a home warranty policy must be properly maintained/serviced on a regular basis before the home warranty company will extend coverage. This will ensure you have no surprises when it's time to make a claim.

Submitting a Claim

You've gone to closing, moved into your new home, and positioned all of your furniture just right. It's a little chilly in the house, so you go down to the basement to turn on your furnace.and all that you hear is the click of switch as you repeatedly try to get it working.

This is the time to call your home warranty service. They will schedule an appointment for a provider (which they will recommend) to come out and evaluate the problem. Like filing a homeowners insurance claim, you will have to pay a deductible ranging anywhere from $50-100 depending on the plan. Once the problem is diagnosed, the provider will usually call the home warranty company directly from your home, give them information about the problem, and get approved to perform the repairs right there and then.

While you still need to have a homeowners insurance policy in place to protect yourself in the event of major issues, a home warranty is to help protect you from minor issues with your new home.