Imagine that brand new cooker, fridge or blender you purchased last year and immediately the manufacturer’s warranty expires it gets spoilt or dies on you, that’s a terrible experience and it could cost you quite a hefty amount however if you have home insurance it will save you a whole lot.
What is a home warranty?
A home warranty is an annual service contract that covers the repair or replacement of important appliances and systems components that break down over time, for many standard home warranty plans, this may include coverage of all the parts and components of your home’s electrical, plumbing, heating and air conditioning systems as well as many other home appliances. You can also customize your plan and add the basic items in your home, you can add coverage for items such as a well pump, a stand-alone freezer or even a pool or spa.
What’s the difference between home warranty and insurance?
Home warranties are designed to protect your home’s appliances and systems from breakdowns caused by normal wear and tear. Homeowners insurance pays for damages and loss caused by unexpected events such as fire and weather damage, but it won’t help if your washing machine breaks down. Home insurance will help homeowners to pay for structural damage and loss of personal property from emergencies like theft or fire, while a home warranty covers repairs and replacements of a home’s systems and appliances when they fail from old age.
How does a home warranty work?
The homeowner calls the home warranty company if a home system or appliance breaks or stops working. The home warranty company calls a provider with which it has a business arrangement, the home warranty company will pay to replace and install the appliance if it can’t be repaired and the homeowner pays a small trade service fee for the visit.
Some plans provide for specific types of coverage, but most operate in a similar manner.
Advantages and Disadvantages of Home Warranty.
The main benefit of a home warranty is convenience, especially if you own a home that is not very new. When you first move into your new home, you most likely won’t have a preferred a plumber, technician, and appliance repair specialist. If anything needs repair, you’ll simply call the home warranty company and they will dispatch a contractor of their choice with experience completing similar types of repairs. Another benefit is that a home warranty could save you money. If you end up needing a lot of repairs that exceed how much you pay for the home warranty, you’ll definitely save money.
However everything has a disadvantage for example you’ll have to pay for the home warranty even on years when you don’t need any home repairs. If you end up only needing a very small repair, you may have been better off just paying for the repair out of pocket. It can be difficult to foresee what kind of home repairs you’ll end up needing.