What is the Difference Between Homeowners Insurance and a Home Warranty Plan?
The main difference is that homeowners insurance generally covers a system or appliance from unpredictable accidents, while a home warranty covers the cost of repair or replacement from normal wear and tear on covered systems or appliances.
When you think about a water pipe bursting or a power line failing, you might assume that your homeowners insurance policy will come to the rescue. But more and more homeowners are finding this to be false.
Though homeowners insurance may cover some of the items damaged from this event, it won’t necessarily cover the repair or replacement of the broken pipe or line. And depending on where that pipe or line lies, your utility might also be off the hook, sticking you with the bill.
This presents some major gaps in protection in homeowners insurance alone. As a result, demand for service contracts and warranties – such as car and home services – has grown immensely.
What are the gaps in homeowners insurance?
Well, first lets look at what it does cover. Homeowners insurance provides compensation for damage, loss, or injury of property or personal belongings due to fire, theft, accidents, or other listed perils.
It is incredibly important to secure a homeowners insurance policy, as it protects against unpredictable accidents. Damages can come with high costs that the homeowner would likely not be able to pay for. And while financial security is on the rise, nearly 25% of Americans don’t have any emergency savings.
What homeowners insurance doesn’t protect against are the more likely costs that come up as your home ages, which are repairs and replacements caused by normal wear and tear.
And that’s where a home warranty can step in to help protect your budget. Home services contracts, or warranties, provide for the repair or replacement of a covered system or appliance that fails due to normal wear and tear, and for some items, inherent defects in the materials or the craftsmanship.
How can a home warranty plan fill these gaps?
Although you may know that line and system failures are likely to come up at some point, they can’t predict when these failures will happen. And an unexpected repair or replacement could be costly. Most home warranty products have a low monthly rate, so many homeowners find that they’re worth the investment. Better safe than sorry!
Protect your budget from those unexpected repairs and replacements. Learn more about how our home warranty plans can fill the gaps in your homeowners insurance coverage to keep your home running smoothly.