Founding Attorney
The distinction between home insurance and home warranty policies comes down to a few main elements regarding their specific coverage.
In a nutshell, home insurance is designed to cover damages to a home’s structure and the personal property contained therein. Home warranties are concerned with damage to a home’s infrastructure and internal components.
In New York, homeowner’s insurance is often a requirement by mortgage lenders that helps protect homes against significant losses. Home warranties, on the other hand, are an optional form of protection that many homeowners may purchase for the sake of their peace of mind.
If you own a house, you may benefit from learning about the differences between homeowners insurance and home warranty policies.
Homeowners Insurance Explained
While home insurance is not a legal requirement, it’s a condition nearly all mortgage lenders enforce. While these policies vary from home to home, homeowners insurance typically covers the structural integrity of your home and the personal items within it.
Home insurance is designed to protect you against losses in catastrophic events like fires and break-ins. Additionally, many home insurance policies also include a clause that covers property damages and personal injury liability, should these occur on your property.
Damages You Can Recover From Homeowners Insurance
Because home insurance policies are designed to cover significant losses, the threshold for filing a claim is often strict. Some of the most common damages you can recover from your homeowners insurance include:
- Cost of rebuilding
- Replacing damaged or stolen items
- Medical bills
- Living expenses
Your policy will outline the precise situations that activate coverage, such as inclement weather.
What Homeowners Insurance Doesn’t Cover
Sadly, homeowners insurance doesn’t always cover every catastrophic event that may result in damage to your home. This is usually the case with floods and earthquakes, which are only covered by additional disaster policies.
Additionally, home insurance policies are subject to coverage limits. This means your insurer may only pay up to a specific amount of damages. Any expenses beyond the limit are your responsibility to pay out-of-pocket.
Home Warranty Explained
Unlike homeowners insurance, a home warranty is optional protection you can purchase to cover the repair costs of your home’s appliances and overall infrastructure.
A home warranty policy can help offset costs when systems fail or appliances break down. Generally, home warranty policies will cover the following:
- HVAC system
- Electrical
- Plumbing
- Water heater
- Ductwork
- Dishwasher
- Refrigerator
- Washer/dryer
- Stove
Home warranties are attractive to homeowners who may not have the funds needed to cover unexpected repairs. Although home warranties may set you back a few hundred dollars a year, they can offer significant savings should you require major repairs down the road.
What Home Warranties Don’t Cover
Though a home warranty may seem like a catch-all for home repairs, many of these policies have strict limitations. Repairs that result from everyday use are covered, but many policies will deny coverage due to:
- Accidental damage
- Improper maintenance
- Poor installation
- Pre-existing damage or wear
Before you sign, you should read the fine print in the policy contract to ensure you’re getting a warranty that meets your needs. Otherwise, you risk having your claim denied and being forced to pay exorbitant out-of-pocket fees.
Homeowners Insurance Vs. Home Warranty: the Bottom Line
If you’re a homeowner, you’re generally responsible for every aspect of repairing and maintaining your property. If you think maintenance costs might run you an arm and a leg, purchasing a low-cost warranty may be the right solution.
Though it’s like that you likely own homeowners insurance, the coverage may be minimal. Balancing and customizing insurance and warranties can be a great way to protect your home and preserve your peace of mind in the event of a catastrophic event.
Merlino & Gonzalez represent clients in real estate litigation in Staten Island, NY, and surrounding areas. Contact us today to schedule a free consultation.