Did you know that home warranties aren’t just for new residences? Homeowners can buy a warranty for their existing home and have this extra protection along with their insurance. Find out how the two types of coverage differ, and see if buying a home warranty makes sense for you.

Coverage — Home insurance, which is usually required by mortgage lenders, typically covers your house against fire, windstorms, hail, lightning and theft. A home warranty, on the other hand, is optional and typically covers the costs for repair or replacement of the electrical, plumbing and HVAC systems as well as major appliances like the refrigerator or oven. Homeowners may opt to buy a home warranty to avoid unexpected expenses when appliances break down.

Liability — If someone visiting your home slips and falls and you’re found legally responsible for the injury, your insurance policy may provide financial assistance. Warranties, however, provide no bodily injury liability coverage.

Limitations — Insurance policies limit claims based on a dollar amount. Warranties, on the other hand, limit coverage to a specified period of time. A home warranty is essentially a service contract.

It’s important to note that a home warranty may cover the cost to fix a broken refrigerator, but you’ll likely have to use a particular service company and will still be charged a service fee. And while your refrigerator may be covered, your ice maker might not be.

Also keep in mind that some home warranties may not cover appliances that have broken due to neglected or improper maintenance.

Buying a home warranty could give you peace of mind. Just be sure to get the right coverage for the items you want to protect and read the fine print.

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