It’s common for new homeowners to assume that because they have property insurance there’s no need to worry about anything else. Unfortunately, that assumption is misguided. While homeowner’s insurance pays for damage due to covered incidents like natural disasters, it will do nothing to protect homeowners against the cost of other appliance and system replacements and repairs. Thankfully, the average home warranty cost is low enough to make this type of protection plan an excellent option for adding another layer of protection.
What Are Home Warranties?
Home warranties are also called home protection plans, and they are a type of service contract designed to cover repairs to and replacements of major appliances and systems. They’re great for new homeowners who don’t have a clear idea of how old the appliances are or whether there are hidden issues with the plumbing, electrical, or HVAC systems that went unnoticed during the inspection. As long as the buyer takes out a comprehensive home warranty plan at closing, any issues that are not covered by the original manufacturer’s warranties will be paid for by the plan provider.
What is Homeowner’s Insurance?
Homeowner’s insurance is a type of insurance policy that covers properties and their contents against unforeseeable events like floods, fires, or vandalism. When an event occurs, the insurance policy kicks in and pays for either repair or replacement of the structure and its covered belongings. Homeowner’s insurance never covers issues that occur due to normal use.
Why Homeowners Need Both
Unless they plan on replacing 100% of the property’s major appliances and systems before moving in, home buyers should always take out home warranties. There’s just no way to know for sure how the previous inhabitants treated the equipment, which means that even if it’s still relatively new, it may not work as intended for as long as new homeowners expect. That’s part of the reason that around two-thirds of homeowners find themselves facing unexpected repair bills of $1,000 or more in the first year of living in a new home.
Most homeowners are required to have homeowner’s insurance as part of their mortgage agreements. They’re not required to take out home warranties. However, having home warranty protection in place means being able to jump right in and start getting used to living in a new home without having to worry about what will break down. Even if nothing major goes wrong, it will be worth having it just for some extra peace of mind.
The Importance of Finding a Reputable Home Warranty Company
Whether homeowners are getting ready to close on a property or they’ve been living in the house a while and are starting to worry about when something might go wrong, they need to work with reputable home warranty companies. Home buyers may be able to get help through their real estate agents. If not, look carefully into plan pricing and coverage to make sure there are no hidden fees or loopholes that the company can use to refuse payments.
