What’s the Difference Between Home Insurance and a Warranty?

It is increasingly common for people to be offered home warranty coverage when purchasing a new home. Both home warranties and home insurance can provide you with coverage if an emergency arises and give you peace of mind. Yet they are actually very different from each other. Your home insurance policy is not a home warranty and wherever you are at in homeownership, it’s important to learn about home warranty advantages through your home insurance in New Jersey. 

Home Warranty, Explained 

Home warranty is meant to cover different aspects of your home and assist you financially if you must make repairs. A home warranty is like a service and replacement contract on key items in your home.

In other words, it’s a service contract to help if you need to do costly repairs or in some cases, if you have to replace contract specified items in your home. This can be a huge help for those who haven’t budgeted for appliance break-downs because the costs are split into monthly, set premiums and a deductible instead of a large, lump-sum cost when an appliance breaks down.

Home warranties are for any property owner so whether you have a condo or a house, you still have a use for a home warranty. For instance, if your home warranty covers your dishwasher, or air conditioning or plumbing, you’re still responsible for these items when you own a condo. 

Unlike manufacturers warranties covering a specific item for a specified term, the home warranty applies to a selection of multiple items in your home depending on your contract.  

Home Warranty vs. Home Insurance

Home warranties and home insurance both cover unexpected circumstances. The difference is that in your homeowner policy there are exclusions about regular wear and tear and mechanical breakdown. If your dishwasher breaks down, or the air conditioning system fails, the actual replacement of those items or repair would not be covered although resulting damage may be covered in a claim, for example, if there was water damage.

If your dishwasher breaks down leaking water all over the floor and through the ceiling of your basement soaking the walls and damaging furniture and floors. Everything has to be torn out and replaced. Your home insurance may have coverage for the water damage, but will not cover the replacement of the cause of the damage which is the dishwasher. Imagine if the cause of damage is a worn-down part of the appliance, and requires replacing parts in the dishwasher. Your home warranty might cover this, while your home insurance policy could cover the rest.

 Another example is if you have a home inspection and reconstruction cost evaluation by your home insurance company, and they discover that a flickering light might mean the wiring needs work. Your home insurance can say it’s a fire hazard and the insurance company asks you to do repairs. Since there has been no accident or sudden or accidental damage, the home insurance policy will not pay for repairs or regular maintenance. Your home insurance in New Jersey can send a professional to take a look at the situation because you took a servicing contract with coverage for the electrical wiring, they identify the source of the problem and what needs to be done and cover the necessary repairs

About SB One Insurance Agency

At SB One Insurance Agency, we have served the businesses and residents of New Jersey, New York, and Pennsylvania for more than 60 years. We are a wholly-owned subsidiary of SB One Bank, the region’s premier banking institution, and we are prepared to offer you personal, business, employee benefits, and risk management solutions. To learn more about our coverage options, contact our specialists today at (888) 990-0526.