What is a home insurance policy and what is a home warranty policy?
How are they different?
What happens when your AC stops working? Who’s going to cover that?
What happens when your pool pump stops working because it’s so old?
What happens when your fridge stops working? Who’s going to cover that?
A home insurance policy is not going to generally cover wear and tear on those things in your home.
No, your refrigerator is not going to be covered under your insurance policy. No, your AC unit is not going to be covered under your insurance policy. And no, your old worn down pool pump is not going to be covered under your insurance policy. These things break down because of wear and tear, because of old age. That is not the job of insurance. That is a job of a home warranty.
Insurance, home insurance, is there to cover things that happen suddenly and accidentally. Big, catastrophic things.
Some examples may include a house fire, and other example may be a huge monsoon storm comes through, a big old tree falls on your roof and completely damages and opens up your roof. Another example may include a waterline bursting in your home and completely destroying the inside of your home. These things are big. They’re catastrophic, they’re sudden, and they’re accidental. Things like your appliances breaking down because of old age, things like your water heater bursting because of old age thing, your washer dryer no longer working. Things like that you would want to consider a home warranty.
Now, in my opinion, and in my experience, you might be better off just saving your money and not buying a home warranty. And then when something does happen, you have all that money that you saved and you can appropriately replace or repair, whatever has broken down. But remember, these are things that your home insurance is not going to cover.
Home insurance generally comes with a larger deductible, a thousand dollar deductible. That’s because we’re only going to use it for things that are big and catastrophic. Home warranties usually come with smaller deductibles, $25, $50.
Something that is very important to point out, if you are a homeowner, you don’t want to rely on your home insurance or your home warranty to properly maintain your home. Part of being a homeowner is taking care of your house, replacing and repairing things before they break down. If you do this, then you don’t have to worry about what will or will not be covered because you’re going to take care of it before it becomes an issue. But please know the difference between a home insurance policy, which yes is 100% needed. In fact, if you have a mortgage, they’re not going to let you have that mortgage unless you insure your home. Versus a home warranty which is up to you to decide if it’s worth it for all those things that break down with old age and because of wear and tear.