Home Warranty vs Homeowners Ins.

Do you know the difference between a home warranty and homeowners insurance? I didn't until I bought my last house. A home warranty is purchased from a warranty company usually at the time of your home purchase and it covers many items in your home, such as appliances, heat and air unit, hot water tank, plumbing stoppages, etc.
AS LONG AS, the repair falls under permitted claims. These warranties usually last from 12 to 13 months, cost any where from $400 to $500 and can be very helpful to a buyer who's stove breaks down 2 weeks after he moves into his new home. I always advise my buyers to ask for a home warranty in their purchase contract and to ask the seller to pay for it. The most important thing for a buyer to read is the exceptions information in the warranty paperwork so they will have a good feel for what is and is not covered. A warranty program provides a central phone number for the client to call if a breakdown occurs. The warranty company then sends out the appropriate repair person to do the work. The client pays a set service fee of approx $75 ( it varies with each plan) and the covered repairs will be completed or if it can't be repaired the item is replaced at no further charge. I also advise my sellers to offer the home warranty up front and use it as a marketing tool figuring that any prospective buyer is going to request one anyway.

Your homeowners insurance is coverage paid on a yearly basis that protects your home from damage from wind, hail, fire, lightening etc. There are many different coverages you can get but all policies should cover both the exterior and interior of the home. At a later post I'll talk about the different coverages you can have but for now lets just say that no one should own a home without homeowners insurance and all the mortgage companies I work with require that there be homeowners coverage at the time of closing. Homeowners coverage is used to protect you from a big loss/damage to the property and also insures that your lender will be paid if the house is destroyed by fire, tornado, etc. The one thing homeowners insurance will not cover for you is if you home floods from anything other than a sudden burst of water ( such as a broken pipe in the house) or, if you have the coverage, from a sump pump back up or malfunction. Many people thought they were covered during the flooding this summer when there was 10 inches of rain and basements were filling up quickly only to find out that flood insurance was needed to cover that kind of damage.

Know the difference between the two kinds of coverage and make your choices wisely. It could be a very costly mistake not to.