After you've purchased a home and moved your things in, the work isn't over. Protection will be an ongoing challenge over the life of your home.
Both home warranties and home insurance are generally worth it to protect your investment. They are not the same, however, and it’s worth making sure you understand the difference. Specifically, each of them protects and covers different aspects of your home. Additionally, whether a home warranty is worth it depends in large part on the company providing the coverage.
This post focuses on home warranties, but first, we’ll explain what distinguishes a home warranty from homeowner’s insurance, what a home warranty does, and ultimately if home warranties are worth it.
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Home Warranties vs. Home Insurance
To better understand if a home warranty is worth considering, first, let’s outline how home warranties differ from home insurance. There are several important distinctions, so you should understand what’s covered by each.
Home Warranties
Generally speaking, a home warranty is a service contract that covers your HVAC, electrical systems, plumbing, kitchen appliances, computers, internet connections, and other home products. If it’s an appliance inside your home and it’s not working properly, there’s a good chance it can be covered by a home warranty plan.
Let’s say, for example, that you have a furnace and hot water heater combination unit that has stopped working during winter, meaning you can no longer heat your home and no one has hot water for showers and washing dishes. A good home warranty won't leave you freezing in the middle of winter due to a broken appliance. They'll take care of your repair quickly and effectively.
Home Insurance
Homeowners insurance covers a different set of problems that may arise with your home, specifically damage and theft. Typically, a standard homeowners insurance policy covers natural disasters and perils including fire, wind, hail, and lightning. Unfortunately, those policies do not usually cover floods and earthquakes, so you have to shop around for those separately.
In other words, homeowners insurance covers you for structural issues that affect your house and property while home warranties cover you for non-structural issues. If your broken furnace needs repairs, a home warranty is your friend. If that same furnace unit were to cause a fire that damages your basement, home insurance can help you.
Home Warranties Cover More of What You Care About
To clarify, let’s take a closer look at what home warranties can cover. Most home warranties cover issues and devices including:
- Appliances, HVAC, and other home systems
- Laundry units, built-in grills, portable AC units, and more
Some providers, such as fixHomz, also cover the following devices:
- Home theater, smart speakers, thermostats, doorbells, and video cameras
- Computers, smartphones, tablets, smartwatches, and game consoles
Not all home warranty companies are alike and what they cover differs. Some home warranty companies will charge you hundreds or thousands of dollars per year to cover a fraction of the systems, devices, and appliances you own. Still, other companies allow you to customize packages that cover only the systems and appliances that make sense for you.
Consumer Reports recommends that you ask a lot of questions to a home warranty company before signing a contract. You need to ask strategic and specific questions about what your policy covers. Any company that doesn’t want to get into specifics and answer every question thoughtfully is not a company worth buying from.
Deciding If You Need a Home Warranty
Now that you’re familiar with home warranties, it’s time to decide if it’s worth the cost.
When considering a home warranty, first measure the financial value. The HVAC, electrical, and plumbing systems in your home are worth thousands of dollars. A warranty that ensures your home systems will be fixed in a timely fashion is likely worth it if you have room in your budget for it. Standard home warranties can range between $300 and $600 per year.
It’s also worth considering the peace of mind when it comes to home warranties. Constantly worrying about your home systems breaking down or the cost of unexpected repairs can keep you up at night.
On the other hand, if your home is paid off or you prefer to address repairs as individual units break, you may not need a home warranty. Either way, it’s important to do your homework before making a decision.
Learn More
If you have additional questions about home warranties, fixHomz is happy to help you better understand what they can cover and if a home warranty is worth it for you.
Learn more about how fixHomz is changing home warranties for the better.
