When Texans buy homes they often purchase a home warranty for that first year that they are in the home. Good realtors will even negotiate the price of it into the offer letter! A home warranty serves a purpose as does a Texas home insurance policy. Unfortunately, some Texans can confuse which one is responsible for what when an inevitable problem arises at their home. Let's break down how this works.
What Is A Home Warranty?
A home warranty is sold through various companies and none of them are true insurance companies. What you are purchasing is similar to an extended warranty on your automobile. You expect to take care of mechanical type issues that arise with different systems in your home that require repairs. Many of these repairs can be eliminated with proper maintenance, but this makes sure that you are not hit with a huge bill to replace an air conditioner, repair a pool pump, or replace a garbage disposal.
List of Systems That Can Be Covered By A Home Warranty
- HVAC (Air Conditioners, Heat Pumps, Furnace)
- Kitchen Appliances (Garbage Disposals, Refrigerators, Dishwashers)
- Other Home Appliances (Washer, Dryer, Hot Water Heaters, Ice Makers)
- Swimming Pools (Pumps, Skimmers, Other Mechanical Items)
One key item here is that all of these items are mechanical in nature. Your dry wall is not going to be replaced by your home warranty, but your dishwasher can be. Some companies allow you to select which systems that you would like to include or exclude to affect pricing. Most Home Warranty plans will provide different levels of service and co-pays. The higher the level of service, the lower the co-pay and the quicker they guarantee an issue addressed. That higher level of service also comes with a higher price tag.
The big takeaway with a home warranty is that the protection that you are purchasing is mechanical in nature. You are repairing or replacing a mechanical appliance in your home. Let's contrast that to a Texas Home Insurance policy.
What Is A Texas Home Insurance Policy?
A home insurance policy is built to protect you from financial loss if your home is damaged by a covered event. That means that when your home is damaged by something unexpected or out of your control, your home is put back together. The easiest example that most Texans can understand is a hail storm. There is no amount of maintenance that you can do with your composition shingles that will prevent your home from being damaged if grapefruit sized hail falls from the sky. Your home insurance is there to repair the damage that occurs so that you do not experience a financial loss. The repair or replacement of household appliances is not covered under these provisions as it is considered maintenance.
What Is The Difference?
So both a warranty and a policy protect your investment. What is the easiest way to keep straight the difference between the two? The easiest way that we can break this down is root cause of what you are needing done.
- With a home warranty, a home appliance or system is simply broken. Worn out. You are lowering the cost of routine maintenance.
- With an home insurance policy, a catastrophe has occurred in your home and we are putting your home back together to keep you from potential financial ruin.
One important thing to keep in mind is that both items can be used for a single event. Let's consider the hot water heaters that are sitting in my attic for a moment. If one of them was to explode, the water would suddenly discharge in to the rest of my house and create a flood. If not caught, that flooding of the inside of my home could become Biblical in nature. So who pays for what?
The damage that resulted from the water flooding my home would be covered under my Texas Home Insurance policy, but the hot water heater itself would not be. Remember, the replacement of a home appliance is considered maintenance with respect to your home insurance. However! The hot water heater replacement could be covered under your home warranty if purchased since the repair of the appliance is part of it's coverage. But remember, all applicable deductibles, co-pays, and service charges do apply.
The best news of all is that Insurance For Texans can help you sort these situations out without fear. Our team of agents has many years of experience and know how to guide you through what to use when. As local independent insurance agents, we can work with many options to make sure that you have the things you want protected covered.