Home warranty insurance is an often-used contingency for protecting personal property.
According to the Home & Family Finance Resource Center, home warranty insurance is the gap between traditional coverage and having a contingency plan for nearly all occasions. It offers protection against the breakdown of home appliances, plumbing, heating, wiring and even the garbage disposal unit. Weighing the costs and benefits of home warranty insurance depends on the needs and budget of the individual homeowner.
As explained by homes.org, home warranty insurance is different from homeowners insurance and provides a longer lasting guarantee against home repairs and upkeep expenses. Most of the insurance that homeowners purchase at the time they purchase their home does not last for the entire length of time the owners are in the home. Warranty insurance provides a safety net for the gaps in traditional homeowners insurance. For example, where homeowners insurance may cover the cost of fixing broken tiles on the roof (major repair), home warranty insurance will cover the cost of the dishwasher breaking down (minor repair).
Traditional house insurance is necessary even if the homeowner opts for the additional security of home warranty insurance. Homeowners insurance covers the cost of major home repairs, restoration and rebuilding in the case of an accident, fire or poor construction. Home warranty insurance covers general wear and tear.
Some of the benefits of home warranty insurance include:
It is important to check the coverage of existing policies when weighing the benefits of purchasing home warranty insurance.
There are a number of home warranties on the market today, and determining the right warranty takes careful consideration and research.
When choosing a home warranty policy, it is important to ask:
Price comparison sites that offer user ratings and reviews are a good place to start researching potential policy options.
The cost of home warranty insurance varies between companies and the scope of the individual policy. In the case of a new home purchase, home sellers may offer to purchase the warranty plan as an incentive to potential buyers. Sometimes the cost may be split equally between the buyer and seller of a home. The cost of the warranty is usually an annual lump sum with the policy renewal at the time of payment. The average cost of a policy ranges from $200 to $600 annually. Deductibles per item range from $30 to $100.
When determining whether an individual should purchase home warranty insurance, it is important to consider:
Homeowners with new appliances, additional savings set aside for maintenance and a newer home may not need the additional coverage offered by a home warranty program.
Home warranty insurance policies are growing in popularity and often are offered by the builder or realtor. Although not always necessary, the savvy individual should consider the additional coverage to add a little peace of mind to the sometimes stressful world of home ownership.