Home warranties, home insurance help cover big, unexpected costs

Homeowners should expect mortgage companies to require homeowner insurance, but to help with big and unexpected costs, they should also have a home warranty. 

While homeowner insurance and warranties don’t really overlap, they both have the same aim in helping homeowners cope with unexpected damages or losses. 

Homeowner’s insurance policies should cover you if a tree falls on your heating, ventilation and air conditions (HVAC) and damages it. But if the air conditioning stops working, you’ll pay out of pocket for the cost of repairs or replacement, U.S. News & World Reports said. 

But if you have a home warranty, replacement, repair and service of systems like your plumbing, electrical and HVAC get covered by home warranties. The refrigerator, dishwasher and other major appliances can be part of a home warranty as well. 

A policyholder’s insurance covers the structure and your belongings, according to U.S. News & World Reports. If weather events, floods, fires or other known perils listed in the policy damage the home, then the house will be covered. 

“If a loss is covered by insurance, it cannot be covered by a home warranty, and if it’s an insurable loss, a warranty won’t cover it,” Art Chartrand, executive director and counsel for that National Home Service Contract Association (NHSCA), told U.S. News & World Report.

But property owners can’t substitute a home warranty for homeowners insurance.

Whether you are investigating a home warranty or a homeowner’s insurance policy, knowing what’s covered should be done before a problem occurs. Home warranties list what they cover and if something isn’t listed, the homeowner will need to ask for it. Insurance policies include a list of exclusions that let the homeowner know what isn't covered, but it's always wise to ask what isn't included either way.

A homeowner’s insurance policy may cover the damages caused by a water heater burst, but not replacement costs for that water heater.

Chartrand told U.S. News & World Reports that warranties cover only what’s listed. If an item is listed in an insurance policy, it’s being excluded from coverage.

Homeowners can use home warranties to cut losses when problems occur, which add more protection for the home, according to U.S. News & World Reports.

Home warranties usually provide one year of replacement, repair and service of major appliances and home systems like HVAC. They also help a homeowner deal with unexpected costs when a system fails.

If your HVAC or appliances are long past their manufacturers’ warranty dates and closing in on their final working days, a home warranty can help cover the replacement costs, according to U.S. News & World Reports. If you don’t know a good plumber, electrician or appliance repair company, the home warranty company will find a service provider for you. This means you won’t be paying any out of pocket costs just to get them to show up.