Buying a new home is a complicated process with a lot of steps, and staying educated on the processes involved is essential. Some first-time buyers will go into the proceedings blindly, which is fine if you have an incredible One Ocean Drive realtor by your side, but it never hurts to have an understanding of things. One of the more potentially confusing elements of purchasing a new home is the differences between Home Warranties and Home Insurance, and whether or not you (the buyer) need the former.
First of all, Home Warranties and Home Insurance policies are different things. Home Warranties are service contracts, similar to the warranty on your smartphone or car. They are a company’s agreement to pay for fixing specified components of your home if necessary, or replacing them entirely if necessary, whereas a Home Insurance policy covers losses if your home or possessions are destroyed or lost due to outside factors such as fires, theft, or flooding. This is a key difference, as some people make the assumption that their Home Warranty will cover more than it does. A Home Warranty typically covers specific items such as kitchen appliances, water heaters, ceiling and exhaust fans, and more, so it is definitely a good idea to know where yours begins and ends.
When buying a home, you will sometimes inherit appliances and systems left by the previous owners that have their share of wear and tear. As a result, these items can break down unexpectedly, leaving you in a pickle. This is where a Home Warranty comes in. The Warranty can help cover the cost of repairing the appliance or system so long as the damage falls within the agreement.
Conversely, your expectations for a Home Warranty may not always line up with reality. Warranties can fall through if the appliance was not maintained or was not correctly installed, which can leave you out to dry when a problem arrises. Another common complaint is that companies will repair broken components as opposed to replacing them.
In summary, Home Warranties can be a very useful tool for home buyers, but be sure to carefully go over your policy. Never make assumptions about what a Warranty will cover, as this is where the danger lies. For more information on Home Warranties, click here.