Owning a home comes with several unexpected expenditures, which are not always covered by your homeowners’ insurance. In such cases, it proves handy to opt for a home warranty insurance plan, which is designed to cover what your homeowners’ insurance doesn’t. A home warranty insurance plan is considered to be the foil to your home insurance when the certain perils that wreaked havoc on your home—water damage, earthquake, floods, or mold—are not covered by your home warranty insurance. 

Here are certain things you should know about home warranty insurance plans that will help you arrive at an informed decision.

How is a home warranty insurance plan different from homeowners’ insurance?

For starters, homeowners’ insurance covers damages that are caused by certain defined perils, such as straight-line winds, fire, burglary, hail, and other property claims. It even covers certain types of water damage. However, homeowners’ insurance doesn’t cover the expenses that are associated with appliances or home system failures unless these failures are caused by the said peril.

Home warranty insurance, on the other hand, covers things that aren’t covered by homeowners’ insurance. These are essentially service contracts that pay for the cost of repairs or replacement of appliances, built-in appliances such as heating and air conditioning, and plumbing, when they cease to function. It typically costs around $250-$500 annually but can run closer to $1,000 depending on what plan you choose. 

How does home warranty insurance plan work?

A home warranty insurance plan works in a similar fashion as the product warranty for any appliance you might have purchased. When you opt for a home warranty insurance plan, the company pays for the repairs and replacement of the specific components of your home which are included in the policy, such as your HVAC system, furnace or boiler. You will have to pay an annual fee which is used for dispatching a contractor to your house for repairs whenever a problem arises. 

What factors are covered by a home warranty insurance plan?

It is essential for you to know that home warranty companies tend to offer several tiers of coverage, and these are some of the common things that are covered:

• Basic coverage includes the cost of plumbing systems, dishwashers, oven ranges, garbage disposal, exhaust or ceiling fans, sump pump and water heaters, built-in microwaves or tubs, and heating and electrical systems. 
• If you opt for enhanced coverage, it would include central air, clothing washers and dryers, refrigerators, and garage door openers. These items would be covered if you pay its additional charges.
• You can even choose from the optional warranty coverage, such as well pumps, pools and spas, standalone freezers, septic systems, and central vacuums. 

Before you decide on a home warranty insurance plan, ensure that you shop around for it.