Home Warranty Vs. Home Insurance

Q: What’s the Difference in a Home Warranty and Homeowner’s Insurance?

A:
A home warranty and homeowner’s insurance can sometimes be confused but they are completely different coverages. A home warranty typically covers the home’s major systems and appliances while the homeowner’s insurance will cover theft or hazard damage: flood/fire/acts of God, etc.

What would homeowner’s insurance cover?

• Personal property, furniture, clothing, jewelry etc.
• Structure and contents of the home
• Your living expenses if the home is not in a living condition due to natural disasters
• Appliances, but only in the event of natural hazard or special circumstances.
• If someone visiting your house gets injured while on your property.
• It protects you from a variety of events, including fire, lightning, tree-fall, burglary, storms.

What Does the home warranty cover?

• Repair and replacement of home systems and appliances, due to normal wear & tear.

A homeowner’s insurance policy generally has a much higher deductible vs a home warranty service fee. Think $1,000 vs $60.00.

Example: Your plumbing leaks for a week while you’re on vacation. Your home warranty will cover the repair of the plumbing leak and your homeowner’s insurance would cover the secondary water damage to your property resulting from the leak.

Example:Your home is struck by lightning. This would be an act of God. Your home warranty typically does not cover electrical failures due to lightning strikes or electrical surge. This is a claim you would file specifically with your homeowner’s insurance policy.

And finally, if your mortgage company requires your home to be insured, they are referring to homeowner’s insurance, not home warranty coverage.

What is SEER 13?

Q: What is SEER 13 and How Does it Effect My Home Warranty Contract?

A:
Beginning in January 2006, the Federal Government required all air conditioning units manufactured have a Seasonal Energy Efficiency Ratio (SEER) of 13 or higher. The previous government mandate for the industry was a minimum SEER of 10 or higher. The higher the SEER rating, the more energy efficient a properly operating air conditioning unit should be.

This new law does not prevent manufacturers from making parts for older A/C systems. This new law does not require homeowners to replace their older units, nor does it require home warranty companies to replace older units if they may be fixed or repaired with available parts.

Manufacturers are even still allowed to sell SEER 10, 11, and 12 units until their entire inventory is sold out. So, if there is a need to replace an older SEER unit it may still be replaced with a SEER 10, 11, or 12 air conditioning systems while supplies last. However, if there are no older units available, and it is determined that the air conditioning system needs to be replaced, then the new system must be replaced with a newer SEER 13 unit.

Some home warranty companies were charging extra for this coverage but most do not any longer. When like models can’t be repaired or replaced, most home warranty companies will cover the additional costs of a SEER 13 rated air conditioning unit, including ductwork, plenum, and electrical compatibility upgrades without adding any premium charges to the policy holder.

However, these new SEER 13 units are much larger than older models and a replacement could mean significant structural modifications that may not be covered by your home warranty. Please read your contract to understand the complete terms of SEER 13, and how this upgrade could effect your budget if your air conditioning system should need to be replaced.