Home warranties pay for appliance repair or replacement when they break.
If you misunderstand an important aspect of your insurance policy, you may face unexpected consequences when you file a claim. Insurance contracts contain warranties and exclusions, and they affect the policies in different ways. With home insurance, a warranty could also refer to a separate product designed to complement, not replace, your insurance contract.
Insurance Policy Warranties
Insurance contracts are contracts of utmost good faith, meaning both parties to the contract rely upon the other to make statements of truth without proving them; the insurer checks some of the insured's information, but must believe that some of the statements in the application are true without verification. Sometimes, insureds must warranty that the information they provide is true. For example, an applicant for health insurance must warranty that he suffers from no chronic or terminal diseases. If an insured lies about a warranty, the insurer has the right to cancel the policy.
Policy Exclusions
Every insurance policy contains an exclusions section that outlines what the policy will not pay for under any circumstances. You should always be familiar with your policy's exclusions, but especially with certain forms of property insurance. Special form, or HO-3, homeowner's insurance policies are "open peril" policies that cover all forms of direct physical loss to the home except those listed in the exclusions. Protect yourself against the excluded losses because the insurance company offers no coverage.
Home Insurance
A homeowners insurance policy protects the structure of your home and your personal belongings against sudden and accidental damage such as fire, explosion, burst pipes, theft and vandalism. Generally, if the damage is slow and routine, such as a roof wearing out over time or poor home maintenance, the insurance policy won't cover it. In exchange for monthly or annual premium payments, the insurance company agrees to potentially pay up to the policy limit to repair or replace your home or contents.
Home Warranty
A home warranty is almost the opposite of insurance. A warranty is a service contract between the homeowner and the warranty company. In exchange for a monthly fee, the warranty company agrees to pay for the repair or replacement of covered appliances in the event they break. Often, the agreement requires the homeowner to pay a service fee, typically around $100, for each repair. Whereas an insurance policy won't pay for an oven that burns out over time, a warranty probably will; the warranty won't pay to repair your home after a fire.
Tags: insurance policy, your home, company agrees, exchange monthly, insurance company, Insurance contracts, insurance warranty
