"Hey, honey. What's up?"
"Just wanted to let you know the dishwasher died this morning. I'm almost positive it had something to do with the pipes freezing, but I'm not sure what."
"Well, that's why we bought our home warranty. I think there's a service charge, but they're supposed to pay for new appliances."
"Okay, I'll call them."
TWO HOURS LATER
"Hey, honey. What's up?"
"Hello? Wilma? Are you okay?"
Sniff. "They said no, Fred."
"What do you mean?"
"They said they didn't have to cover it. They don't cover freeze-related malfunctions."
"WHAT? Why, those...You just wait. I'll get to the bottom of this. What's the number? Somebody's going to get a piece of my mind!"
PAUSE THE TAPE.
Before Fred calls and gives away a piece of his mind that he can't afford to lose, he needs to understand the purpose of home warranties. Without a clear understanding of the nature of home warranties versus homeowners insurance, any of us would be incensed at what appears to be the warranty company's duplicity.
Like a sturdy net under a tightrope walker, there's something immensely comforting about warranties and insurance policies. That confident "I'll just make a claim if anything happens" mentality allows us as homeowners to relax and not stress about all the stuff we acquire. When a claim is denied, it's almost as if all that misplaced trust is replaced by a disproportionate amount of anger, betrayal, and downright fear.
The great thing about home warranties and insurance policies is that, when used in conjunction with one another, you can pretty much be assured of coverage. Let's take a look at the two types of plans.
Home warranty plans are designed to help you repair or replace the mechanical systems in your home that malfunction because of regular wear and tear. These warranties aren't required, since they don't affect the physical structure of your home. Still, they can save you a lot of money if your washer, dryer, and refrigerator all go kaput at the same time. It happens, by the way.
The more electronically loaded your home is, the more seriously you should consider purchasing a home warranty. An annual home warranty will cover HVAC problems, electrical issues, certain plumbing problems, and appliance malfunctions - provided those problems are solely a result of normal breakdowns and not related to natural disasters like floods, freezes, earthquakes, or fire.
Unfortunately, natural disasters happen and wreak havoc on your home and its mechanical systems. That's where homeowners insurance comes in.
When Fred and Wilma's dishwasher breaks because it was one of the first models ever made and it is dying a noble death of natural causes, their home warranty would replace it without a problem. When their new dishwasher breaks because of a hard freeze, they should make an insurance claim.
Just as you use different types of health care for different types of physical problems or just as you might find yourself refinancing a car and using different methods to do so, at times you'll need the different coverages offered by both homeowners insurance and home warranties.
For example, when your body needs routine maintenance, you make a call to set up an appointment for a checkup. When you have an emergency, you'll hurry straight to the emergency room.
In this case, think of your homeowners insurance as emergency room service for when disaster strikes your property, and your home warranty plan as the family doctor for the run-of-the-mill aches and pains of your mechanical appliances and systems.
If you have a mortgage, you already have homeowners insurance. Whether or not you choose to purchase a home warranty depends on how likely your appliances are to need service in the next twelve months. There will be a service charge, but if you should need any large appliance replaced or your HVAC system overhauled, you'll be glad you had it.
Best of all, you'll never have any reason to call anyone and angrily give them a piece of your mind. Like Fred, we all need every bit we've been given.
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