What’s the Difference Between Home Repair Insurance and a Home Warranty?

When it comes to home appliances and systems, there is one thing you can know with absolute certainty: nothing lasts forever. Home repair insurance and home warranties both act as safety nets for many homeowners when appliances and systems fail due to normal wear and tear. A home warranty and home repair insurance are not necessarily the same policy, although they tend to provide coverage for similar utilities within your home.

Any home buyer (or homeowner, for that matter) can attest to the fact that coverage options are pretty overwhelming. Let’s break it down. So what exactly is the difference between homeowners insurance, home repair insurance and home warranties?

Take the time to inform yourself before you make the decision to invest in the protective coverage that a home warranty offers. When you’re ready to get your free quote from Choice Home Warranty, fill out the form or call (848) 256-4657.

Homeowners Insurance

Homeowners insurance covers you in terms of property (the actual structure of your home), personal belongings and additional living expenses in the event of an insured disaster, and liability. Home repair insurance policies cover the actual appliances and systems in your home.

One major difference between the two is that homeowners insurance is actually required by most lenders if you are interested in financing your home through a mortgage. Of course, you can technically legally own a home that is not covered, but you can’t purchase one (unless you’re purchasing with cash) without coverage.

Home Repair Insurance

Home repair insurance is never required. This means it is purely elective. It is additional coverage that can be added on to a homeowner’s insurance policy for extra fees, which will then cover the cost of repairs or replacement for the appliances in your home.

It is important to remember that standard homeowners insurance does not cover the cost of repairs or replacement, unless a fire, flood or other natural disaster warrants the need for a replacement. Also, not all insurance companies offer home repair insurance services, in which case you’ll need to purchase a home warranty in order to protect the valuable appliances and systems in your home.

Home Warranty

A home warranty (or home protection plan) is a separate service contract that provides repairs, maintenance and replacements for utilities that are included in your coverage plan. You can opt into it if you are interested in extra peace of mind when it comes to your appliances and systems, but you can forgo it if you would rather pay for repairs and replacements on an as-needed basis. This can be a risky (and expensive) option, but some homeowners prefer it.

Understanding the difference between home repair insurance and a home warranty is paramount when choosing between these two different kinds of coverage. It can be confusing to decide which type of coverage is the best option for your home, but the experts at Choice Home Warranty can explain what a home warranty covers, and how much coverage you need for your property.

Home Repair Insurance: What It Covers and What it Doesn’t

Now that you understand homeowners insurance, you can make an informed decision as to whether home repair insurance is something you’re interested in purchasing as well. One of the major pitfalls of homeowners insurance is that it only protects your property from damages incurred by insured disasters. This is also a limitation presented by most home repair insurance options, because they rarely cover routine wear and tear, which is inevitable.

You may find a homeowners insurance policy that allows for the additional protection of appliances and systems that break-down from regular use over time, but generally, it will only replace these items if the home experiences:

  • Water damage
  • Fire and smoke
  • Windstorms and hail
  • Vandalism and malicious mischief
  • Theft
  • Weight of ice, snow or sleet
  • Explosion
  • Lightning strikes
  • Damage from an aircraft, car or vehicle
  • Falling objects

Home warranties are built specifically around the idea that wear and tear is unavoidable and should be covered. Choice Home Warranty offers repair service plans that include protection against the high cost of repair or replacement of properly maintained covered major systems and appliances.*

How Does Choice Home Warranty Protect Your Home?

When you select one of our home protection plans, you’ll only be paying a monthly cost for a home warranty that entitles you to repairs for your covered items. If a system or appliance breaks down from normal wear and tear, our professional representatives will act as a liaison between you and the contractor. You then only pay a nominal service charge (kind of like a copay at the doctor’s office) and Choice Home Warranty will do the hard work for you. We’ll contact a local, pre-screened technician and arrange for the covered repair or replacement, and foot the bill to get your system or appliance up and running again.* Often, if you use your home warranty even once throughout the year, the protection plan pays for itself.

Now that you understand the difference between home repair insurance and a home warranty, consider why a home protection plan from Choice Home Warranty could be worth it to you. If it is, you’ll need to determine which home warranty plan is the best option for your home, and whether or not you should purchase additional coverage.*

Do You Need a Home Warranty?

The best way to determine whether or not you need a home protection plan is to determine exactly what it covers, and whether or not this coverage will benefit you in the long run. If a home warranty covers certain appliances or certain systems that you don’t have (some older homes don’t have HVAC systems, for example), you may decide to opt out of the plan.

Chances are, though, your home includes several appliances or systems covered by home warranties. If this is the case, you may want to consider purchasing a Choice Home Warranty protection plan for additional coverage against natural and inevitable wear and tear in order to avoid getting stuck with expensive repair or replacement costs.

Choice Home Warranty offers two home protection plans: a Total Plan and a Basic Plan. Before we dive into what is covered in each plan, let’s go over the basics.

What Counts as a Home Appliance?

Choice Home Warranty offers policies that cover home appliances, including:*

  • Water Heater
  • Whirlpool Bathtub
  • Refrigerator
  • Oven / Range / Stove
  • Cooktop
  • Dishwasher
  • Built-In Microwave
  • Garbage Disposal
  • Clothes Washer
  • Clothes Dryer
  • Ductwork
  • Garage Door Opener
  • Ceiling and Exhaust Fans
  • Pool / Spa
  • Well Pump
  • Sump Pump
  • Central Vacuum
  • Limited Roof Leak
  • Second Refrigerator
  • Stand Alone Freezer

What Counts as a Home System?

Choice Home Warranty offers policies that cover home systems including:

  • Septic System
  • Heating Systems and Ductwork
  • Plumbing Systems
  • Electrical Systems
  • Air Conditioning System
  • Central Vacuum System

Average Lifespans of Most Major Appliances

While homes can last for over a century, the lifespan of most appliances is less than 20 years. There is no single number when it comes to the lifespan of most major appliances. Typically, their lifespans directly correlate with how much (or how little) use they receive. With older appliances, home repair insurance most likely won’t pay for repairs if something breaks down, but Choice Home Warranty will cover properly maintained systems and appliances even if they’re a little outdated.

According to This Old House, gas ranges tend to last around 15 years. Washers, dryers and refrigerators are built to last as well. They tend to work for around 13 years. Dishwashers and microwaves, on the other hand, average only around 9 years.

Water heaters last anywhere from 8–12 years. Well pumps last between 8 and 15 years (depending on usage) and a sump pump will typically last around 10 years.

Common Appliance Repairs and What They Cost

While many appliances last anywhere from 8-20 years, this usually factors in routine maintenance. It is also important to remember that, when you’re purchasing a home, unless your appliances are 100% brand new, you have no real record of the maintenance and upkeep. Here is a breakdown of some of the most commonly reported appliance repairs and what they cost:

Fridge

One of the most common components that malfunctions in refrigerators is the compressor. This repair can cost between $50–$300. Issues with the icemaker can run between $200–$350. If your freezer is malfunctioning, you may have an issue with the evaporator fan. This tends to cost between $200–$250.

Range / Oven

Ovens and ranges have a startling number of components that can malfunction.

  • An electronic gas stove-top igniter costs between $20–$200.
  • Doors can cost anywhere from $65–$400 (door glass alone costs between $50–$300).
  • Control knobs cost between $10–$70
  • Oven thermostats cost between $100–$200 for budget brands and the cost can rise up to $450 for designer brands.

Keep in mind, these are just the costs of the actual replacement parts. Most contractors charge a diagnostic fee and you will also be on the hook for the cost of labor.

Dishwasher

According to Angie’s List, the national average for dishwasher repair is $191 and most contractors charge between $75–$100 per hour. The most common issues for dishwashers are:

  • Clogged spray arms, which cost around $115 to repair
  • Worn-out rubber gaskets and pump/valve problems, which cost between $170–$230
  • Dirty filter screens, which cost between $200–$350 to replace
  • Blocked or kinked drain hoses, which cost between $160–$190 to replace or repair
  • Worn out control panels, which cost up to $150 to repair
  • Defective pumps, which also cost around $150 to replace or repair

Laundry Washer / Dryer

If your washer is failing to drain or accumulating standing water, you need to service or repair it immediately. Specifically, this usually means you need to repair or replace the pump. This can cost between $50–$100.

Dryer repair, on the other hand, tends to be a bit more expensive. The most common things that dryer owners spend money on are thermostat replacements, gas ignition coil replacement and repair and unclogging clogged dryer vents. On average, you can expect to pay between $300–$420 on dryer repairs.

Water Heater

The average national cost of water heater repairs is around $545, although repair costs can fluctuate from as low as $100 to as high as $1,000. The most common repairs are:

  • Thermocouple replacement, which costs between $20–$150
  • Gas control valve replacement, which costs between $300–$500
  • Heater element replacement, which costs between $200–$300
  • Thermostat replacement, which costs between $150–$200

The most expensive potential issue is a leaky water heater, which can cost up to $1,000 to repair.

Well Pump

Surprisingly, one of the most common repairs that well pump owners encounter is fairly affordable. It only costs between $20–$40 to replace the well pump pressure switch. Unfortunately, replacing the tank (another very common repair) costs between $250–$500. If you need to replace your well pump, that will cost around $1,000 for above-ground pumps and closer to $2,000 if you have a drilled well.

Sump Pump

Unlike many appliances, when it comes to sump pumps, most homeowners end up replacing them rather than repairing them when they fail. The two most common sump pump issues are visible rust on the exterior of the pump (which is a sign that the pump needs to be replaced) and a failing electrical motor. Water backup coverage is one of the few protections offered by regular home repair insurance. However, a home warranty will provide you with more protection overall for other sump pump failures. On average, homeowners spend between $380–$530 for major repairs. When a sump pump needs to be replaced, those costs can range anywhere from $650 to $1,770.

Average Lifespans of Most Major Systems

Most systems require regular maintenance, but none will last forever. HVAC systems, for example, only average a lifespan of around 15–25 years. Furnaces typically last 15–20 years, while heat pumps have a lifespan of around 16 years. You can expect an air conditioning unit to last between 10–15 years.

Septic systems can last for up to 40 years (they average between 15–40 years) depending on what they’re made of. Steel tanks last between 20–30 years, while plastic tanks can last between 30–40 years.

Common Systems Repairs and Costs

Home systems are often significantly more expensive than home appliances when it comes to replacement and repairs. This is because they tend to be more complex. For this reason, you’ll want more than standard home repair insurance to protect you from unexpected repair bills. Some systems are not covered under the Choice Home Warranty Basic Plan (like septic systems, for example). Make sure you’re opting for the most coverage possible if you’re interested in protecting all of your major systems.

Septic System

The most common problem you’ll encounter with a septic system is a broken pipe. Most septic repairs are going to be over $1,000, but they average anywhere from $891–$1,434.

Plumbing System

When it comes to plumbing systems, a lot can go wrong. A few of the most common issues are dripping faucets, leaky pipes, a running toilet, low water pressure and malfunctioning drains. On average, most plumbing issues cost between $160–$430.

Electrical System

While repairing electrical systems vary widely in cost, according to the Electrical Safety Foundation International, “home-based electrical systems cause nearly 55,000 fires a year, resulting in more than 500 deaths and 1,400 injuries. Electrical fires cost $1.4 billion a year in property damage.” Preventative maintenance and making timely repairs could save you thousands of dollars in the long run.

Is Home Repair Insurance Really Worth the Cost?

The main question that you should be asking is whether or not you have enough available cash to cover a major emergency repair. If the answer is no, you may want to purchase a home warranty instead, so your covered appliances and systems can be fixed if they experience issues after normal wear and tear.

According to an article published in The Balance, “One popular rule of thumb says that one percent of the purchase price of your home should be set aside each year for ongoing maintenance. For example, if your home cost $300,000, you should budget $3,000 per year for maintenance.” While you are risking paying for a warranty that you may not need (if you have a particularly lucky year), for the cost of one repair, you can purchase protections that will cover all of your major appliances and systems.

Who Should Cover the Cost of A Home Warranty—the Buyer or the Seller?

While there is no one correct answer to this question, it is often customary for the seller to offer to purchase the home warranty. The reason this actually works in the favor of the seller is twofold:

  1. The seller doesn’t have to worry about the buyer calling after the closing to complain about a malfunctioning appliance.
  2. According to the Professional Warranty Service Corporation, “A study from the Service Contract Industry Council (SCIC) found that homes with systems and appliances warranties sell for an average of $2,300 more and 16% faster than their non-warranted counterparts. Consumer studies have found that a systems and appliance home warranty also reduces the number of days on the market by 16.14%.”

If the seller does not offer to purchase either a home warranty or some form of home repair insurance, it is still in the best interest of the buyer to consider a home protection plan. Many buyers, after hefty down payments and closing costs, are not in a position (financially) to make major emergency repairs. A home warranty plan offers added protections that are typically well worth the investment.

Can You Purchase Home Protection After Closing?

Absolutely. Of course, you’ll usually need to factor in a 30-day waiting period once your home warranty policy is purchased (this is standard), but you can purchase a home warranty at any time and for any reason.

Choice Home Warranty: Two Options

When it comes to home protection plans, Choice Home Warranty is one of the best options on the market and offers a Basic Plan and a Total Plan.

What Is Covered By the Basic Plan?

Choice Home Warranty’s Basic Plan covers most standard appliances and home systems. It is the best option for individuals who only want to cover the essentials.

The Basic Plan Covers:

  • Heating System
  • Electrical System
  • Plumbing System
  • Plumbing Stoppage
  • Water Heater
  • Whirlpool Bathtub
  • Oven / Range / Stove
  • Cooktop
  • Dishwasher
  • Built-In Microwave
  • Garbage Disposal
  • Ductwork
  • Garage Door Opener
  • Ceiling and Exhaust Fans

What Is Covered By the Total Plan?

The Total Plan is the best option for individuals who are interested in the maximum amount of coverage. It covers the same appliances and systems included in the Basic Plan with some major additions. For example, the Total Plan covers the air conditioning system, the washer and the dryer.

The Total Plan Covers:

  • Air Conditioning System
  • Heating System
  • Electrical System
  • Plumbing System
  • Plumbing Stoppage
  • Water Heater
  • Whirlpool Bathtub
  • Refrigerator
  • Oven / Range / Stove
  • Cooktop
  • Dishwasher
  • Built-In Microwave
  • Garbage Disposal
  • Clothes Washer
  • Clothes Dryer
  • Ductwork
  • Garage Door Opener
  • Ceiling and Exhaust Fans

Is There Optional Coverage Available?

Yes. Choice Home Warranty offers additional coverage on an opt-in basis. Additional coverage is best for individuals with appliances and systems that do not fall under the Basic or Total Plans but often are quite expensive to fix or replace.

Choice Home Warranty offers additional coverage of the following appliances and systems:

  • Pool / Spa
  • Well Pump
  • Sump Pump
  • Central Vacuum
  • Limited Roof Leak
  • Septic System
  • Second Refrigerator
  • Stand Alone Freezer
  • Septic Tank Pumping

Choosing the Right Warranty for You

Now that you’ve done your research on home repair insurance and your other options, it’s time to put that knowledge to work!

Once you decide that a home warranty is right for you, you can call (848) 256-4657 for a free quote on a home protection plan today.

You will get the opportunity to speak to a Choice Home Warranty representative at no cost. He or she can help you determine which plan will offer you the best coverage (at the best price) and whether or not you should consider additional coverage.

 

* Click Here to view complete limits of liability and any exclusions. CHW offers service contracts which are not warranties. ** See policy for specifics on response times. *** CHW reserves the right to offer cash back in lieu of repair or replacement in the amount of CHW’s actual cost (which at times may be less than retail) to repair or replace any covered system, component or appliance. **** In the event a claim is denied, and a customer seeks to have Us review that denial, We have the right to request routine maintenance records in reviewing its decision.