Buying or selling a home involves many decisions, including whether or not to purchase a home warranty.
Wisconsin’s Office of the Commissioner of Insurance (OCI) is urging those presented with the opportunity to purchase a home warranty to weigh the costs and benefits and to research various home warranty policies and companies before making any decisions.
A home warranty differs from homeowner’s insurance in the scope of coverage.
Homeowner’s insurance provides coverage for items such as the home structure itself, other structures or outbuildings, personal property, personal liability, medical payments and additional living expenses for events such as fire, lightning, hail, wind, etc. A home warranty covers the mechanical breakdown of individual pieces of a home such as a doorbell, microwave, heating/air conditioning, and plumbing.
“It is important to remember home warranties are insurance and, like insurance policies, do not provide protection for everything that may happen,” said Jorge Gomez, commissioner of Insurance. “Home warranties have exclusions and limitations that can greatly restrict the product’s usefulness.”
Common damage such as rust and corrosion are categorized as pre-existing conditions by home warranties and are listed as exclusions in most contracts. As a result, consumers should reportedly not purchase a home warranty in lieu of conducting a pre-sale inspection of the home.
OCI publications, such as “Warranties,” “Buying a Home and Your Insurance Needs,” and “Consumer’s Guide to Homeowner’s Insurance” can be ordered free from the agency by writing to OCI Publications, P.O. Box 7873, Madison, Wis., 53707-7873, calling 800-236-8517 or visiting the OCI Web site at oci.wi.gov.
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