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Experiencing unexpected damage to your home doesn’t have to be a total nightmare. You might be able to better prepare yourself for—and protect your savings account from—costly repairs, by understanding what homeowners insurance and product warranties don’t cover.

The Difference Between Warranties and Insurance

First, there is an important distinction to make between warranties and insurance. While warranties might provide repair or replacement of household items that malfunction on their own, insurance usually covers damage caused by external catalysts. This could include fire, weather or even your fellow man/woman (vandalism, burglary, accidents). 

Warranties typically offer guarantees, making consumers feel confident in buying large ticket items like cars, computers, washer-dryers and ovens. They happen to be a divisive topic, though; some see them as scams, ways to make more money out of buyers. Those who have purchased a faulty computer or car, however, will swear by a warranty’s value. If you’re pro-warranty, always be sure to read the terms and conditions. Simple mistakes, like trying to fix a device before asking a certified expert for help, can void a manufacturer’s guarantees and lead to you paying for previously-covered services.

Insurance, on the other hand, is intended to give consumers longterm peace of mind. It protects large investments—your home being your biggest—against multiple forms of externally caused damage and loss. Being properly insured allows you to fix a roof that’s been broken by a fallen tree, or replace valuables taken during a burglary. Just like with warranties, it’s important to know your policies inside and out—they might not guard against everything you expect.

Look Over Your Insurance Policies Closely

A lot of homeowners are surprised to learn that standard policies don’t typically cover harm caused by natural disasters (earthquake, flood, wind and even termites). If your area is prone to these issues, you’ll likely need to purchase additional insurance for protection. Without these add-ons, you might otherwise find yourself in financial peril. In the last few years, in fact, many homeowners have lost everything because of hurricane-related flooding. They simply didn’t know that flooding wasn’t covered, and their subsequent claims were denied. 

The good news is, add-on policies are easy to secure. Ask your family and friends about their experience with these policies, and check with an insurance agent you trust as well. Do your homework and compare policies to be sure you find the best product for your unique situation. When you do find a home that you want to purchase and insure, we at Open Mortgage are always here to discuss your financing needs. Visiting OpenMortgage.com today is a great way to learn about our services and to talk with home-financing professionals.

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