Shuman Roy is an entrepreneur, business owner, and musician. He started RoysNoys, LLC in 2013 as a music production and education service company. He also offers small business consulting and advisory services to help businesses get from start-up mode to turn-key operations. Shuman earned his M.B.A from the Stern School of Business in 2001 and has an undergraduate degree from Manhattan College in ...

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Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Joel...

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Reviewed by Joel Ohman
Founder, CFP®

UPDATED: Jul 19, 2021

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So, you’ve faithfully paid your homeowners insurance policy for a few years without so much as a phone call to your insurer. The bill shows up; you pay it. Rinse and repeat.

All of the sudden, out of nowhere, something goes wrong that damages your house and you know immediately that the bill is going to be a few hundred up to as much as a few thousand dollars.

Good thing you have insurance, right? You call your insurer and they promptly tell you that the damage to your home is not covered by your policy…you EXPLODE.

This exact scenario occurs hundreds of times each day across America. Who’s to blame for the misunderstanding? You and your insurer.

Let us guess. You didn’t read a single page of your home insurance policy when it arrived, and your insurance company runs commercials every 30 seconds that lead you to believe that every single possible thing that happens to your home is covered.

After all, would the guy from “The Unit” mislead you for a few million-dollar endorsement checks?

No home insurance policy is designed to pay for your home maintenance or the potential costs associated with not keeping up on home maintenance.

[Will my premium go up if I file a claim?]

Think of It This Way

Most home maintenance costs are so high that it is difficult to believe that they are not insurable losses.

Sometimes it’s easier to grasp the concept of warranty vs. insurance by thinking of car insurance. If you consider that your home’s foundation is like the tires on your car (they both make contact with the ground) and that your roof is like wiper blades, it may make things clearer.

No one has ever filed a successful insurance claim for an insurer to purchase new tires for them because the old tires look like they’re on their last leg. Buying tires is part of car ownership.

You also wouldn’t file a claim on your car insurance because your wiper blades are streaking. You simply buy new wiper blades.

In both situations, you understand that if you own a car, you’ll have to pay for the parts of it that are going to wear out over time. Including the motor.

However, if you’re in an accident, your insurer will certainly replace these items if they were destroyed.

It’s the same for home insurance. Things you buy that don’t work properly, or needing to replace your roof when it’s worn out is your problem. Not your insurers. If, on the other hand, a fire burns your house down, your insurer will probably cover everything.

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What’s a Warranty?

The confusion, beyond believing television advertising lies in the fact that your home insurance policy is not a home warranty.

A warranty is something you purchase to be reimbursed for a device that doesn’t work as it should for a specific time frame. Your refrigerator has a warranty. Your television set has a warranty. A brand new home will likely have a warranty (which is why brand new homes are cheaper to insure).

A warranty generally states that the product, which is warranted by the manufacturer who built it, is guaranteed to work as advertised. If the product is a lemon, they’ll make it right by repairing or replacing it.

Think of it this way. If your home were destroyed by a tornado, would you contact your refrigerator manufacturer to replace your fridge? Probably not, as their deal with you is to “make things right” if their product doesn’t work properly.

Read more: Why insurance won’t cover some roof claims.