If the loss is also covered by a service agreement or home warranty, when does the homeowners policy pay?

• A. Before the warranty
• B. After the warranty
• C. Simultaneously with the warranty
• D. Only if the warranty refuses

Answer: (B)

When two coverages apply, the contract that specifically covers the item (the service agreement or home warranty) usually pays first. The homeowners policy acts as secondary coverage, paying only for what the warranty doesn’t cover (or after the warranty has paid up to its limits), and still subject to the policy’s terms.

For example, if a covered appliance repair costs $800 and the warranty pays $500, the homeowners policy would pay the remaining $300 (assuming the loss is within the policy’s limits and deductible rules). If the warranty covers the full amount, the homeowners policy doesn’t pay.