What Are The Differences between Home Warranty and Home Insurance?

financing-3089937_960_720Home warranties and home insurance both cover surprise issues with your house and the comforts that are inside, but there are differences between the two that should be addressed!

Usually in a home insurance policy there will be exclusions in the contract that would not hold wear and tear/age as a valid reason for a claim, but it would be covered if something happened to the appliance, such as an electrical fire in your house— so your destroyed appliances in this case could be covered with home insurance! Depending on your coverage, you can also cover your home for things like flood, theft, and acts of god, just depends on how much you want to spend!

Home warranty on the other hand would cover wear and tear on appliances and wouldmoney-2724248_960_720 help you save money if you have a plan that replaces an appliance if a repair cannot be made. Think of home warranty as something that helps when an appliance naturally goes to  pasture, and home insurance as something that helps when an appliance gets knocked out by various acts of destruction!

By Aaron Young
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What is Home Warranty?

A Home Warranty is a type of service contract that will repair or replace appliances and crucial parts of your home, such as refrigerators, water heaters, and air conditioning— it felt like the Sahara in my home when mine died this summer, so thank goodness for home warranty!

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But Home Warranty will cover other things such as your washer or oven when they decide to kick the bucket.

Home warranties can also be extended to your pool and spa, and these add-ons are usually at an extra cost, but can save you a lot of money, headache, and heartache when your pool pump gives up a ghost!

IMG_4173How does this work? Well, what happens is a technician will come by and screen the situation at hand, if it’s determined that the appliance is no longer working due to defect, age, or normal wear and tear then you will either have it replaced or repaired by a qualified specialist all for a small fee while the warranty company covers the rest.

This is an important component of any homeowner’s arsenal of tactics to combat trouble when it decides to say hello and can be the difference between you paying a couple hundred or a couple thousand— neither is fun but I would rather take $200 Mr. Trebek, not $2000.

By Aaron Young
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What is homeowners insurance?

real-estate-2734564_960_720A home insurance policy is what you want to have when things like damage happens to your home through acts of god, fires, and theft. Each of these things are hard to swallow thinking about, but this is a necessity in the world of homeownership (And required if a house is mortgaged). These policies are renewed yearly, and price can vary depending on the coverage— and like most other insurance policies out there, you will have to pay a deductible when you make a claim!

Say for instance you have a pipe burst in your kitchen causing water to flood everywhere! You luckily have home insurance and call your provider to find out your next steps, what they will do is send an insurance adjuster over and they will take into account the damage that the water caused and how much it will be to fix/replace everything (Including the pipe!). plumbing-840835_960_720

Once given approval for your claim, your insurance provider will then deduct the amount of your deductible and pay out the balance to repair your kitchen! The higher the deductible the lower your the payment, and the lower the deductible the higher your payment— just depends on your preferences!

By Aaron Young
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How Sureties Are Carried Out

Say you did mess up (God forbid), you didn’t pull through on time, the project didn’t pan
out as it should’ve, or negligence happened— then your bond will be at risk if a claim is placed against it! club-2492011_960_720

If they do file a claim, then the claimant finds out who issued the bond and they contact the bonding company to file a claim. The company then receives, responds, and investigates the claim to find out if the claim is truly valid— if the bonding company finds that the claim is invalid then no further action is taken, but if it is valid the bond amount will be paid out. You may think that they won’t pay out to a claimant, but they do since they are bound by law to be impartial and pay out when warranted!

justice-2060093_960_720If the principal is paid out, then you will be on the hook for the amount and the bonding company will then demand the money from you! It is always extremely important to treat surety bonds with respect and to always carry out the commitments that are promised by them!

By Aaron Young
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Top Mistakes Made When Buying Surety Bonds

Surety Bonds can get confusing, but honestly don’t let it get in the way of using your decision-1697537_960_720noodle and seeing that it’s not as intimidating as it seems! These 3 mistakes are what I have found to be the most common:

Mistake #1 Getting the Wrong Bond Amount

It is always the buyer’s responsibility to double and triple check the exact bond amount before taking out a surety bond! The reason you want to get this right the first time is because the bond will be rejected when it is submitted with the wrong amount, and you will have to do the process and pay the premium a second time! Not fun!

Mistake #2 Getting a Surety Bond Through Unsavory Sureties

mistake-876597_960_720It happens, there are those rare few stories out there about how obligees have been victimized by an unsavory (Usually unregistered) surety. But to make sure that you are always getting what you agreed to, always do business through reputable agents, make sure that they are registered with the state by talking with your state insurance commissioner or by verifying membership through one of the various national surety bond associations just to make sure!

Mistake #3 Not Buying the Surety Bond Before the Given Deadline

Just as the title says, always be punctual and get it done on time! time-481444_960_720Otherwise you will have to do the process again and possibly face judgment! Just like those nightmarish days in college, deadlines do matter!

In sum, always do your homework and don’t be afraid to ask questions! As I mentioned before, mistakes do happen— but be proactive and you can avoid them!

By Aaron Young
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Why Would A Normal Consumer Need A Surety Bond?

Say you bought a sweet 69’ Camaro out of state and the guy you bought it from lost the title years ago (Or pocamaro-rs-1253606_960_720ssibly is a title-jumper, who knows!), and you thought— what the heck, I’ll see what I’ll have to do, I really want that car!

After you do a bit of research you discover that you will need to get a “bonded title” through a surety company. Reason being is the state needs to have some sort of promise that you own the vehicle, and to keep dated and proper documentation of a previously untitled vehicle on hand in case it turns up stolen!

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I wish the DMV was always this empty

After you get the Surety Bond based on the value of the vehicle, you submit the bonding documents to the state DMV and acquire your new bonded title, with the car now 100% in your name!

 

There are some practical uses to Surety Bonds and shows that they have a much different role than a regular insurance plan!

By Aaron Young
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Surety Bonds

What is a surety bond? Say you opened a business in commercial contracting and you have to get bonded according to your state’s regulations.building-2762319_960_720

You may be asking, why do I need this? This surety bond is enacted so a consumer can do business with a qualified contractor with some piece of mind—which the government wants to help negate risk to facilitate the local economy. If a contractor does not do his job correctly due to negligence or malice (Say they are lazy and decide to cut corners, or did not live up to contract terms), then the customer can file a claim against the bond since the underwriter guaranteed their work!

binding-contract-948442_960_720The difference between this and an insurance plan is the company that bought the bond cannot make a claim against it! Surety bonds are usually made to protect the customer as well as the bonded company in higher risk business scenarios and in situations, but if you are the bonded party and do lose your bond, the surety company will be expected to be reimbursed in full! The surety buyer’s protection is very short lived!

By Aaron Young
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