Insurance Explained

Not only is having insurance a good idea, if you're getting a mortgage, it's required.  A lender doesn't want to loan you all that money without knowing that the house is insured.  So, what does this insurance do for you?  It covers you in the event of something catastrophic such as a tree falling on the house, fire, someone crashes their car into your house, etc.  But, it can also cover you for theft or if someone is injured on your property.  So, don't forget to insure that engagement ring!

Homeowner's Insurance is not the same thing as a home warranty.  Sometimes people get confused here.  A warranty covers "working parts" of your house like the hvac system, water heater, dishwasher, etc.  This is a one year policy that can be issued at the time of closing. It's not uncommon for sellers to provide this for the buyer.  But you can also issue a warranty on your current home even if you bought it a while ago.  Each year, the warranty company will offer you a renewal.  This can be great piece of mind because all of these working parts are aging, and if you buy an older home to begin with, it could be a lifesaver.  If it's July 4th weekend and your air conditioning goes out, it's nice to have someone come fix it for a $50 deductible rather than a typical service call fee and parts and labor...trust me.

So, where do you get homeowner's insurance?  Most of our clients start with whomever has their cars insured.  Insurance companies offer discounts the more policies you have with them.  But don't stop there.  Shop around.  You can do it by phone, with no obligation and you just might find someone else can make you a better deal.  You'll probably call the "big guys" but don't forget about the independent agents.  Often, they can shop more insurance carriers and really beat the big guys. Happy quote hunting!

What is a home warranty & what does it do?

Sometimes I mention "home warranty" and people start nodding their heads and they say something like, "oh yes, insurance on my house."  Well, no. It's not a homeowner's insurance policy.  Homeowner's insurance is the big one; covers fire, trees crashing through your roof, someone getting injured on your property, your belongings, etc.  A home warranty is something quite different.

The home warranty is a one year policy that covers the working parts of a house.  Working parts are things like the heating & air system, water heater, dishwasher, swimming pool, electrical system, etc.  They were originally created to give homeowners some coverage for the big ticket items like heating & air but have evolved to cover much more.  Typically, the process goes like this:

• Your water heater malfunctions or quits working.
• You call the warranty company's toll-free number FIRST. Do not call a plumber, or any type of contractor without calling this number first.  You will void the warranty.
• The warranty company authorizes the proper contractor to come to your home.
• You pay that person a deductible, which can be anywhere from $50 to $100, depending on your plan.
• The contractor evaluates the problem and determines if it can be repaired or if it requires replacement.  They report this back to the warranty company who then approves the repair/replacement.

So, as you can see, this type of coverage can be quite valuable to a homeowner, especially someone who has not owned a home before.  As the end of that first year approaches, the warranty company will offer to extend the warranty for you.  You just pay the annual premium and you're all set.  Usually this is no more than $500, depending on the size and age of the house.  I can tell you from experience, if your heating & air dies on July 3rd in South Carolina, you'd much rather write a check for $500 than $2500!  Because when it's 100 degrees and 105% humidity, you're writing a check!