Home warranty vs home insurance

Todd: Hello and welcome to Todd Miller TV joined here today with Sherwin Escanuela, hi, Sherwin.

Sherwin: Hi Todd. How you doing?

Todd: Good. So common question I get is actually pretty simple but a lot of people get confused when we put it on the contract. The difference between homeowner’s insurance and a home warranty.

Sherwin: Okay.

Todd: They both kind of sound the same. What is the difference?

Sherwin: Well a lot of people confuse both things as the same thing what it is your homeowners insurance protects you from let’s say fires, burglary, we are breaking anything and things like that even from the last one let’s say a busted pipe in your house like I said high-tech plumbing and things of that nature whereas a home warranty actually protects your items in the home like your AC unit, your furnace, your refrigerator if you pay for the extra coverage.

Todd: Okay.

Sherwin: Washer, dryer, dishwasher and things of that nature. Very similar to car insurance and a warranty, those two things is a car insurance there is a warranty on your car. Okay, the warranty is annually renewed a certain fee and you pay that kind of outside of Escrow whereas your hazard insurance your homeowners insurance for the most part unless you pay cash is part of your payment. It is part of the PITI (Principal, Interest, Taxes, and Insurance) that last I is for Insurance that is already paid off annually.

Todd: Okay.

Sherwin: As part of your mortgage payment.Todd: If you have every year what if you don’t have a loan in your cash buyer do they still want to get insurance on the house?Sherwin: No, because you don’t have to, but I would definitely highly recommend it because the same thing happens— the reason why your mortgage company wants you to have insurance if it catches on fire and they want to rebuild it back. Well if you are a cash buyer you are going to want somebody to rebuild back that house instead of you know a pocket.

Todd: So this happens quite a bit. When you are getting a loan the lender always requires it in place before the final loan right, but on cash purchases sometimes people just forget and you close.

Sherwin: Yes.

Todd: And title won’t remind you it is not their job to say, “Hey, did you get insurance on it because they don’t need it.” It is on you and sometimes it is a couple of standards saying, “Hey, wait a minute” so I get insurance so do you think there is people out there that pay cash for house who forgot to put all those insurance on?

Sherwin: Absolutely, I will be honest I have been a victim of this a couple of times when we are closing the deal and I see the warrantee and I go where’s the insurance and I got to call them back and go I don’t know if you are going to call your insurance company and say you need coverage on this house because you are just you know for the most part you just spent 80 grand on the house that is wroth $200,000 to be build, you need to insure that.

Todd: Now a home warrantee, okay. How long do they typically run from close of escrow and then how much do they cost and who pays for that?

Sherwin: It is negotiated for home warrantee a lot of the banks no longer pay for them, a lot of the short sale listings they will not pay for the warrantee. A lot of times the selling will already have one, but you normally it last from the day you close to 1 year anniversary. It will specifically state when it expires.

Todd: Okay.

Sherwin: So that is how long it will last one year although there is a company that does a 13 month now and it is a service call just like a lot of them shows like a deductible ranges between 50 to 75 dollars per service call.

Todd: Okay.

Sherwin: And then you should be paid to see what is wrong with that to file a claim.Todd: When that ends can the homeowner just go buy another year policy?Sherwin: Absolutely he doesn’t have to live with the same company if they don’t like how they were treated before, go get another one from somewhere else.

Todd: Okay. Cool.

Sherwin: Yeah. Todd: Alright so that was it. You know that was the only thing I get that question a lot when they say why are we asking for a— do I have to get that with my no or what they will say is oh, I use USAA, I’m going to get my home warranty with them.

Sherwin: Yeah.

Todd: And we don’t have a home warranty.

Sherwin: No, they get from

Todd: They get insurance.

Sherwin: Yeah it is always confusing so hopefully we clear that out for everybody.

Todd: If someone wants to buy a house since you are like an expert in taking through that process how do they get a hold of you?

Sherwin: Just give me a call (702) 219-5582.

Todd: Alright that is the update for today and I hope to see you on another video. Thanks.