Home Warranty vs. Home Insurance

When someone buys a home, they are putting in an investment into their own or their family’s future. As a homeowner, it is important to be able to maintain this investment by protecting the house and the possessions inside. This maintenance can be accomplished through tools such as home warranty and home insurance. Understanding the dichotomy between the two and how to use each to protect your home is important if you are looking for the strongest protection of your home.

What’s the Difference?

Homeowner warranties protect home appliances and systems from breakdowns caused by the normal wear and tear they go through during the owner’s everyday life. If the garbage disposal stops working, a home warranty may cover it as long as it is covered under the policy.

On the other hand, homeowner insurance protects the house and its contents from atypical phenomenon such as flooding, fire, or storms. If the house catches fire, home insurance will help pay to replace the house and its contents. Knowing and understanding which type of policy applies to your specific situation will better enable you to protect what you own.

Why Buy a Home Warranty Policy

The most important fact to understand about home warranty is that it comes into play through the expected wear and tear of regular use of the appliance/system. It does not protect from the unusual events that are covered by insurance.

However, this means that a homeowner warranty is more universally applicable. Appliances break. Systems stop working through no direct fault of the homeowner. These types of occurrences are a part of regular life, and these are what a home warranty covers. If one day your electrical system stops working because it got worn out, your applicable home warranty can cover that. Dishwasher breaks? The warranty can cover that. Through a homeowner warranty, a homeowner is protecting themselves and their finances from the appliances and systems giving out due to regular expected use.

Why Buy a Home Insurance Policy

Home insurance policies, while only applicable in specific circumstances, give a greater amount of protection. An inch of floodwater can cause extreme damage to the house and the belongings found inside. The insurance policy is replacing all sorts of items damaged by the circumstance. Homeowner insurance protects a homeowner and their finances from the worst circumstances that could potentially cost them everything in their home.

Conclusion

Both a home warranty policy and home insurance policy are important for the maintaining of your home. Whether it be through daily use or a major peril, a combination of these policies can extend your protection to cover nearly all circumstances. Both of these types of policies are designed to protect homeowners from the unexpected.

While it is always important for each homeowner to understand the specific limitations that these types of policies have, that does not lower the value and importance that these types of policies bring. If you do not have one or both of these types of protection policies for your home, consult your local agent to figure out a policy that works best for your home.

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Workers Compensation Case Study: Injury Sustained at a Work Function Away from Work

If an employee sustains an injury at a voluntary team building work function, can the employer be held responsible for workers compensation? The case study of Stephen Gordon examines this question.

Stephen Gordon worked for a sales organization that was holding an event at a local go-karting facility. The event was completely voluntary. Stephen suggested that the purpose of the event was to build rapport and boost morale amongst employees. It was intended to reward employees for their hard work and success.

During the event, Stephen Gordon and other employees participated in go-kart races that were incentivized by prizes awarded to the fastest times. During Stephen’s race, he lost control of the go-kart and collided with the railing, forcing him from his go-kart. Following the injury, Stephen felt okay and continued to participate in the rest of the event (though he could not finish the race).

In the following weeks Stephen visited the hospital multiple times and eventually had to undergo surgery to remove fluid from a punctured lung that was the result of a rib fracture. This injury required Stephen to miss time from work for which he was compensated.

Stephen later filed for workers compensation and was heard by an administrative law judge (ALJ). Stephen argued that while the work event was not mandatory, there was some pressure to attend the event and to demonstrate your commitment to the team. He further argued that while racing was not mandated, it was encouraged and further incentivized by prizes.

The ALJ found that Stephen’s injuries arose during the course of his work day and further agreed that while the event was not mandatory, there was some pressure to attend the event and also to participate in activities at the event.

The employer appealed the case, however, the appealit judge upheld the original ruling and agreed that there was substantial evidence to support the finding that while the event was not mandatory, employees were encouraged to attend the event and incentivized to race at the event.

Ultimately the courts sided with Stephen and he was awarded a 15% disability. It’s important that businesses and employees recognize that the company can be held responsible for injuries sustained to employees while on the clock. It does not matter whether or not the employee is at a voluntary event or not. If the employee is being paid and a judge can rule that there was some pressure for the employee to attend the event, then the company will be held liable for any injuries sustained during that time.

Why Flood Insurance is Important

When it rains, it pours. Often times life can find ways to push us down when we least expect it. Because of this, we often have to take preventative measures in order to maintain control when events go awry. Flood insurance is one of those preventative measures that can keep you afloat when life sends its worst at you.

Who Needs Flood Insurance?

Every home is vulnerable to flooding. Just an inch of water can cause thousands of dollars’ worth of damage. Some are more susceptible than others, but no home is flood-proof. Nearly one fourth of the claims made to the National Flood Insurance Program (NFIP) come from outside high-flood risk areas and receive a third of flood-related federal disaster assistance. Given this, everyone should consider purchasing flood insurance for their home, even if it is not required for their mortgage.

Cost

According to the NFIP, one foot of water could cause $27,150 of damage to a 1,000-square-foot home with the average claim being higher than $38,000. Without flood insurance, this cost crashing down all at once will greatly damage a family’s finances. With so many homes being susceptible to flooding, including those in moderate to low-risk zones, flood insurance is worth the investment.

The average annual cost of flood insurance is about $700. Policies for homeowners in moderate to low-risk areas usually cost less than $500 a year. This makes the decision of purchasing flood insurance a weighing of two costs. Given that the average claim for flood insurance is higher than $38,000, this covers over 50 years of the average flood insurance premium. With this put together, if you feel there is any risk at all of your home being flooded, flood insurance is a wise investment to make.

What does Flood Insurance Cover?

While every policy will vary with different coverages and premiums, the NFIP gives a strong standard of what the typical flood insurance policy looks like. If you would like a full list of what is covered under a typical flood insurance policy, refer to this NFIP fact sheet.

The items on this sheet refer to building and personal properties, among those being the electrical and plumbing systems, furnaces, water heaters, refrigerators, foundation walls, well water tanks, clothing, furniture, electronic equipment, portable appliances, clothes washers and dryers, and certain valuable items such as original artwork and furs.

Conclusion

In conclusion, flood insurance is a valuable safety net for nearly everyone. Your policy has the ability to save you thousands of dollars out of pocket and covers a wide assortment of items. If you do not have flood insurance, consider getting an estimate from the NFIP or a private insurance agency. It may just save you when life sends its worst.

Why Your Company Needs Workers’ Compensation Insurance

Congratulations, you just started your very own business. After receiving your FIEN and state account number, you’re ready to hire your first set of employees. Well, after you hire your employees, the process isn’t finished yet. In fact, it’s only the beginning.

Most new business owners are not aware that the law requires them to insure each of their employees through workers compensation. Workers compensation is a “type of insurance that provides restitution for medical care for employees that are injured while in the place of employment, in exchange for the forfeit of the employee\’s right to sue the employer under the umbrella of negligence.”

So before you begin to stress out about the possibility of adding yet another expense line item in your already packed budget, there are numerous of benefits of having workers compensation.

  • As we have discussed, it is the law to have worker’s compensation. Period. So if you are hiring employees, even just one, you need to have them insured. Many states require you to have worker’s compensation or you cannot be in business. But after your employees are insured, you will be in compliance with the law – which is always a good thing right?
  • Worker’s compensation not only covers the medical costs to treat injuries or illnesses, it also covers missed wages. Although some laws require employers to pay a portion of these missed wages, your insurance will cover a substantial cost of it.
  • The next benefit is ongoing care. In the ever unfortunate event that an employee gets severely injured on the job, your insurance will cover those costs. In extreme cases, an employee may not be able to return to work which means your business may be required to pay for their care. By having workers compensation, your policy will cover these costs.

There are other added benefits of having workers compensation such as funeral costs and death benefits and employer’s liability coverage (if your business gets sued).

It is very important that you discuss with your insurance agent what exactly is in your workers compensation policy. Not all policies are the same and it’s important to know what exactly your business needs.