is the "Residential Service Contracts" AKA "Home Warranty" necessary when buying a condo apartment?

[ToyYot]

Originally Posted by Wardendresden

There is absolutely no Homeowner or automobile policy ANYWHERE in the United States that covers ALL RISKS. In every such policy they will state that they cover all BUT the named exceptions. But an agent will often stress the "all risk" aspect without mentioning the named exceptions.

I guess I'm splitting hairs but that is the definition of an all risk policy. It covers all risks subject to certain exclusions which eliminate cover in particular circumstances - like flood.

As opposed to a named perils policy which only covers losses arising from the perils named in the policy - fire, wind, hail, etc, subject to certain exclusions which eliminate cover under particular circumstances.

All exclusions being the same, the all risk policy offers broader coverage. State Farm offers all risk, my current home policy is named perils and I will be switching to all risk when the additional premium fits my budget.

But I do agree the average insurance buyer can be easily misled by an unscrupulous agent.

[Wardendresden]

Originally Posted by BDFP

I guess I'm splitting hairs but that is the definition of an all risk policy. It covers all risks subject to certain exclusions which eliminate cover in particular circumstances - like flood.

As opposed to a named perils policy which only covers losses arising from the perils named in the policy - fire, wind, hail, etc, subject to certain exclusions which eliminate cover under particular circumstances.

All exclusions being the same, the all risk policy offers broader coverage. State Farm offers all risk, my current home policy is named perils and I will be switching to all risk when the additional premium fits my budget.

But I do agree the average insurance buyer can be easily misled by an unscrupulous agent.

Yes, I agree that in general most people will "accept" that named exclusions means all risks. But the list can get quite long. In addition, I personally have heard people say, "But he said it was all perils." So as a compliance officer I cautioned co-workers, sales representatives, and agents to avoid that term.

Earthquake is not covered unless you pay for an endorsement, and some companies don't offer it. With more earthquakes occuring in Texas (fracking?), this might be an endorsement some would be willing to pay for, but it is generally not cheap.

Another exclusion which cannot be endorsed off a policy is War, whether declared or undeclared. I still wonder about another terrorist attack which might cause widespread damage---would insurance companies try to claim "War"? I know they would like to, but I suspect that there would be a lot of public and political pressure on them to pay off. But a missle strike? War.

I think you are making a wise move to go to State Farm's better policy. There are some coverage provisions which have some actuarial significance to them.

I've been retired from the insurance field for about ten years now, so certainly there have been at least a few changes to policy provisions over those years. And I worked for independent insurance companies rather than direct writers such as State Farm or Allstate. Big difference in how the independent companies vs. direct writers market their products. Both types of companies have advantages and disadvantages, but the majority of people will think price first.

Home warranties do not have as many "large" providers. American Home Shield would be my guess as the largest. So for smaller companies, I would recommend checking on their financial status prior to purchasing a policy. Not sure if Texas Insurance Department would have that information, and I believe Best's, a company that analyzes insurance companies' financial condition, probably does not include home warranty operations. You might have to google your way to an answer which might not be that satisfactory.