Typically included while purchasing a home, these contracts have minimal coverage and many exclusions. This industry is regulated by the Texas Real Estate Commission where numerous complaints are filed. Most home warranty companies are understaffed, do not return phone calls and use contractors that work out of their homes. In short, these contracts are not worth the paper they are written on. I would not purchase or renew a home warranty contract.
Most car dealers try to sell you an aftermarket vehicle warranty that attempts to either exceed or parallel the manufactures warranty. The dealer will try to sell you a warranty that is NOT a manufacturer’s warranty ( i.e. Toyota, General Motors and Ford Motor Company) but a warranty from an out of state company that is typically understaffed and will not return phone calls. Also, once you purchase a vehicle you might get a sales solicitation in the mail. There are many exclusions, limitations and traps in these contracts. Dealers like to push these non OEM contracts on consumers because of what? Pure profit. The profit margin is substantially higher for non OEM warranties. If you do buy a non OEM warranty, most dealers are out of the loop and will not help you should you have a claim.
This is one of the biggest problems going on in Texas. Have you seen all of the strip shopping center and/or store front insurance agents popping up? They are not true insurance companies but are managing general agents aka MGA’S.
An MGA is defined as follows: any person, firm, or corporation who has supervisory responsibility for the local agency and field operations of an insurance company or carrier within this state, or any part thereof, or who is authorized by a company or carrier to accept or process in its behalf insurance policies produced and sold by other agents.
MGA’S not only can sell polices for a carrier, they are also authorized to handle claims.
INSURANCE CODE , TITLE 13. REGULATION OF PROFESSIONALS, SUBTITLE B. AGENTS, CHAPTER 4053. MANAGING GENERAL AGENTS, SUBCHAPTER A. GENERAL PROVISIONS. http://www.statutes.legis.state.tx.us/Docs/IN/htm/IN.4053.htm
MGA’S will sell you a policy but they are not actually the true insurance company behind the policy. The MGA has a contractual agreement with an insurance company (typically a county mutual company with few assets). The MGA typically has limited assets, typically extremely poor claims procedures and guess what, they either delay or refuse to pay valid claims. You can go to http://www.tdi.texas.gov and check out all of the complaints against a given company. The Texas Department of Insurance (TDI) has received numerous complaints from consumers regarding these limited liability policies. As a matter of fact, the TDI has ordered that these limited liability policies be in certain SIZED FONT AND BE IN SPANISH because they are so confusing to the consumer.
Some examples of MGA's are:
You can yelp and/or google any MGA and see what consumers think about them. Mostly, not good.
They sell limited liability policies. That means that if you buy a liability policy from one of these MGA’s, no one else is covered BUT YOU. So if your spouse or daughter or friend has a wreck in your vehicle and regardless of fault, you are not covered nor is the person you gave permission to drive your vehicle. They are also known for excluding drivers from coverage. You get what you pay for.
For the most part, all MGA's want to sell you is liability only policies and won’t tell you that you have the Texas right to purchase uninsured motorist coverage up to the limits of your liability limits. Although they have to get your written rejection on both uninsured motorist coverage and personal injury protection if you don't want the coverage, they will not push the coverage and rarely explain the importance of having uninsured motorist coverage. Uninsured motorist coverage is by far the most important coverage you can buy other than state required liability insurance.
Guess why insurance companies do not push selling uninsured coverage? It's because it is one of the least profitable lines of insurance. They sell UM coverage because the legislature makes them offer the coverage to you. In my experience, over 25% of those driving on Texas roads do not have any type of automobile liability coverage. The fact that the Texas Department of Insurance (TDI) and Texas Legislature allows MGA’S to sell limited liability policies makes the statistic of no insurance drivers worse.
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