Schroeder, 011580 MSAGO, 19800115
|Case Date:||January 15, 1980|
Recently, a service commonly known as a 'home warranty' or 'limited home warranty' has appeared in the real estate industry. Generally, companies which offer this service will agree, for a fee, to repair or replace certain items (appliances, central air conditioning units, plumbing, etc.) should these items need repair during the agreed period of time. The fee is paid by the seller, purchaser or, in some cases, by a real estate broker involved in the sale of the property. The fee is required whether or not any claims are made during the period covered. Please advise if this activity constitutes the business of insurance and, if so, whether these companies should be licensed by the Insurance Department. In responding to your inquiry, the following has been assumed: 1. A company enters into an agreement (contract) with a homeowner who is in the process of selling his dwelling. (The agreement being called a home warranty or limited home warranty). 2. The agreement (contract) provides that the company will repair or replace defective or worn-out specified items in the dwelling such as plumbing, heating and air conditioning system, appliances, etc., during an agreed period of time after the sale of the dwelling. 3. The agreement (contract) is geared to benefit the purchaser of the dwelling, which will, in essence, indemnify the purchaser should one of the specified items become defective. 4. The company providing the agreement (contract) charges a fee, which fee is paid by the seller, purchaser, or, in some cases, by a real estate broker. 5. The company providing this agreement (contract) will provide such to just about any individual who is selling his home and desires to obtain such protection.Our State defines a contract of insurance, pursuant to Section 83-5-5, Mississippi Code of 1972, as follows:
...a contract of insurance is an agreement by which one party for a consideration promises to pay money or its equivalent, or to do some act of value to the assured, upon the destruction,...
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