Calif. Consumers Reportedly Enjoy Increasing Value from Home Warranties

September 21, 2005

California homeowners are receiving value at unprecedented levels by owning home warranty contracts for existing homes as the industry saved contract holders over $127 million in repairs and replacements during 2004, according to data released by the Home Warranty Association of California (HWAC).

At a time when Californians are reportedly purchasing home warranties in record numbers (more than 500,000 contracts were sold last year), HWAC also reports that homeowners made over 1.2 million claim requests in 2004. On average, owners of home warranties file two claims per contract year.

“This data indicates that homeowners with home warranty contracts are increasingly knowledgeable about how to use the product and enjoy maximum value,” said Mark Lightfoot, president of HWAC.

Responding to a common query about the extent of home warranty coverage, Lightfoot said home warranty companies cover appliance and system breakdowns caused by normal wear and tear.

“Everyone recognizes that appliances and systems eventually break down during their normal lifecycle; it’s inevitable. However, consumers should understand that normal wear and tear does not include breakdowns normally covered by homeowners insurance, such as an accident like a tree falling on a house,” said Lightfoot.

Pre-existing conditions represent another key concept consumers need to understand, according to Lightfoot.

“Home warranty companies do not cover appliances or systems that were already broken on the effective date of the contract. It’s comparable to homeowners insurance, which does not cover a home that has already been damaged by fire and wind, or auto insurance not covering a vehicle after it has already been in an accident,” said Lightfoot.

He explained that a quality repair technician can readily determine whether or not an appliance or system was already broken.

“Nevertheless, if a pre-existing condition is unclear, home warranty companies will treat their customers fairly,” Lightfoot declared.

Lightfoot noted, however, that just as homeowners realize that homeowners insurance will not cover damage from a house fire that occurred before they bought the insurance policy, a home warranty will not cover the repair of an appliance that broke down before they purchased the home warranty in the first place.

“Consumers get the best value from their home warranty provider if they leave the entire process to the professionals: the diagnosis as well as the repair or replacement,” Lightfoot said.

Lightfoot underscored the customer satisfaction with home warranty company service by noting that in 2002 the industry in California completed 1,048,045 service calls. Of these, just 817 complaints were filed with the state’s Department of Insurance, representing less than one-tenth of one percent of total service calls.

Was this article valuable?

Here are more articles you may enjoy.