Value, Reasonable Cost Cited

CONSUMERS SELECTING HOME WARRANTY OPTIONS

AT INCREASING RATE

AS HOME PRICES HAVE RISEN

by Art Ansoorian

           VAN NUYS, CA -- Consumers purchasing home warranties in California -- now part of over 90 percent of existing home sales in the state -- are selecting optional coverages on these contracts at a steadily increasing rate, now approaching 1.5 options per contract, according to the Home Warranty Association of California (HWAC).

            In a informal survey of HWAC member firms, which represent approximately 95 percent of all home warranty contracts written in California, the association found that since 2001 there has been a growth rate of some three percent annually in the number of home warranty contracts that include optional coverages.  Most HWAC-member firms report that air conditioning coverage is the most frequently chosen option by far, with pool/spa and refrigerator options a distant second.
          

           The HWAC survey also found that consumers who purchase home warranty contracts directly (as opposed to a home seller buying for a home buyer, and including customers who are not moving or home buyers) typically select a “package” of options in a growth rate of some 20 percent annually.  This would include air conditioning, refrigerator, washer/dryer, and other items.
 
          “We attribute the increased selection of home warranty contract options to several factors.  First, consumers perceive home warranty options to be a good value at a reasonable price, while completing their coverage package.
 

           “Additionally, with the dramatically increasing price of homes in California and the concurrent ability for homebuyers to move-up to homes with more amenities, the desire to cover additional features in the home, such as spas and pools, comes far more into play,” said Mark Lightfoot, president of HWAC.  He emphasized that with today’s home prices, the cost of a home warranty becomes negligible.
 

           Lightfoot added that the typical home warranty contract option ranges from $50 to $60 in additional cost to the average standard home warranty contract costing $250.  Typically, a home warranty covers a home's major operating systems for one year after the close of escrow.  Items covered include plumbing, heating and electrical systems, most-built-in appliances, and water heaters; and optional coverages are available to cover items such as air conditioners, pool equipment, washer/dryers and refrigerators.

           HWAC is a statewide organization of home warranty companies representing approximately 95 percent of contracts sold in California.  Member firms include American Home Shield, AON Home Warranty, Buyers Home Warranty Company, Fidelity National Home Warranty Company, First American Home Buyers Protection, HISCO Home Warranty Company, and Old Republic Home Protection, Inc.