Home warranty or home service plans are widely available today to help pay for repair or replacement costs when appliances and system components such as air conditioning and heating systems break down.
For a fee, payable monthly or annually, if the washing machine dies or the heating system breaks down, the plan pays the repair or replacement cost, after the homeowner pays a deductible or copay.
Similar plans are now available in the United States that cover the costs of repairing exterior utility service lines on private property, typically not covered by water and sanitary sewer service providers.
Some utility providers offer such services with fees added to utility bills and they also are available through private companies. However, unless homeowners have received a solicitation for such a plan from a utility provider or a private company, it’s likely they are not aware that they are responsible for repairing their water or sewer service lines.
HomeServe USA is one company that provides water service line coverage for repair or replacement of a leaking or broken exterior water service line on homeowner property. Earlier this year, HomeServe launched a mail campaign to individual homeowners in several cities.
For $4.99 per month, mailed information says, the plan provides $6,000 coverage per year with a maximum of two service calls a year and $3,000 maximum per covered claim. Payment also can be made quarterly ($14.97) and annually ($59.88).
Covered homeowners call in a claim when repairs are needed. A licensed and insured local contractor does the work and HomeServe pays the covered costs.
HomeServe USA currently has more than 1.3 million service contacts in force, said Myles Meehan, HomeServe’s senior vice president for account management. A significant proportion of these contracts provide coverage for water service lines and sewer laterals through HomeServe partnerships with water utilities, he added.
HomeServe also offers plans covering natural gas service lines; outside electrical service lines and inside wiring, including low-voltage and communications wiring; central heat and air conditioning systems; and hot water system components.
“HomeServe offers water service line and sewer/septic line coverage across 36 states,” said Meehan. “There are some variations across the states, depending upon the specific requirements of our local utility partners. In general, the differences are based on the annual dollar limit of the coverage, the number of claims allowed per year, the extent of property restoration, etc. HomeServe tries to design coverage plans that cover the majority of situations that homeowners may encounter, while keeping prices of the plans affordable.”
Regardless of its success in terms of new business, HomeServe’s efforts to sell water service line protection is giving many thousands of homeowners the opportunity to be aware, likely for the first time, that repairing their water service lines is their responsibility and their expense. This awareness has to be a positive development for utility providers and contractors who serve them.
HomeServe was founded in the United Kingdom in 1993. HomeServe USA was established in 2003.
The web provides a fast easy way for disgruntled consumers to voice grievances — justified or not — about products and services, and complaints about HomeServe can be found on several web sites that specialize in collecting and posting consumer complaints. Most are from homeowners who learn that needed repairs are not covered by their plan or for slow or inferior service by the third-party contractor assigned to make repairs. Similar complaints also are common for home appliance protection plans.
Considering a customer base of more than one million, the number of HomeServe complaints on web sites is not significant — the company claims a 97 percent satisfaction rate with the entire HomeServe USA emergency process, based on surveys conducted by HomeServe.
“When a customer contacts HomeServe’s 24 hour emergency hotline and a job is dispatched to one of HomeServe’s service providers, the service provider must contact the customer within an hour to confirm the job and agree on a time of arrival,” said Meehan. “On average, HomeServe service providers are on site within three hours of the customer’s call.”
HomeServe uses licensed and qualified service providers from the local community to perform work on the company’s behalf, Meehan added.
“Our contractor certification process includes significant pre-qualification that can include auditing licensing and insurance coverage, background checks, drug testing, and onsite inspection by our field managers,” he said. “This process can also involve the service provider signing a contract with HomeServe and receiving training from us.
“Following a service call, customers sign a document indicating that they are satisfied with the work performed. In addition, 48 hours after the work is completed, HomeServe contacts the customer to conduct a satisfaction survey of the service process. Portions of this survey also measure the performance of the service provider from the customer’s perspective. Finally, HomeServe has a comprehensive escalation process should a customer express dissatisfaction with any aspect of the service. The internal team with this responsibility has broad powers to take the necessary steps to resolve customer issues.”
One of the final questions that HomeServe asks the customer is to rate their overall satisfaction with the service offered, said Meehan. It is the response to this question that is the basis for the claim that 97 percent of HomeServe customers receiving service rate it satisfactory or above.
However, HomeServe has had problems resulting from allegations of misleading advertising, specifically mailings sent to prospective customers that appear to be from utility providers and are mistaken for a bill due or a mandatory charge for service.
Consumer complaints to the Kentucky and Ohio attorneys general alleged solicitations that were mailed to consumers offering water line repair services generated confusion and numerous complaints from consumers and public utility officials due to its design and wording, which suggested that the service was a mandatory fee imposed by the utility company.
One of HomeServe’s utility partners in a different part of the country, who asked not to be identified, experienced the same problem with complaints filed with another state attorney general.
The Southeast Florida Better Business Bureau (BBB) — HomeServe’s operations headquarters is in South Florida — record for the Kentucky and Ohio cases documents that:
• In an Assurance of Voluntary Compliance agreement in Kentucky, HomeServe sent letters clarifying that its service is optional and not required by the consumer’s water utility company or local government. The consumer was given the opportunity to cancel the service by notifying HomeServe USA within 30 days of the corrective letter and receive a full refund of any monies paid. In addition to the corrective measures, HomeServe USA paid $7,500 to the state for civil penalties and the costs of investigation; and
• In Ohio, HomeServe USA agreed to refrain from using unfair, deceptive, and/or misleading advertisements, which would violate the Consumer Sales Practices Act. Under the agreement, HomeServe USA agreed to pay $15,000 to the Office of the Ohio Attorney General for attorney fees and investigative costs.
In addition, at the request of the Southeast BBB, HomeServe discontinued use of mailers after consumers in Southeast Florida complained that mailings resembled a utility bill from a local or state agency.
Regarding these legal issues, Meehan said: “There have been a limited number of instances where HomeServe has had inquiries from state attorney general offices. These have primarily been the result of specific mailings that took place in early 2010. In all inquiries, HomeServe has been forthcoming and cooperative with these offices. In three cases, HomeServe signed an Assurance of Voluntary Compliance with the state attorney general offices. While HomeServe materials were not found to be misleading in those cases, HomeServe agreed to this outcome in the spirit of working together with these offices to improve our materials.”
HomeServe is dedicated to presenting consumers with clear information so that they are informed about the services they receive, said Mehaan. HomeServe marketing materials are designed to give prospective customers information about who HomeServe is, what their responsibilities are, what HomeServe’s affiliation is or is not with the local community or utility, what the coverage does, and that the coverage offered is optional.
“We continuously work to improve these materials so that they accurately reflect these items, comply with applicable consumer laws, and incorporate best practices,” he continued. “In addition to ongoing internal review, we regularly engage nationally recognized legal counsel specializing in marketing practices and consumer law to review our materials to assure that they are both explicit and transparent. Moreover, after a customer signs up for coverage, HomeServe provides a 30-day period for customers to review the coverage materials, including full terms and conditions. Should the customer decide that the coverage is not right for them, HomeServe provides a full money back guaranty.”
Several HomeServe industry partners told Underground Construction that their association with HomeServe is the result of acquisitions of companies that already had agreements with HomeServe.
Three partner organizations — Aqua, United Water and CalWater – have brief video testimonials on the HomeServe web site.
Deb Rizzi, director of communications for United Water said some of United’s operating companies have arrangements where customers are offered HomeServe water plans.
“It works well,” she said. “If there are issues, HomeServe takes steps to resolve them.”
Anthony Donatoni, of Aqua Resources, a non-regulated subsidiary of Aqua Industries, said most Aqua customers with HomeServe plans are satisfied.
“With about 150,000 customers with HomeServe contracts, we average about 10 complaints a year,” said Donatoni. “I personally review every complaint, and I can say customer satisfaction is above 95 percent. Aqua has maintained strict control over the content of information sent to Aqua customers, and they contain no mandates.”
“Reliable, affordable peace of mind,” is a phrase often used in promoting the services offered by HomeServe USA. Depending on the location, for about five dollars a month, homeowners don’t have to worry about the cost of replacing water service lines, provided the cause of the trouble is covered in their HomeServe contracts.
However, based upon information received by Underground Construction, covered and exclusions are difficult to understand, and water line problems may occur months or years after a contract is executed, long-past the 30-day cancellation period.
Meehan said that HomeServe’s water service line coverage basically provides for the emergency repair or replacement of burst, broken, or leaking water service lines on the homeowner’s property that are their responsibility.
The most important exclusions of HomeServe’s water service line coverage, he said, are thawing of temporarily frozen pipes, pre-existing service line breaks, piping inside the home and sprinkler system piping.
For example, if a line has been in the ground for more than 30 years and a portion near its midpoint between meter and house connection breaks or otherwise fails, would it be covered by HomeServe’s water service line protection plan?
The answer: “Assuming you are the homeowner, and have the responsibly for this section of pipe, this is an excellent example of the type of emergency covered under the HomeServe water service line plan.”
FOR MORE INFO:
HomeServe USA, (888) 777-1175; http://homeserveusa.com