VAN NUYS, Calif.--(BUSINESS WIRE)--With California registering approximately 20 percent of total national sales, over three million home service contracts (often referred to as “home warranties”) were sold nationwide during 2010, representing the greatest number of sales in the history of the industry, according to the California Home Service Contract Association (CHSCA).
While a growing number of home service contracts are marketed directly to existing homeowners, the majority are still purchased as part of a real estate transaction or subsequent renewal, said Jeff Powell, president of the CHSCA.
“There is little doubt that these numbers reflect the fact that consumers are seeking security and financial protection due to the current economic environment. Home service contracts provide the peace of mind that helps alleviate potential concerns of both home sellers and buyers during the resale transaction and for one year following the close of sale. In addition, an increasing number of consumers are choosing to renew their plans year after year to continue to be protected from breakdowns as their systems and appliances age,” Powell said.
Powell reported that a total of at least 583,000 home service contracts were purchased in California in 2010. Stressing that consumers who use home service contracts increasingly recognize their value, he noted that over 300,000 renewal contracts were purchased in the state last year.
He underscored that the home service contract industry has long advanced consumer education about contracts.
“Home service contracts will vary in the details of benefits provided. The market is very competitive and consumers have many choices when it comes to benefits, service and pricing. Contracts of CHSCA member firms are typically only a few pages and outline the complete terms and conditions of coverage. Consumers should compare contracts and consider the systems, appliances and utilities unique to their property. This will help them be more knowledgeable to select a product with coverage to meet their needs,” he said.
Powell added that it is also important for consumers to understand that home service contracts have limitations and that “everything” cannot be covered by a contract that typically costs less than $500 a year.
“While contracts cover many breakdowns, there must be reasonable limitations to keep plans affordable. Members of the National Home Service Contract Association (NHSCA) paid out well over one-half billion dollars nationwide to local contractors in 2010 to service customers’ homes. Even so, member firms are always working to make contracts easier to read and understand as the industry strives to close any potential gap between available benefits and customers’ expectations,” he said.
About Home Service Contracts
Home service contracts generally provide service, including the repair or replacement for items such as dishwashers, ovens, garbage disposers, electrical and plumbing systems, heating and ventilation systems. Many home service contract providers also offer a menu of optional items such as air conditioning systems, swimming pool and spa equipment, well pumps, and free-standing appliances such as refrigerators and washer/dryers for an additional fee. Contracts generally do not cover pre-existing conditions, but will provide service, repair or replacement for failures arising due to normal wear and tear during the contract period.
About CHSCA
Members of the new CHSCA, which provide approximately 95 per cent all home service contracts in California, include 2-10 Home Buyers Warranty, American Home Shield Corporation, BPG Home Warranty, Fidelity National Home Warranty Company, First American Home Buyers Protection, HISCO/CRES Home Warranty, HMS National/Cross Country Home Services, Inc., Home Security of America, Inc., Home Warranty of America, Inc. and Old Republic Home Protection Co., Inc. For more information, visit www.homeservicecontract.org/california.htm.
About the National Home Service Contract Association
The NHSCA is a non-profit 501© (6) industry trade organization of member companies serving home service contract providers and consumer interests throughout the United States. To learn more about the NHSCA and to find answers to the most common questions regarding the purchase of home service contracts, visit www.homeservice contract.org http://www.homeservicecontract.org.