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More Coverage DUBLIN, CA, Sept. 24, 2002 -- As home prices in California soared during the past decade, the cost of home warranties on existing homes rose only marginally despite an increase of up to 20 percent in coverage, according to the Home Warranty Association of California (HWAC). In a poll of HWAC member firms, association officials found that, on average, the cost of "basic warranty coverage" rose less than seven percent between 1992 and 2002. Meanwhile, HWAC reports, home warranty coverage increased substantially, particularly in the area of optional equipment covered. This may include (depending on the individual home warranty company) roof coverage, septic pumping coverage, pool sweep motor and pump coverage. Additionally, most home warranty companies in California now offer condominium coverage, usually with a lower premium than basic coverage. Condominium coverage was not typically available in 1992, the association states. In 1992, HWAC members firms report, basic warranty coverage ranged from approximately $225 to $245. Today, the range is from $240 to $255. At the same time, the cost of a home warranty contract service call (or deductible) has remained virtually constant, ranging from $35 to $50. "In short, home warranty coverage has increased substantially since 1992 -- in some instances by as much as 20 percent -- while prices of home warranty contracts have risen only in the mid-single-digit percentage range," said James Armstrong, president of HWAC. He emphasized that this may explain why nearly nine out of every 10 existing home sales in California carries a home warranty today. Armstrong attributes the "valued added" performance of the state's home warranty sector to a sound regulatory scheme in California (the home warranty industry is regulated by the Department of Insurance), the professionalism of the industry, and heightened awareness of the value of home warranties. 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. In recent years, most HWAC member companies have provided additional coverage for homeowners for such items as air conditioners, washer/dryers and refrigerators. HWAC is a statewide organization of home warranty companies representing approximately 95 percent of warranty contracts sold in Calfiornia. Member firms include American Home Shield, AON Home Warranty, Buyers Home Warranty Company, Fidelity Chicago National Home Warranty Company, First American Home Buyers Protection, and Old Republic Home Protection Company, Inc. ## |
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