Florida Company Mass Mailing Rankles Some — They want your water line business

I missed the latest in insurance products, but my friend Gabe Zambrano did not miss it.

Insurance company, HomeServe USA, has a fool proof product for you. Well, really its fool proof for them…possibly just foolish for you and me.

HomeServe wants to provide you insurance protection for your water line at your house. They are mailing notices to homeowners who have been deemed to need this product after HomeServe’s “review” of their property. HomeServe warns that damage to your water line could cost you thousands, but for $4.99 a month, which HomeServe will kindly extract from your bank account for you, they will put your mind at ease.

The Sun Sentinel reported on Elizabeth Railsback who received one of HomeServe’s very official looking notices about her property in Southwest Ranches, Florida. HomeServe promises to protect her buried water line for up to $7000 in a given policy year and provide two calls per year to (presumably) repair any problems for a maximum of $3500 per call. All of this is for the small, insignificant really, monthly charge of only $4.99.

Now there are some wrinkles:

• You must wait 30 days before you can make a claim; so you really are only covered for 11 months, not 12.
• Oh, and the line is only covered if it is “installed correctly and meets local laws”.
• Oh, yeah, you also have no coverage if the line “is damaged as a result of natural disaster, pre-existing condition, accidents or negligence”.
• You also have no coverage for “obsolete parts, ornamental plants, swimming pools, decorative features, faucets or bib hoses”.

At first, I thought, this can not be for real can it? I went to HomeServe’s website and, sure enough, all true. And they say it with a straight face and everything.

In fact, HomeServe will cover all different parts of your home for different prices per month. For example, the interior plumbing system for $8.99 per month for a total of $5000

(based on a limit of two calls a year and a limit of $2500 per call). What does it not cover?

• No breakdown caused “by a condition which existed prior to the effective date of the service agreement”. So, they say they cover wear and tear, but apparently not if they can determine the wear and tear existed prior to the service agreement.
• No claims in the first 30 days of the service policy. So you pay for 12 months, but get only 11.
• They don’t cover breakdown “caused by faulty construction, improper maintenance or a lack of maintenance”.
• No damage is covered “arising from a controllable leak where you could have contained or shut off the leak yourself”.
• No coverage for water tanks, water heaters, radiators, bathroom fittings, toilet bowls bath tubs, or sinks.
• No coverage for repairing or replacing damaged walls, floors, ceilings, carpets, cabinets, paneling, stucco, wood, tile, wall paper, etc.

It is true that HomeServe is offering coverage for things in and around the home that traditional insurance policies typically exclude. The danger here seems to be in two areas. Take Ms. Railsback for instance; she does not have city water lines because she is on a well. Yet, in HomeServe’s mailing they tell her they have looked into her water pipe situation at her house, yet they describe a city water configuration and not well water. They give the impression that specific information is known about the consumer’s property and needs…and they are the answer.

Many of the 600,000 mailings from HomeServe probably went to the elderly consumers or people who may not be sophisticated enough to understand what they are buying and the method to be used for payment is automatic withdrawal from checking accounts and automatic renewal each year.

Is it illegal for HomeServe to sell these products? Attorney General Pam “Jo” Bondi says she is looking into complaints, but ultimately it is a case of buyer beware; if the deal seems too good, it probably is; and carefully read what you are buying. To HomeServe’s credit, they do have their agreements on the website. The question to be resolved is what are you really buying and is it worth the money being charged?