It comes neatly packaged in a business envelope, complete with an acceptance form and a handy business reply envelope.
But Arkansas Attorney General Dustin McDaniel says “buyer beware.” The AG says a warranty being offered to many Arkansas consumers to provide protection for water service lines may be literally tossing their money down the drain.
According to the Attorney General's Website, Arkansas homeowners have reported being solicited by a company peddling warranty coverage for water service lines connecting a house to a utility company's main water pipe. The Website says the monthly premiums may sound alluring up front but a closer look reveals that homeowners are hardly ever covered by common waterline problems.
McDaniel issued a “Consumer Alert” to give Arkansas consumers can get all the facts before buying into water-line warranty coverage.
“Consumers invest in insurance and warranty policies for the peace of mind they receive by knowing they are protected in the event of a problem or emergency,” stated McDaniel in his Consumer Alert report. “This type of warranty comes with too many stipulations and too little security for the consumer.”
McDaniel went on to say that in fact the water-line service coverage might already exist as part of a consumer's current homeowners' insurance policy. The AG suggested homeowners check their insurance policy or their insurance company for more details. If it is not included it is possible that it could be added to the existing policy at about the same price or possibly lower than buying the coverage separately.
Mail-outs sent to Arkansas residents promote waterline coverage for a monthly fee of $4.99. The policy provides up to $3,000 in coverage twice a year. According to the AG, that means no matter how expensive it gets to repair the line consumers could be left footing the bill for anything over $3,000. Frequently, such expenses well exceed the coverage limit.
McDaniel pointed out that numerous exclusions keep the consumer from ever being able to file a claim. Coverage does not apply if pipes are damaged due to freezing and thawing (a common occurrence in Arkansas during the winter months); acts of God (These acts are not defined by the seller); pre-existing conditions (difficult to define for subterranean water pipes); or normal wear-and-tear.
The AG's report also states the policy omits payments for repairs due to controllable leaks (A controllable leak is not described) and repairs to lines without previous authorization.
McDaniel says with so many vague exclusions, it is nearly impossible to determine just what is covered.