Home Warranty Use on Resale Homes Rose Sharply in 1994

Home warranty usage on resale homes rose dramatically in California for 1994, establishing record highs in sales and market share, according to the Home Warranty Assn. of California (HWAC).

About 240,000 home warranty contracts, not including renewals, were sold in California last year, representing a 14.8% increase over the 209,000 home warranties sold in 1993.

In terms of market share, more than 76% of all previously owned homes sold statewide included a home warranty last year, compared to about 65% of resale homes sold with a warranty contract in 1993, the association reported.

The total home warranties sold in California during 1994, when more than 70,900 annual home warranty renewals are included, was the highest in history at 310,000. The previous high was 278,199 sales in 1989.

A home warranty typically covers a home’s major operating systems for one year after close of escrow (contracts can usually be renewed after the first year). Examples of items covered include plumbing, heating and electrical systems, most built-in appliances and water heaters.

Marty Wool, president of HWAC, noted that an average of 1.7 claims per annual contract are currently being experienced.

HWAC is a statewide organization of home warranty companies representing 98% of warranty contracts sold in California. Member firms are American Home Shield, Buyers Home Warranty Company, Continental Home Warranty Inc., Electronic Realty Associates (ERA) L.P., First American Home Buyers Protection, HAA Home Protection of California Inc., HISCO Home Protection Plan, Old Republic Home Protection Co. Inc. and Sierra National Home Warranty Corp.