Date: June 25, 2005
For more information contact: Eileen Mallow, Assistant Deputy Commissioner, (608) 266-7843 or eileen.mallow@wisconsin.gov

Office of the Commissioner of Insurance Urges
Research before Purchase of Home Warranty

Madison, WI--Buying or selling a home involves many decisions, including whether or not to purchase a home warranty. The Office of the Commissioner of Insurance (OCI) urges those presented with the opportunity to purchase a home warranty to weigh the costs and benefits and to research various home warranty policies and companies before making any decisions.

A home warranty differs from homeowner's insurance in the scope of coverage. Homeowner's insurance provides coverage for items such as the home structure itself, other structures or outbuildings, personal property, personal liability, medical payments and additional living expenses for events such as fire, lightning, hail, wind, etc. A home warranty covers the mechanical breakdown of individual pieces of a home such as a doorbell, microwave, heating/air conditioning, and plumbing.

"It is important to remember home warranties are insurance and, like insurance policies, do not provide protection for everything that may happen," said Jorge Gomez, Commissioner of Insurance. "Home warranties have exclusions and limitations that can greatly restrict the product's usefulness."

Common damage such as rust and corrosion are categorized as pre-existing conditions by home warranties and are listed as exclusions in most contracts. As a result, consumers should not purchase a home warranty in lieu of conducting a pre-sale inspection of the home.

OCI publications, such as "Warranties," "Buying a Home and Your Insurance Needs," and "Consumer's Guide to Homeowner's Insurance" can be ordered free from the agency by writing to OCI Publications, P.O. Box 7873, Madison, WI 53707-7873, calling 800-236-8517 or visiting the OCI website at oci.wi.gov.

Created by the Legislature in 1871, Wisconsin's Office of the Commissioner of Insurance (OCI) was vested with broad powers to ensure that the insurance industry responsibly and adequately met the insurance needs of Wisconsin citizens. Today, OCI's mission is to lead the way in informing and protecting the public and responding to its insurance needs.