Home Warranties in the News … and it’s Not Good

Yesterday, NBC 5 in Chicago aired a report critical of the home warranty business. How will the industry respond?The report tells the story of a suburban Chicago home buyer who was denied coverage when the furnace in her new house went out because, the repairman said, the faiure was due to a “pre-existing condition.” She’s not pleased. And now everybody (or at least a few hundred thousand people in the Chicagoland area) know about it.

So just as the housing market is picking up steam, the home warranty business gets hit between the eyes (or, perhaps more accurately, below the belt) with a highly negative and potentially damaging story. If the story gains internet traction, the damage may be widespread and long lasting.

Will the industry respond?

Where will the response come from?


Not long ago, WarrantyWeek asked whether the service contract industry needs a spokesperson.  Instances like this one make a strong argument for answering the question: “Yes.”

DrivingValue.com guest “poster,” Jim Martinez of RightStoryGroup, posited that the service contract industry is playing Russian roulette with its reputation.  We suspect his answer to the spokesperson question may be a bit more emphatic, something along the lines: “Hell Yes!”

Bottom line:  Stories like this one remind us that an industry, no matter how successful, is one teed-off customer – or one viral internet episode – away from real crisis.  Is the service contract industry prepared?

1 Comment

Filed under Customer Experience, PR & Branding, Risk Management, Service Contract

One response to “Home Warranties in the News … and it’s Not Good

  1. Dennis Cosper

    You can clearly understand the frustration of the Home Owner. Having worked in the Housing industry, I found that there were often correct or incorrect “interpretations” of the warranties that left the Homeowner open to dissapointment.

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