Tucked away in a news release about a major water company’s COVID-19-related donations was a pitch for insurance plans that cover utility-related home repairs. While the company promises “the unexpected—protected,” such offers often end up costing customers more than they’re worth.
American Water is the parent company of Illinois American, a water company that sparks a lot of angry complaints from consumers across the state. In a June news release, American Water’s Homeowner Services division announced a total of $25,000 in donations to two Illinois organizations on behalf of the company’s COVID-19 Response Fund.
CUB is glad to see companies giving back, but the for-profit company then used the pandemic as a selling point to encourage customers to enroll in its maintenance programs.
“Homeowner Services’ protection programs continue to be an optional resource for individuals and families spending more time at home, placing additional stress and usage on their systems and vital lines. The unexpected—protected,” the news release read.
CUB has talked about the woes of maintenance plans like these for years. American Water’s Homeowner Services division markets so-called “protection programs” through several subsidiaries, including Pivotal Home Solutions, Nicor Home Solutions, and American Water Resources.
Nicor Home Solutions was once owned by Nicor Gas, the utility, which NBC 5 Chicago reported, caused a lot of confusion and frustration for customers who saw the “sneaky fees” on their gas bills and were dismayed to find that it wasn’t a utility charge.
Marketed as low-cost insurance to protect you against high-cost, emergency repairs, these plans can cover anything from sewer lines to kitchen appliances, from surge protection to your water heater. Protection plans may look attractive on the surface, but the fine print reveals that they too often turn out to be more restrictive than helpful and more money than they’re worth.
Even if you do need maintenance or repair work done, often there’s a long list of work these plans don’t cover. A quick review of Nicor Home Solutions’s $11.95/month Kitchen Essentials plan showed that it covered up to $2,000 dollars for repairs/replacements to a cooktop and refrigerator. However, once you read the details, you find the plan does not include damages to door handles, shelving or drawers, or the electric or water line to the fridge. For the cook top, it doesn’t include damage to the natural gas or electric lines or to the exhaust fan. Nothing is covered if the damage is caused by pests or rodents.
“Any money you pay into a plan is nonrefundable, even if you never have maintenance or repair issues,” said Bryan McDaniel, CUB’s director of governmental affairs. “Essentially, you could be paying anywhere from $3 to $50 per month for years and never use the service. You’re better off putting aside some money in a utility emergency fund—at least then you’re in control of how and when you use the money.”