Homeowners and government officials in the greater Milwaukee area are concerned that formal-looking advertising materials from an insurance company called HomeServe is tricking consumers into buying water line insurance that they may not need.
In its advertising mailers, HomeServe USA Repair Management Corp. correctly states that property owners are responsible for repairs on the water lines between their government’s right of way and their house. The company offers insurance coverage for water laterals.
But the advertising materials may trick some consumers into thinking the company is affiliated with people’s local government and lead them to buy services they don’t need. The Village of Greendale said in a warning Tuesday that it is not affiliated with HomeServe and does not endorse its services. It urged residents to be cautious.
“Property owners should contact their insurance companies to see if they are already covered for a lateral damage incident, or if they feel such coverage is warranted,” the warning said. “Property owners are urged to read the fine print of the proposed coverage and determine if the long-term costs warrant such coverage.”
Milwaukee resident Jeff Szymanski said he received a mailing from HomeServe advertising water service line insurance for homeowners in the city of Milwaukee and found it suspicious.
“Your exterior water service line is the pipe that brings fresh water into your home from your water utility or private well,” the ad states. “It is your responsibility to maintain and repair this line in the event of a leak or breakage. Repairing a broken line could cost you thousands of dollars.”
The ad asks recipients to reply by July 24.
“This offer has scam written all over it,” Szymanski said. “It has a plastic quality about it. It looked fake. … They sell these insurance policies that people don’t really need.”
The ad states at the bottom that HomeServe is an independent company. But consumers across the country are raising concerns, saying the mailing may still fool people into thinking it came from the government.
The state Department of Agriculture, Trade and Consumer Protection has five complaints on file about HomeServe’s mailings, spokesman Jerad Albracht said.
The Better Business Bureau has 99 closed complaints on file about HomeServe’s advertising and sales practices. Some complainants said the solicitation included something that looked like a bill and asked for credit card information.
“The solicitation is misleading, giving the appearance that it is from a government agency and requires action,” a complainant wrote on June 25.
HomeServe didn’t respond to a request for comment from the Journal Sentinel. But in response to the Better Business Bureau complaint from June, the company wrote:
“HomeServe never attempts to present itself as a utility or government. Our mailers state explicitly that HomeServe is ‘an independent company separate from your local utility or community.’ This disclaimer appears in our mailings in italics, adding emphasis. Please be assured that if a customer finds that they have similar coverage, they can contact HomeServe to receive a refund of the service agreement fee, less any claims paid.”
The company said it uses “standard direct-marketing methodologies” to inform homeowners of its products.
“These mailers are not intended to alarm homeowners, but to inform them of services that have been an enormous help for tens of thousands of homeowners,” the response read. “HomeServe services over 1.3 million customers nationwide; 96% of customers surveyed after using our repair services would recommend HomeServe to friends and family.”
The company says on its website that homeowners often falsely believe the local utility will cover the water pipe that runs from their property to their home. But homeowners insurance typically doesn’t cover the cost of repairing or replacing a broken service line, which can cost from $200 to upwards of $3,000, the company said.
Details on the complaints are available on the Better Business Bureau’s website.
Consumers can file a complaint with the Better Business Bureau online at bbb.org or (in Wisconsin) by phone at (414) 847-6000.