An innovative new product called “home value warranty” is being offered by Isential, Inc. of Dallas, Texas. This product is sold in conjunction with spec and custom homes and it protects the buyer against having to take a loss on resale of the home in a depressed economy.

Isential asserts that such an assurance will result in the sale of more homes by builders as it will increase buyer confidence. The product is available nationwide.

This product should not be confused with home owners warranty insurance which protects the home owner against construction defects.

Source: Isential, Inc.; http://www.insential.com/

Approximately 70 consumer and justice groups in SC object to the use of home owner warranty products alleging that they violate state law dealing with forced arbitration in insurance contracts. They have asked that state Attorney General Henry McMaster look into the legality of these contracts.

It is alleged that the home owner warranty contracts are represented as a gift to protect the home buyer but that they are actually a litigation control tool that benefits the home builder.

I disagree, if the prospective home owner does not like the terms of the warranty, they don’t have to buy the house. Also, just because a case goes to arbitration does not mean that the outcome will be more favorable for the builder.

 Source: Insurance Journal http://www.insurancejournal.com/news/southeast/2009/05/27/100839.htm