Home Emergency Insurance Solutions "Recommended by SJWC?"

I received a formal looking letter from the San Jose Water Company signed by Robert Day, Director of Customer Service. It may look official, but it really isn't. The fine light gray print at the bottom of the letter says, "Coverage provided by Home Emergency Insurance Solutions is an  optional, third-party, non-tariffed service. San Jose Water Company customers are not required to sign up for this service in order to receive regulated water utility services from San Jose Water Company.".

Who is Home Emergency Insurance Solutions? Do they satisfactorily serve their customers? What record does HEIS have? What does SJWC get for recommending and probably provided a customer/ratepayer mailing/address information to HEIS?  Did SJWC give my mailing information to HEIS, since the letter used the SJWC logo, was signed by an SJWC employee, and SJWC is probably getting compensated by HEIS and the envelope shows it was mailed in Hartford, CT (an office of Homeserve USA parent corporation).........did SJWC violate my privacy by giving HEIS a mailing list of ratepayers? especially my address?

Let's start with "What does SJWC get out of this", it's likely that they get 10% at least of the revenue from their customers/ratepayers. That's 225,000 customers times $4.95/month or about annually $59.40, if 100% signup, $13,365,000. SJWC gets 10% or $1,336,500 every year and more as the customer base grows. Where does this money go? How much does HEIS make on this insurance?

The Alameda County Water District has also "offered or recommended" their ratepayers HEIS insurance. ACWD published description of the insurance says ACWD gets 10%, per year, of the revenues. It also notes that they have 1% of their customers annually get a leak let's do some math:

82,533 (October, 2012) ACWD customers

$4.95 per month

This is then $4,902,460 HEIS (if 100% signup)

ACWD also says 1% or so of their customers have a leak, some leaks are not covered by the HEIS Insurance. So lets assume that 500 customers/ratepayers have a leak in the water line from the water meter to your home. It doesn't include anything past the point the main water pipe enters your home.

I've seen quotes in San Jose from $1200 for plastic pipe to $2000 for cooper pipe replacing the water pipe from the meter to a home. Let's take the high number $2000. better yet the highest amount HEIS covers in an incident $3000.

500 leaks times $3000 equals $1,500,000

$4,902,460 (premiums) minus cost of incidents (insured covered leaks), (10% ACWD $490,246 plus estimated cost of repairs $1,500,000)

Home Emergency Insurance Solutions makes $4,902,460 minus $1,990,246:

$2,912,214 annual HEIS profit from 

ACWD customers/ratepayers

WOW! The question is is this the HEIS Insurance a fair price for what you may get?

Did SJWC or ACWD do any do diligence whether it made sense for their customers/ratepayers?

What is the experience of other water utilities with HEIS and other organizations?

• BBB information
• UCAN review (Utility Consumers' Action Network)
• LA Times, "Water-line insurance could be money down the drain"
• EWEB, Eugene, OR article
• Home Warranty Wiz, Web site article about HEIS
• City of Whittier, CA
• KPIX Bay Area, "Consumer Watch: Is Water Pipeline Insurance Worth It?"
• Eureka Daily Journal
  
  Home Emergency Insurance Solutions, also known as HomeServe USA Corp., has a D rating from the Connecticut Better Business Bureau, according the organization's website.
  The company has had to answer two government legal actions in the past year, which led to the addition of the statement that they are not a government organization, and the insurance is optional, according to the Better Business Bureau. Home Emergency Insurance Solutions has also responded to 156 complaints in the last three years.
• The "parent company" of HEIS is Homeserve USA they already have SJWC logo on their partner page.
• San Jose Mercury News, Scott Herhold, "Examine that water pipe insurance pitch carefully".

The above raises some issues about doing business with Home Emergency Insurance Solutions. It also calls into question the $4.95 rate while appearing low may be extremely high for the protection you get, as the model for ACWD showed. SJWC again did not try to be transparent and give their customers any guidance or any disclosure of the terms and benefits for either their customers or SJWC.

After reading that and concerned about my privacy, I looked up SJWC Privacy statements regarding a customers personal information:

• SJWC Privacy statement on their website
• SJWC Rule 22, signed by Palle Jensen

The only thing I've signed is a check to pay my SJWC water bill. SJWC says they'll request my "WRITTEN CONSENT", before releasing my personal information.

Apparently the potential to get $1,336,500 or more every year will buy Homeserve USA (AKA Home Emergency Insurance Solutions) a release of my personal information without my written consent, from the San Jose Water Company.

I wonder if California CIVIL CODE SECTION 1798.80-1798.84 applies to the potential disclosure of my full name including middle initial and home address, in a computer format, as well as other customers/ratepayers of San Jose Water Company, as part of their "partner" relationship with Homeserve USA (aka Home Emergency Insurance Solutions).  Wikipedia has a page explaining the California Privacy law and the recourse of customers, with the potential disclosure by San Jose Water Company, to Home Emergency Insurance Solutions.

Home Emergency Insurance Solutions FAQ does say how mailing addresses are obtained:

Q. How are the mailings done? How is mailing information obtained?

While as part of this agreement the mailings arrive in San Jose Water Company-branded envelopes, Home Emergency Insurance Solutions executes the mailings. All of the mailing information used by Home Emergency Insurance Solutions to contact homeowners is obtained from publicly available data sources. 

It's worth reading the page of FAQs, as the perspective of the message appears to represent San Jose Water Company as selecting Home Emergency Insurance Solutions, as a "superior solution", but doesn't really recommend the insurance and doesn't say anything about what San Jose Water Company gets in return for use of their logo and their  "sort of" implied recommendation. It's important, the Director of Customer Service signed the cover letter, but simply says, "passing along the information".

I'd really like more transparency from San Jose Water Company what are they getting as a partner of Home Emergency Insurance Solutions. Should an activity like this be part of the things a regulated utility does, does it really benefit the customer/ratepayers or does it benefit someone else?

Latest posting, 6/25/2015, to the blog on Homeserve USA can be viewed, click here.