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A closer look at water line warranties

LR and NLR have very different deals with a water line warranty company.

LITTLE ROCK (KATV) -

A new partnership between the city of Little Rock and a warranty company has many residents wondering what is behind the deal...and if it is legitimate.

We pull back the curtain and share what we’ve learned.

In exchange for partnering with Service Line Warranties of America the city of Little Rock gets paid for every new warranty sold and will collect $42,000 in fees over the first three years.

But not all cities make the same deal.

Little Rock homeowners received this blue card in the mail offering optional protection for water lines from Service Line Warranties of America.

A month later these blue letters were sent out...encouraging residents to sign up for coverage by February 14th. It came with the city of Little Rock's logo and the signature of former mayor Mark Stodola.

But it was not sent by the city.

Immediately we started hearing from viewers like Allene Higgins, who wrote "I just want to know is this another scam?"

Under the agreement, Little Rock gets .50 per month for every active policy as well as a $42,000 brand fee...paid out over the first three years of the five year contract.

"That to me kinda sounds like a kick back,” says Jack Stanley of Little Rock. “It's the city...is getting something for letting them come in as a partner to offer a service."

North Little Rock partnered with SLWA seven years ago and now has about 4,000 subscribers.

The city gets no money. Instead residents get a 10 percent discount...paying $5.41 a month for coverage vs. The $6.49 a month that Little Rock residents will pay.

"The customer discount would be more beneficial,” says Stanley. “The other sounds like, well, the city is getting their fingers into it."

All the money Little Rock takes in through this agreement has been dedicated to the city's housing programs.

The water line warranties have several exemptions including accidents, negligence, the thawing of frozen pipes and sprinkler systems.

Air date: January 25th, 2019

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