HOME WARRANTIES RIDE BOOM; CLAIMPAYMENTS UP 15 PERCENT THANKS TO SURGING REAL ESTATE.

Byline: Gregory J. Wilcox Daily News Staff Writer

Fueled by California's surging real estate market, home warranty companies paid a record $68 million in claims last year, a trade group reported Tuesday, a 15 percent increase over the previous year.

The jump is primarily due to a strong market that saw home sales increase 10 percent last year from 1996, according to the Home Warranty Association of California.

Home warranties are now a common element in real estate transactions. They typically cover a home's mechanical systems and many built-in appliances, including plumbing, heating and electrical systems, dishwashers, stoves, garbage disposals and trash compactors.

Coverage is also available for items such as air conditioning, pools and spas.

It costs about $310 a year for homes up to 4,000 square feet, with a deductible of about $25 per repair.

Approximately 35 percent of the policies are renewed each year, according to the association, with the criteria varying from company to company.

The industry, which does not release the total number of claims filed, is regulated by the California Department of Insurance.

Two San Fernando Valley-based companies, Buyers Home Warranty Co. in Burbank and First American Home Buyers Protection of Van Nuys, write about 40 percent of the business across California.

``Coupled with rising sales over the past decade, it means homeowners possess a better understanding of how to use warranties and are receiving tremendous value from warranty contracts on resale homes,'' said Ray Adams, president of the association and Buyers Home Warranty Co.

In about 50 percent of the policies, the seller pays for the coverage. Buyers pay the premium in up to 25 percent of the deals and the cost is divided among the parties in the remaining 25 percent of the deals.

Once a homeowner has a policy, she calls the warranty company if something needs to be fixed, not the product manufacturer. The warranty company sends out an independent repair technician for the repair work.

``It is not designed to protect the manufacturer of a product, or to facilitate the sale of additional products. A standard home warranty doesn't have a hidden agenda,'' Adams said.

Jim Link, executive vice president of the Southland Association of Realtors, said this type of insurance has become a regular part of a home sale and that it's a good deal for buyers.

``There are very few homes that don't come with a warranty,'' said Link, whose association covers the San Fernando and Santa Clarita valleys.

Link said home buyers should make sure their warranty covers big ticket items like roofs, air conditioning systems and swimming pools.

``Mostpeople look at it as an insurance policy for after the close of escrow. If anything goes wrong with the home it's going to get fixed.''