Analysis of water & sewer line insurance

[gtd98765]

Excellent story from a consumer magazine of water & sewer line insurance. The story includes lots of facts and analysis from water systems across the country. Bottom line: Far too expensive for the protection it offers. Also, the price for fixing these lines when they break is usually hundreds of dollars, not many thousands as the scare stories emphasize.

https://www.checkbook.org/washington-ar ... arranties/

Warranty companies warn of a potential catastrophe lurking under your property that might cost thousands of dollars to fix.

What are the chances a water or sewer line will need to be repaired or replaced? The warranty companies wouldn’t tell us.
....
Our research reveals it’s an unlikely problem. Even if you need a repair or replacement, costs likely will fall well short of the thousands of dollars cited by the warranty companies.

[Dottie57]

Excellent story from a consumer magazine of water & sewer line insurance. The story includes lots of facts and analysis from water systems across the country. Bottom line: Far too expensive for the protection it offers. Also, the price for fixing these lines when they break is usually hundreds of dollars, not many thousands as the scare stories emphasize.

https://www.checkbook.org/washington-ar ... arranties/

Warranty companies warn of a potential catastrophe lurking under your property that might cost thousands of dollars to fix.

What are the chances a water or sewer line will need to be repaired or replaced? The warranty companies wouldn’t tell us.
....
Our research reveals it’s an unlikely problem. Even if you need a repair or replacement, costs likely will fall well short of the thousands of dollars cited by the warranty companies.

Mom’s neighbors had sewer failure in the middle of a very cold winter. The front yard was dug up , the ground heated And large machinery used to uncover the problem. The cost was indeed thousands of dollars which included restoration of the yard in the spring.

[livesoft]

I fixed my own water line leak between the house and the street for $3.50 and personal time.

I know others that spent thousands for the same kind of repair partly because they didn't want or know how to use a shovel.

[LittleMaggieMae]

I think this is one of those "self insure" things.

I spent 10 years putting $50 a month into a savings. I have 6K saved up and ready to go.

OK, the 6K is kind of mixed in with other investments - but I really did do it. The $50 was originally a payment to a "sinking fund" for Cat Maintenance (vet bills) and unexpected big ticket house stuff that I wasn't already saving for. I was able to cash flow the vet bills and never had an unexpected big ticket house thing happen.

If my sewer line (or water line) fails - I will cover the repair expense myself. It's kind of built into my "homeowner's expenses" list like Roof and HVAC.

[adamthesmythe]

The last time I looked at one of these offers- a long long time ago- restoration after the repair was not included and I figured that was a pretty large part of the project.

I took a pass on the insurance and don't regret it.

[KneePartsPro]

OP,

Thank you for posting! Our municipality has been pushing water line insurance on its customers for the better part of six months now. It's good to gain some outside perspective on the issue.

KneePartsPro

[megabad]

I have it but don't feel strongly either way. I pay significantly less than their range (<$4) monthly. I also may or may not know that my line was not installed correctly...and might be more prone to breakage. I also was offered to policy many years ago where they include up to several thousand in concrete repair (they no longer do). My line runs on the steep side of the house under a driveway, underground about 4 ft. I will not be using a shovel to repair it though I would admire someone that would. At $30 a year, probably a waste but not worth me cancelling I guess.

[carolinaman]

My house is 350 feet from the road and I am responsible for the water line from the meter at the road. A problem is unlikely but it would be expensive if it ever happened so I pay $2.94 a month for protection.

[dsmil]

Our water and sewer lines both needed replacement in the short 5 year period that we owned our townhouse, which was built in 1994. $7k later, I now pay the $10 per month on my current (older) home to cover this.

[illumination]

I've always been deeply skeptical of these types of policies. Most of these repairs are more like your HVAC breaking down or getting replaced. Except it's more like a once in every 30 year type problem.

My reasoning in general is you should only insure things that have the ability to break you financially. But there's a huge range in what some of these policies cost, if it was a trivial amount like a few dollars a month, I'd probably pay it. The quote I got was not trivial. My experience also is these policies have so many "gotchas" and hoops to jump through that I'd rather just bank the savings and go out of pocket when it actually does happen.

[IMO]

Our water and sewer lines both needed replacement in the short 5 year period that we owned our townhouse, which was built in 1994. $7k later, I now pay the $10 per month on my current (older) home to cover this.

On one hand, sure one can self insure. The problem is statistically not very likely to happen. I read the OP link, and I suspect what is missing on the statistics is that probably very few people actually pull a permit when things like a sewer line or water line is replaced. I've personally known a few people in different states that have done one or the other, and no one pulled any permits although technically they were probably required.

Additionally, the OP link author acts like it's not going to cost thousands of dollars to have a sewer line replaced. Good luck on that. Water line, same thing, good luck for most people needing a trench dug and line replaced. I had a main line small water leak that was a minor repair at $600.

I did the math and decided to get this for some SFR rental properties. I think the coverage was up to $4000 repairs and premium of $60/year, so I figured $4000/$60 (yr) = 66.67 yrs of coverage until I hit the $4000 "payback". Ask yourself, will the problem possibly happen in the next 66 yrs? Yes, premium will go up, but so will cost to repair with inflation. Even my small water line repair of $600 would have been 10 yrs of the $60 premium.

Figure the $60/yr is a rental expense and while I could pay a few thousand out of pocket to repair, I'd rather pay a $60 essentially tax deductible expense to not worry about having that repair expense.

But I can see if someone doesn't want to worry about paying this as the odds are low that it will happen. It won't bankrupt most people.

I suspect municipalities promote this insurance for a couple reasons:
a) As a PR thing to let homeowners know that the city is not responsible for something that most homeowner's will think the city is responsible.
b) It will help the typical homeowner who lives paycheck to paycheck pay for something they did not plan ahead with any emergency fund.

[Tubes]

I think this is very region and era specific.

About 1/2 of the homes in my neighborhood have had issues that required water line replacement. This is due to two things: the type of pipe used during the era they were built (around 1980) and the type of soil which contains many sharp rocks that shift and migrate.

Costs range from hundreds to thousands. It depends.

My home has a very deep line compared to most of the others. My neighbor on this side of the road had a blow out, and it required an OSHA approved excavation. They spend about $3.5k. My neighbor across the street had theirs blow out, and it cost them about $500 as the pipe was at most 18" deep (Southern region).

In light of all the failures around me, and the depth of the cut, I just recently added the insurance for about $5 a month. This is my first type of insurance I've bought for anything like this.

I should say that sewer line issues in this area are typically not a problem so I'm not buying that.

[Swansea]

If you have PB water pipe, then insurance may be a good idea. I had PB and the pipe broke when it was about 20 years older. I should have seen it coming from the neighbor's lawns which were dug up. The manufacturer faced a class action suit.

[gwe67]

I have had two sewer line failures that cost about $6,000 each to repair. Now I have the insurance. Of course, that means that failure probably won't happen again.

Tree roots can cause a lot of damage, even to PVC pipe.