Water and Sewer Line Insurance. Do I need this?

[Thrif-t]

We have the sewer line replacement insurance thru our natural gas co in OH. It is $3/mo plus I pay another 3.75 to have my yard and drive way (sewer line runs under concrete drive) put back together if they'd have to replace the line. But we know we will eventually need this, We have oak & maple trees in our front yard that the roots get into the line. When we first moved in it clogged all the time and backed up yuck! We'd get the line snaked and it'd be good for a year. Finally we had the line scoped with a camera and found a crack in the pipe and had 6 ft of the line replaced right where it came out of the house($900 in 1996). Was good for 12 years and then started w/the clogs again. But we have gotten smarter as soon as the wash bubbles start coming up the drain we know we have clog and call to get snaked so we don't have the sewer backup. Insurance pays for the snake so its worth it to us. We pay 81/yr and a snake call could cost that much or more if its an emergency over a holiday or weekend..which tends to be when it happens So for us it pays for itself. Oh and insurance won't replace the line until we have 3 backups in a 12 mo period. So far its been 1 a year usually around thanksgiving. Our house is 41 years old and the pipe is like that terracota stuff, the part we replaced is pvc.

[Frugal]

I have never heard of this kind of insurance before. Is this common?

[snafu]

I suspect the need for specialized insurance is very much tied to your particular circumstances. $12. per month - $144. annually sounds expensive. What trees are on or adjacent to your property? Have any of your neighbors had sewer line backup problems? Read your home insurance contract carefully to identify whether there is any coverage for water/sewer-line damage. [The law says insurance contracts must be written in plain English]. I suggest asking your agent if the carrier sells this type of insurance as an add-on/rider and rate. Ask e-pinions site for feedback.

[nick__45]

Originally Posted by disneysteve

My water company periodically sends me a dire-sounding notice about how the water and sewer lines on my property are my responsibility if anything goes wrong. Of course, they are trying to get me to buy insurance for $12/month to cover costs if a water pipe bursts or a sewer line gets blocked.

Is this something I really need to be concerned about? If so, is $12/month an economical way to insure these lines or is there a better way to go about it?

There is an item listed as part of the admin cost within my bill to cover that. My water/sewer bill is usually 23 dollars and only 3-5 dollars is actually usage while the rest are fees and taxes; one of which is a administrative fee that covers maintenance. The reason I know this is so because the administrative fees goes up as usage goes up; therefore, it is not just to cover paperwork as that would not be associated with usage amount. Basically, people who use more water pays more for sewer as well as maintenance fee of such lines.

Of course, this is on top of what my property tax covers. Therefore, I am clueless of why there is such a insurance that you have to buy. Since it's only 12 dollars, I figure this is probably a ploy to get people to pay extra for the service. People usually don't look at their water bills the way they do with their electric bill and such small fees are a great way to raise cost without complaints. For my electric bill, there are also a lot of maintenance fees labeled as taxes and administrative cost. Basically, I won't have to stuck with preparing my own power line.

[Robert742]

Here is some input based on my experience working in insurance:

As DisneySteve knows well, it is best not to file homeowners insurance claims and to keep the insurance for catastrophic coverage.

More than one claim every 5 years is considered a high frequency of claims. You may pay more in insurance premiums over 5 years than the cost of 2 small claims, but when you consider claims processing expenses, as well other people's small claims, and other administrative costs to sell you and service your policy, and huge claims costs from hurricanes, tornadoes, wildfires, and other sizable losses, insurance companies want to avoid customers filing claims. There are a lot of people who never file a homeowners claim, and insurance companies would prefer to insure them, and avoid frequent claims filers.

Some insurance companies surcharge you for claims, so they are less likely to use the 2 claims in 5 years non-renewal guideline. Some insurance companies allow you to buy a guarantee you will not be non-renewed for claims.

I know it is not your fault if your house is damaged 2 years in a row if we have 2 back-to-back severe hurricane seasons, but it is best to do whatever you can to maintain your home and take steps to avoid or reduce the chance or amount of a possible claim. If you have weather losses, you are not the problem, it is where you live -- even so, the insurance company wants to avoid it.

Many insurance companies pay out more in claims each year than they collect in premium dollars -- don't feel bad for them (not that you would), they usually make a profit on investment income.

If a sewer or water line breaks, the damage it causes to your house may be covered, but not the cost to repair the break, or the cost of clean up if there is no damage to your house. if your sewer line backs up into your home, the damage & cost of clean-up is excluded, but some insurance companies offer additional coverage for water back up of sewers and drains.

Consider buying water/sewer back-up coverage if you have a sump-pump, a finished basement, have no basement, or keep a lot of property in the basement or your lowest level. what is covered by water/sewer back-up can vary by insurance company, so know what is covered and what is excluded. For example, some companies do not cover sump-pumps, or limit the coverage.

Rather than buy this coverage, you can reduce your exposure by keeping your basement unfinished and unfurnished. Still, a sewer back-up can cost you tens of thousands of dollars, so you may desire the protection.

It is almost always best to "self-insure" or retain a loss if you can afford it and set aside the funds.

Your homeowners insurance does not offer coverage to insure your sewer & water line.

But if the cost of insurance through your utility is low versus the likelihood and cost of a loss, it may be worth it. Snafu's situation makes sense to buy it. DisneySteve's does not.

Homeowners need to know their potential cost for this problem. Tree roots are probably the most common reason for blockages.

Thanks for letting me bore you about insurance.