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Water line insurance sales questioned

Officials: Policy marketed by Florida firm is not required

December 7, 2012
By BILL SHEA, bshea@messengernews.net , Messenger News

Official-looking letters from a Florida company offering people insurance to cover costs resulting from broken water service lines at homes have been received by Fort Dodge and Webster City residents recently, but they are not required to buy it, according to local leaders.

The coverage offered by HomeServe USA Repair Management Corp. is neither mandated nor endorsed by the two cities, officials said Friday.

''That has nothing to do with the city of Fort Dodge,'' said City Manager David Fierke. ''This is not a city program; it's a private program. That's an individual's choice if they want that coverage.''

Ed Sadler, the city manager in Webster City, had a similar message for residents of that community.

''No, we do not recommend this,'' he said Friday. ''No. we don't endorse this. It is not required.''

Myles Neehan, a senior vice president for Miami-based HomeServe USA Repair Management Corp., said the insurance is a ''totally optional service.''

The coverage may not be a worthwhile investment, local insurance agents and a plumbing company owner said.

While homeowners aren't required to buy the insurance, they are required to pay for any repairs to their water service line. That's the pipe that connects the water main under the street to each residence.

Neehan said lots of people don't realize they're responsible for those costs. Providing residents financial protection and peace of mind is the company's goal, he said.

The company is offering local residents a policy that provides up to $6,000 of annual coverage for a monthly premium of $4.99. The letter to homeowners states the insurance will protect them from ''the costs associated with covered repairs or replacement of a leaking or broken exterior water service line on your property.''

Neehan said repairing water service lines costs $1,500 to $3,000.

''Not everybody has that kind of money laying around,'' he said. ''For a modest price you can get that fully covered. That's not a bad tradeoff.''

Neil Gadbury, president of Gadbury Plumbing, Heating and Sheetmetal Inc. in Fort Dodge, said water service line repairs are expensive, but they are also rare.

''It's not an everyday thing,'' he said.

He said such a line will typically last 40 years.

''I would think that it would not be that beneficial to you,'' he said of the insurance. ''I don't see the point to it.''

Sadler said just one or two water service line breaks occur every year in Webster City.

The letter sent to homeowners indicates that HomeServe will dispatch ''local, licensed and insured contractors'' to make any repairs for its insured customers. However, Gadbury said the company has never contacted him.

''I've never heard of this,'' he said.

Neehan said the company has a process for identifying contractors that it will work with, but he was unable to name any in Fort Dodge and Webster City.

''I don't have offhand the names of folks in your area,'' he said.

Local residents who do experience a water service line break may get some assistance from their homeowners insurance policy, according to Kreg Foster, the president of Foster Insurance & Financial Services in Webster City.

Foster said that every insurance claim is different but in most cases a homeowners policy will pay for damages resulting from a water service line break and the costs of getting to the pipe to repair or replace it. He said the only thing that wouldn't be covered would be the cost of the pipe. He added that the cost of the pipe may be much less than the cost of the premiums for the proposed insurance.

Bennett O'Connor, an agent with Town & Country Insurance in Fort Dodge, also said that homeowners policies may cover costs associated with a water service line break. He said he doesn't recommend purchasing the coverage now being offered.

 
 

 

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