Insurance offers aren't scams, water expert says | MailTribune.com

If you're a homeowner, you likely got a mailer recently

December 05, 2011

Homeowners in Jackson County have been inundated with mailers recently warning them they need insurance in case their exterior water lines break. "I didn't know what it was for, because I'd never heard of it," said Vivian Grabisch, an 85-year-old Medford resident who thought the mailer had something to do with her water bill.

The Medford Water Commission has nothing to do with the companies selling the insurance, but it has received calls from homeowners ? particularly seniors ? about whether the mailers are bogus.

"To be honest, I think the companies are legit," said Laura Hodnett, spokeswoman for the Water Commission.

However, Hodnett said she wouldn't comment on whether it's necessary to pay $5 a month for coverage to repair a broken water line or $9 a month to pay for a broken sewer line. "It's not our position to advise people about insurance," she said.

Hodnett did point out that repairs to water lines from the house to the water meter can run into the thousands of dollars and would be the responsibility of the homeowner.

She noted that other water agencies in the country have established an alliance with companies that offer water-line agreements. "It's something we have never discussed," she said.

The mailers generally warn homeowners that they could face costly charges to fix their exterior water lines.

"Our records indicate your home ... is not covered by water service line coverage," a letter from HomeServe USA states.

The mailers warn that repairs to water lines could run as high as $2,300.

HomeServe offers up to $6,000 in coverage annually, or $3,000 for each water line repair.

Home Emergency Insurance Solutions has a similar monthly fee, but offers up to $3,000 coverage for each leak or up to four calls a year, totaling $12,000 a year.

Both companies offer similar services in other countries.

Although the mailers appear to come from two different companies ? HomeServe USA and Home Emergency Insurance Solutions ? they actually are part of the same company.

The fine print on the mailers indicates the coverage relates only to repairs of the water lines, not to damage caused by water leaks to walls, floors, foundations, landscaping or other problems. So-called "acts of god" also are not covered. Pre-existing damage to pipes may not covered, along with many other exclusions.

A maximum dollar amount is allowed each year, as well as a limit on the size of the pipeline and the number of feet of pipe.

"You have to be careful with these insurance companies because there are a lot of exclusions," Grabisch said.

Before receiving the mailings, Grabisch said she had no idea that water lines on the house side of the meter were her responsibility.

She said she has enough expenses to take care of without worrying about exterior water-line insurance, which she thinks would be of dubious value anyway.

"It's just another big scam, I think," Grabisch said.

The mailers are being sent out because of a change in the way the Oregon Department of Consumer and Business Services, Insurance Division, defines these water line agreements. Before June, the agreements were treated as another form of insurance, but now they are seen as being similar to home warranties.

"They shouldn't be using the word insurance," said Cheryl Martinis, a spokeswoman for the Insurance Division.

Martinis said the warranties on water lines started being offered recently throughout Oregon but have been available in other states for years.

Home Emergency Insurance Solutions sent out mailings in August that still referred to "water line insurance protection."

Myles Meehan, senior vice president of HomeServe USA, said the reference to insurance on mailers sent out in August was phased out. He said newer mailers refer only to HomeServe, not to Home Emergency Insurance Solutions, and they don't mention insurance.

He said his company purchases mailing lists for areas to help determine where to mail flyers.

"We certainly aren't targeting seniors," he said.

Though water line agreements contain exclusions, Meehan acknowledged, the company would repair aging pipes that have sprung a leak, as well as pipes broken after being frozen. The company will not thaw out frozen lines, though, he said.

Other damage related to water line leaks, such as a subsiding foundation, might be covered in a general homeowner's policy, he said.

Meehan said water line insurance would appeal to people who are not handy or aren't familiar with local plumbers.

"You're either insurance-minded or you're not," he said.

Reach reporter Damian Mann at 541-776-4476 or email dmann@mailtribune.com.

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