October 31, 2004
What are the chances of a water pipe bursting under your front lawn or driveway?
That's a question every consumer should ask in deciding whether to invest in water-line insurance offered by the local utilities, including LeakGuard from United Water New Jersey and ServiceSentry from the Ridgewood Water Department.
The rules are simple: For about $4.50 a month, you will be covered for all repairs to your water pipes, from the curb valve near the property line to the water meter in your house. Just about everything is covered, including replacement of pipes and valves, restoration of soil and grass disrupted by the excavation, and repairs to sidewalks and driveways.
In case you didn't know, the curb-to-meter piping is your responsibility, not the utility's, and repairing a broken underground pipe can cost thousands of dollars.
Is the insurance worth the cost?
"You'd better believe it," said Frank Iannone of Teaneck, who was grateful to have coverage when a water pipe burst last year.
Iannone's 75-year-old house is set back 125 feet from the street, and it had its original pipes, so when LeakGuard first came out five years ago, he signed up. "I knew if anything happened, it would be costly."
Sure enough, on a December Saturday, with the temperature toying with the zero-degree line, the main water pipe sprang a leak. A repair crew from Pratt Plumbing and Heating Co. in River Vale, which has a 10 percent stake in United Water's LeakGuard program, was on the scene quickly, digging a ditch from the street to the house and replacing the pipe, Iannone said.
Two weeks later, after the dirt in the ditch had settled, a repair crew returned to replace topsoil, and it came back in the spring to seed the lawn.
"They really did a great job," Iannone said.
Best of all, it didn't cost the retiree a penny beyond his annual $54 payment for the service. Based on similar work done on a neighbor's property a couple of years earlier, Iannone estimates his repair would have cost at least $3,000.
But not all emergency repairs are massive. Frank Meseck of Paramus took advantage of LeakGuard when a leak developed at his water meter, and a repair crew fixed the problem in less than an hour, including time to upgrade valves on the system.
He estimates it would have cost $200 to $300 if he had had to pay for the service call.
Obviously, if you need major work done, as happened with Iannone, it's a great deal. But if you need a small repair, as with Meseck, it was basically a break-even situation, with the estimated cost nearly equal to five years of premiums.
The question in deciding whether to purchase the service contract is how likely are you to have an expensive repair.
Officials from United Water and Ridgewood Water, which offer the insurance, say the odds are higher than you might think. But the executive director of the Passaic Valley Water Commission, which has rejected similar programs, downplays the threat.
"We've looked at it, and the probability is pretty small," the PVWC's Joseph Bella said. The utility, which has 65,000 customers, repairs breaks for a flat fee of $1,600, and gives customers three years to pay, interest-free.
United Water launched the program because "the last thing you want to be doing is telling a customer you couldn't help them on a water leak right outside in their yard," spokesman Rich Henning said. "There was a great sense of leaving them in the lurch."
A good percentage of the utility's customers have signed up since the program began in the spring of 2000, including 25,000 of 170,000 customers in the Bergen-Hudson region, Henning said.
"We're looking at repair rates of seven or eight per month per thousand customers," Henning said. Of the 600 jobs handled by the company, 30 percent would have cost customers between $2,000 and $3,000, and an additional 39 percent were over $3,000. The total cost is more than $1 million.
"We're really looking at a pretty large dollar amount," Henning said.
The Ridgewood Water Department, which has 20,000 customers in Ridgewood, Glen Rock, Midland Park, and Wyckoff, is already doing 300 to 400 repair jobs a year, from total repairs to fixing leaks, said Frank Moritz, its director.
The department considered offering service contracts about five years ago, but didn't decide to begin ServiceSentry until this fall, Moritz said. "A lot of people sent letters or called, asking when were we going to get into this program."
In addition, having a predictable income stream from the fees helps his budget process, Moritz said. He expects 3,000 to 4,000 customers to sign up, "and there's an opportunity for even more than that."
In deciding whether it's worth the cost, remember that the plans don't cover pipes inside your home, only those from the street to the valve. As Meseck pointed out, if his leak had been eight inches further along the line, he'd have been stuck paying for it himself.
As with any insurance, a water company service contract is a crapshoot in which you hope to lose. Sure it's nice getting the check in the mail, or having the insurance company pick up the tab, but most people would just as soon not have the hassle, disruption, and possible heartache that leads to the payment.
Still, it is reassuring to know that you won't be drowned in bills if you spring a leak.