What Is Service Line Insurance and Do I Need It?

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If you’re a homeowner, there’s a chance you’ve gotten letters from at least one utility company offering insurance for your water and/or sewer lines. Such letters often warn that your homeowners insurance won’t pay for damages related to these lines, which could leave you responsible for thousands of dollars in repairs.

It’s true that standard homeowners insurance policies won’t likely cover the issues these companies are offering to protect. But that doesn’t mean you should rush and get one of these policies for your water and sewer lines.

Keep reading to see what money expert Clark Howard thinks about service line insurance and for answers to common questions, including:

Should I Get Insurance on My Gas, Water and Sewer Lines?

There are many things that standard homeowners insurance policies won’t likely cover. And unfortunately, service lines can be added to the list. That’s because insurance is meant to cover unexpected events. So, the first thing to know is that service line insurance is technically a warranty.

The key difference between insurance and a warranty is that warranties cover events that are likely to occur at some point in a product’s life, thanks to things like aging or wear and tear from normal use.

The second thing to know is that a service line warranty is intended to offer you financial protection in the event of damages to — or caused by — your service lines. Service lines include the exterior utility pipes (or lines) that run underground and supply your home with a specific service. Think water lines, sewer lines or even other utilities like gas and electricity.

Service line warranties work similarly to insurance policies. As with insurance, if you purchase a service line warranty then you’re paying a company for financial protection against events covered by your warranty. But instead of coverage limits, warranties have annual benefit amounts. Like a coverage limit, annual benefit amounts reflect the maximum amount of protection your warranty company will cover in a year. For example, a service line plan with an annual benefit amount of $5,000 will only cover up to $5,000 worth of repairs and/or damages in a year.

Many utility companies across the country partner with third-party companies to sell service line warranties. So even if your utility company writes to you about a service line plan, they probably won’t be the ones providing support for customers with warranty plans.

How Much Does Service Line Coverage Cost?

The cost of a service line warranty plan will depend on several things like where you live, what company you buy coverage from and how much coverage you get. But rates seem fairly low overall.

I got quotes for plans from HomeServe, one of the largest companies (by market share) in the service line warranty business. I had to enter my zip code and select my utility service provider to see plans offered through their partnership. Here’s what I found:

CostPlan Type/Maximum Coverage
(with 50% off your first year)
Exterior water service line coverage
Annual benefit amount: $7,000 maximum
$10.99/monthExterior sewer/septic line plus coverage
Annual benefit amount: $10,000 maximum

Through my utility provider, the only water service line plan available was $2.99 a month, thanks to a deal of 50% off the first year. Then the rate would increase to $5.99 per month afterwards. The only sewer/septic line plan available was $10.99 per month.

The company also offers plans for people in my zip code whose utility provider isn’t a featured partner. These plans are slightly more expensive. Here are the costs for the same plans directly through HomeServe in my area:

CostPlan Type/Maximum Coverage
$7.98/monthExterior water service line coverage
Annual benefit amount: $7,000 maximum
$12.98/monthExterior sewer/septic line plus coverage
Annual benefit amount: $10,000 maximum

I also looked at rates using zip codes for a few major cities across the country. I found monthly rates for exterior water service line plans (without any deal) ranging from $4.95 to $12.98. For exterior sewer/septic lines plans, monthly rates ranged from $7.99 to $12.98. And some cities offered a single exterior pipe plan, which covers both water and sewer lines. Prices for the exterior pipe plan ranged from $15.99 to $20.97 a month.

Should You Get Insurance on Your Water and Sewer Lines?

Spoiler alert: you probably don’t need insurance for your water or sewer lines. Companies that sell service line insurance have no problem telling you how many thousands of dollars it can cost to repair your water or sewer lines. The figures are often listed next to reminders that your homeowners insurance won’t cover the costs and quotes for coverage with their company.

“If you take an individual item in your life and you say, ‘well, if it breaks, it’s going to cost me this much to replace it or repair it or whatever. But if I have the insurance, it only costs this much.’ It’s all a matter of odds,” says Clark.

Paying $5.99 a month might look like a good deal compared to the risk of paying around $3,000 or more to repair a broken service line. But what are the odds that your service lines will need replacement, and will it really cost thousands of dollars to do so?

“So often with product service contracts…the odds of something breaking are relatively small…. The reason the companies sell the insurance plans, or service contracts, or whatever, is because the math actually works for them. Because most of the time, none of these things are actually going to happen.”

Water and Sewer Line Statistics

How low are the odds that you’ll need to repair your water or sewer lines? Consumers’ Checkbook reviewed service lines warranties, water and sewer line restoration permits in several major cities, and claims data from, “the two largest warranty outfits, American Water Resources (AWR) and HomeServe” to find out.

According to their research, “more than 7 million U.S. homeowners have purchased plans” from these companies, which, “pull in $900 million a year.” But, “few homeowners ever have to deal with expensive water or sewer line repairs or replacements.”

Some notable findings from Consumers’ Checkbook include:

  • On the California Department of Insurance website, we found a 2015 rate filing disclosing frequency of claims from Virginia Surety, which underwrites AWR’s plans. It reported that only 0.7 percent of its customers per year filed sewer line claims.
  • Only 233 customers of the Boston Water and Sewer Commission in 2019 tapped its financial assistance program set up to help defray the cost of replacing or repairing sewer laterals. That was 0.3 percent of its 76,821 residential customers.
  • During HomeServe’s partnership with [Washington Suburban Sanitary Commission] WSSC, claims for sewer line repairs also averaged just $580; the average was $1,565 for water line claims.
  • The 2015 filing we found with the California Department of Insurance indicated the average water-line-coverage claim was only $676; for sewer lines, it was just $430.
  • Lines made of copper, the most common material used for water lines, typically last 30 to 80 years. Galvanized steel pipes—also common—usually last even longer: 40 to 100 years. Even comparably weak plastic pipes (such as PVC and polyethylene) last 20 to 40 years. And because the study looked only at pipes that failed, your pipes may last a lot longer than these estimates.

Source: https://www.checkbook.org/washington-area/water-and-sewer-line-warranties/


Clark Howard’s Thoughts

So, do you need insurance for your water and sewer lines? Clark’s thoughts on this are similar to his stance on whether home warranties are worth it. And his advice is simple.

“If you think of the totality of your life, you’re much better off having a maintenance fund that you contribute to regularly rather than insuring individual things like that.”

There’s also another alternative to consider. Many companies that sell homeowners insurance offer endorsements — or policy add-ons — that can cover your water and/or sewer lines. You can contact the company you have homeowners insurance with to see what options might be available for you.

Final Thoughts

The cost of having several different service warranties quickly adds up. Instead of paying a small amount each month to different companies for individual items, you’re better off putting that money towards your own maintenance fund.

With your own maintenance fund, you will have complete control over your money. And if something goes wrong, you control what to put your money towards, who to work with on repairs, and you get to decide how the repairs get done.

The bottom line is: you probably don’t need a service line plan for your water or sewer lines. But, if you’re still thinking about buying one, consider a few questions first: How old is your home? What are your service pipes made of? And can you get protection from your homeowners insurance company instead?

“If you think about everything that you have that might require coverage and you add together all the premiums for all of them, not everything in your life is going to go bad. Not everything in your life is going to break,” Clark says.

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