That Letter You Got About Sewer Line Insurance? Yes, It’s Real

Homeowners around the city received a letter from the New York City Department of Environmental Protection recently, informing them of a new insurance program covering the water and sewer lines connecting their homes to the public system. The timing of the letter – just weeks after Superstorm Sandy wreaked havoc on the area’s infrastructure – raised alarm for many, who sent Sheepshead Bites e-mails and Facebook messages wondering if this was a scam.

Well, it’s not. We spoke to Department of Environmental Protection representatives last week, and the program has been in development since long before Sandy.

“In terms of this program, while the timing is a coincidence, it does not have anything to do with Hurricane Sandy,” said Chris Gilbride, communications director for the DEP.

The letters came in two parts: one, a letter on Department of Environmental Protection letterhead, the other, a form to sign up.

Many New York City homeowners are not aware that repairs to the water and sewer lines that run from their home’s exterior to the mains in the street are their responsibility. Recognizing that many residents do not cover these costs, the New York City Department of Environmental Protection (DEP) is please to introduce new programs to protect homeowners like you from such unexpected expenses.

The letter goes on to explain that the “aging pipes” that connect most homes to the city’s lines are increasingly frail, and that, once they burst, homeowners are liable for repairs that range between $3,000 and $5,000 for water lines, and a whopping $10,000 and $15,000 for sewer lines.

The letter then talks about American Water Resources (AWR), a company that the city teamed up with to provide reduced rates to homeowners in exchange for exclusivity.

That exclusivity in particular raised an eyebrow of “AB,” who was the first to tip us off to it and sent us a copy of the letter.

But it’s not some sinister plot by the city to help out some connected company as some fear, according to the DEP.

Gilbride said the agency issued a standard Request for Proposals about a year ago.

“There are a number of sources that provide these services, but we wanted a service that would provide those fees directly on the bill, and meet certain standards we set,” Gilbride said.

Part of those standards is that the company has an A+ rating with the Better Business Bureau and that they’ve guaranteed a level of service outlined by the city. But, perhaps more importantly, rates for the program are determined entirely by the New York City Water Board – not the company – and the city won’t see a dime of revenue from the program, removing any nefarious incentive to wantonly raise rates.

Gilbride adds that one of the benefits of the program is that the pricing – $3.99/month for water line protection, and $7.99 for sewer, or $11.98 for both (until June 30) – is built right into your water bill, as opposed to an additional bill.

However, it’s important to note that the insurance only covers normal wear and tear that come from age and use.

“If there are other factors, like contractors cut your service line during street work, or a natural disaster, that’s not part of this program,” Gilbride said.

He noted that the breaks are more common than homeowners might think.

“In 2012, the DEP responded to more than 3,000 complaints of street leaks. And 2,339 of these – 77 percent – were breaks to private infrastructure,” he said, though he could not say how many of those were from wear-and-tear versus extraordinary circumstances.

Still, he notes this is all about choice, and not at all mandatory.

“It is an optional program and it gives people a choice that they didn’t have before,” he said.

Here’s a copy of the DEP letter received by local homeowners:

And the form that came with it: