The Three Scenarios When Utility Protection Plans Are Worth It
As a new homeowner, you may have been surprised to learn you're responsible for the sewer and water lines that run from the street to your house. No, you didn’t install them. No, you don’t technically own them. But they’re your potential headache anyway—if a water line bursts or a sewer pipe fails, you’ll wind up paying for the repair.
When you receive a frightening letter in the mail telling you that replacing or repairing these pipes can cost anywhere from $2,585 to $8,500, signing up for a “utility protection plan” (also known as service line insurance) seems like a great idea. For a small amount of money, you get the peace of mind that comes with knowing any sewer or water line problems will be paid for. This is especially comforting because sewer and water line problems aren’t always covered by standard home insurance policies.
So yes, it seems like a great idea—but in most scenarios you don’t really need that utility protection plan. There are just a few specific scenarios when it makes sense.
You'll probably never need to use your utility protection plan
While all insurance is something you buy hoping to never need, there are reasons to think you don't really need a utility protection plan to cover a water or sewer pipe repair:
Those repair/replacement costs are way overblown. The average cost of repairing a water line is just $950 (with a high end typically around $1,575). Sewer lines can be pricier (with a high end of $7,500), but average about $4,000. Moreover, most claims on these policies are for much less, according to an investigation by The Wall Street Journal, because a problem like a clogged main can often be solved with an inexpensive service call.
The odds of having a water or sewer line problem are actually pretty low. A study conducted by Utah State University found that the average replacement rate on water mains is 125 years. And according to that The Wall Street Journal study, an analysis of municipal permitting records shows the chance of needing a water or sewer line repair in a given year was less than 1 percent.
Finally, it’s likely you can add utility line protection to your homeowner’s insurance as an endorsement for a lot less money(typically $30-$40 a year).
When it's a good idea to buy a utility protection plan
So, generally speaking, you probably don’t need to purchase line protection from your utility provider (or the third-party company they’ve partnered with to offer it to you). But there are specific scenarios when buying this protection makes sense.
First, if you can’t add it to your homeowner’s insurance, it’s worth investigating. But even then, you likely won’t need it unless your home falls into one of these scenarios:
Your home is older than 50 years AND your water and sewer lines have never been replaced. As noted, the average replacement for water and sewer lines is about 125 years, and the expected lifespan of a water main is about 84 years. Once those pipes get into their sixth decade, the odds of a problem start to go up. So if your water and sewer lines are getting up there in age, a protection plan starts to make more sense.
You can try to determine the age of your water and sewer lines in a variety of ways. You can do a permit search at your construction office; even if the utility company or county did the work, there will be permits as evidence. You can also go down into your basement or crawl space and look at the exposed pipes coming into your house; if they look ancient (rusted and corroded), they probably are, and there are sometimes stamps on the pipes that will give you info about their age—though this will require some research, as these markings are usually unique to the manufacturer (a plumber may be able to help you out). You can also make some educated guesses if you can figure out what your pipes are made of—cast iron, for example, probably means your pipes are really old. Barring that, you can contact your utility's customer service and they may be able to tell you the history of your water/sewer lines.
Other homes near you have had problems. Ask your neighbors. If more than one of them has experienced the joys of a burst water main or a sewer line replacement, chances are the plumbing in your area is older and all the lines are in danger of failing. That makes a protection plan a wise investment.
You’re already experiencing the signs of failing service lines. Are you suffering from chronic low water pressure or frequent sewer or sump backups—but your neighbors aren’t? Those are signs that your service lines are old, damaged, or blocked. Cleaning out a sewer line or calling a plumber to investigate your water supply might fix the problem, but if it doesn’t, utility line protection might pay for itself sooner rather than later.