November 2014, Vol. 69, No. 11
Features
NYC Launches Service Line Protection Program for Homeowners
Failures to aging water and sewer service lines are on the increase in major cities and small towns alike throughout the United States.
More than 7 billion gallons of treated drinking water is lost to leaks and failures to utility pipes every day across the country, evidence that the nation’s water and wastewater infrastructure is in desperate need of repair and replacement.
No city or town, regardless of size, is immune. According to the National Association of Water Companies and the U.S. Chamber of Commerce, 45 percent of all city water and sewer pipes in the nation’s fourth largest city, Houston, TX, which ranks eighth nationally for cities with water system leakages, are in poor shape. American Water Resources of Texas data shows that nine out of 10 water line repairs occur in homes more than 20-years old when homeowners’ pipes begin experiencing leaks and breaks due to age, tree roots and shifting soil from weather and climate changes. Field crews with the New York City Department of Environmental Protection (DEP) responded to more than 3,000 leaks and related service line failure complaints citywide in 2012, of which an overwhelming 77 percent were determined to be private residential dwelling service line problems.
In response, the New York City DEP has partnered with American Water Resources to launch a water and sewer service line protection program, designed to help property owners better manage the risk of service line failures and protect them from the often alarming repair costs. By enacting the program, the nation’s largest city now joins the fast-growing number of cities and municipalities throughout the country that are partnering with service line protection firms like AWR to offer similar homeowner water and sewer line protection programs.
DEP selected American Water Resources (AWR), a market-based subsidiary of American Water, the largest publicly traded utility company in the United States, as the exclusive provider for DEP customers. In January 2013, AWR launched the Service Line Protection Program to help shield NYC homeowners from potentially high repair costs to failed service lines, which are the responsibility of the property owner. Roughly 670,000 properties throughout all five New York City boroughs are eligible for the coverage, and to date approximately one in four eligible properties are enrolled in the program, with many homeowners electing to enroll in both water and sewer line coverage. So far, the program has saved New York City homeowners more than $20 million in repair charges – including emergency repairs that occurred during last year’s harsh winter – that would have otherwise been paid out of pocket.
Under the terms of the partnership agreement, AWR manages all components of the program — from educating homeowners about their responsibilities for maintaining water and sewer service lines, to establishing a network of local, independent contractors and providing 24-hour customer service.
Eligibility and coverage
The NYC program provides unlimited protection for covered repairs, such as normal wear and tear and basic restoration of the affected property. It also offers, for an unlimited number of claims, round-the-clock customer service support and access to a network of service providers qualified to perform needed repairs. AWR’s network of local, independent service contractors comprises NYC-licensed master plumbers, who are on call to respond to the service line issues of participating customers. When a customer calls to report a claim, AWR dispatches a licensed master plumber from the local network. There are no claim forms to submit and no deductibles, and the monthly protection fee is itemized and included on each participating customer’s DEP water and sewer bill. AWR’s emergency response time is less than four hours, and customer satisfaction ratings are at 94 percent.
Properties eligible for voluntary enrollment in the NYC Service Line Protection Program include residential, mixed-use, and single- or multi-family dwellings with wireless meter reading devices; currently billed on a flat rate or by metered charges. To be eligible, homeowners must also be current on all DEP charges or have an established payment agreement. Non-residential properties that are not metered, have multiple service lines, are not equipped with a wireless meter reading device, are delinquent in charges and lack an existing payment agreement, are billed on a frontage fire line plan, or are served by a meter pipe that is more than two inches or smaller in diameter are not eligible.
On average, NYC property owners without this program could expect to pay between $3,000 and $5,000 to repair a water line break and between $10,000 and $15,000 to repair a sewer service line failure. “There is a one-year warranty on all repairs, so customers know they are fully protected,” says Malcolm Conner, president of AWR. “Based on the average repair costs, a customer could be enrolled for close to 100 years, and the program will pay for itself with just one repair.”
According to DEP Commissioner Emily Lloyd, the Protection Program will ultimately save rate payers millions of dollars in repair charges that would have otherwise been paid by them out of pocket.
“The Service Line Protection Program is an affordable way for homeowners to shield themselves from unexpected repair costs,” says Lloyd. “The program underscores our commitment to provide the best possible service to our customers, one of 100 distinct initiatives outlined in our strategic plan, Strategy 2011–2014. Since 2011, these customer-focused initiatives have saved New Yorkers tens of millions of dollars collectively, and we are encouraged by the tens of thousands of DEP customers who have already enrolled in the program.”
Conner believes that the Service Line Protection Program fills an important need for homeowners, who are often unaware of the costs involved with service line repairs on their properties. Conner explains that although technically a service contract, the program actually operates more like an insurance policy. “The Service Line Protection Program is an affordable solution that provides peace-of-mind protection to homeowners by shielding them from the high-priced, unexpected costs for these repairs. DEP customer homeowners enrolled in the program currently pay a flat monthly fee of $4.49 per month for water-line protection, $8.47 per month for sewer line protection or $12.96 per month for both programs.” Conner says.
Gaining momentum
Monthly program fees for service line protection coverage in subsequent years will be determined and adopted by the New York City Water Board, prior to beginning a new protection coverage year. Monthly water and sewer bills must be paid in a timely manner for customers enrolled in the program to remain eligible.
“Until they experience a service line failure or emergency, many homeowners are unaware that they are responsible for the repair costs to damaged water or sewer service lines that run from their building’s exterior to the municipal service line in the street,” says Boyarsky. “These repairs are usually not covered by most homeowners’ insurance policies.”
The Service Line Protection Program fashioned by DEP — the largest municipally-owned water and wastewater utility in the United States — and AWR is just one of many related service line protection programs now offered by cities and municipalities throughout the country. Such proactive protection initiatives are helping to increase awareness of property owners’ service line maintenance responsibilities, while collectively saving residential homeowners millions of dollars in potential repair costs.
According to Alan Rothschild, owner and president of Vantage Group, a leading water-cost management and analysis firm, additional residual advantages and benefits are also realized from such service line protection programs.
“If homeowners are enrolled in the Protection Program, they are often likely to be more aware of potential service line maintenance issues and fix leaks promptly, which is an advantage for the city,” says Rothschild. “The program will also reduce expenses imposed on cities by not having to shut down water to unrepaired service lines. The NYC Protection Program is a great example of how a government and private business partnership can provide homeowners with an affordable program that relieves them of unanticipated and burdensome repair costs.”
“It’s a great idea,” says Peter von Simson, chief executive officer of New Bedford Management Corp., a prominent NYC-based property management company. “With a few adjustments to eligibility requirements and pricing considerations, it also has potential for larger properties. It’s refreshing to see government and private business partnering in such a proactive way.”
FOR MORE INFORMATION:
American Water Resources, (856) 309-4690, http://awrusa.com
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