File photo

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:

Click to enlarge

And the form that came with it:

Click to enlarge

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  • wisdomofbigcarlo

    Sure Bloomberg doesn’t receive a single penny and there is absolutely no cronyism involved for this “insurance”. Avenue U stores used to pay this kind of “insurance” too, but they actually received something for the money – their stores didn’t catch fire and their windows weren’t repeatedly smashed.

    Everyone that had insurance has vowed to cancel their policies upon learning that all of their premiums went into the policy writers pockets with no intention of ever paying claims since the hurricane from hell.

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  • bagels

    Normal wear and tear? Does that also cover damage caused by the roots of a city tree? Who makes the determination that the problem is caused by “normal wear and tear” – a city employee or the contractor?

    • levp

      If you ever dealt with an insurance company, you know the answer to the first question (my guess is no).
      As for determination, your contract is with the private company, not DEP itself – thus, it will be the agent of that contractor who determines the damage and its causes.

  • guest

    How after 70, 80 maybe close to 100 years this is the first time anyone has heard of such a thing for homeowners? Who decides what causes sewer lines to break? How is it proven? Only the little nanny tyrant could come up with this scam. Which in the end is what it really is. Just like the “expedited” sidewalk repair program and all the sidewalk violations that have swept the outer boroughs in the past year. The DOT (which somehow was put in charge of sidewalks) was given a runaway budget and squandered all of it on 6 1/2 avenue, gridlocking the city, paint, dangerous bike lanes, environmentally unfriendly paper wasting multi-meters, bloated constricting construction projects, lowercase bike friendly non motorist/pedestrian friendly street signs, bike racks, out of sync traffic lights, biased traffic calming studies and other nonsense. Now homeowners who already have seen their property taxes skyrocket by nearly 20% in the past 3 years are expected to pick up the tab via sidewalk violations and sewer insurance. Regarding this case, the DEP is low on funding? Well maybe they shouldn’t have wasted all that money on new automatic water meters which no longer let you manually (and thus trust-worthily) see how much water you have used Water bills have skyrocketed by about 12% in the past year as well a result of the cost of these ridiculous meters. Somehow I hope whoever the next mayor is can undo all the damage the Bloomturd administration has caused across the board.

    • levp

      Water meter still has the same “manual” dials under the cover (see image below). In fact, it’s the same meter, just with an attachment that counts how many revolutions has that small white “triangle” in the middle made and transmitting that through a specialized one-way “wi-fi”.

      And before you ask:

      Does the AMR transmitter run on my home’s electricity?
      No, AMR transmitters run on batteries with a 20 year lifespan.

      http://www.nyc.gov/html/dep/html/customer_services/amr_faqs.shtml

  • Ali

    This type of insurance is great but chose to not sign up because of the MANY exclusions. See awrusa.com/nyc

  • Guest

    This article did not include a copy of the American Water Resources fine print of terms and conditions, which includes over two dozen repairs that are not covered and will make the insurance practically useless. Too late now. I foolishly sent in my form without reading the fine print first; otherwise, I would not have joined.

  • norman mcdonald

    I signed up for the insurance to quickly find out that they do not cover anything! They disqualify everything as a “pre existing condition”. COMPLETE waste of money. Several of my friends and family members have the same experience…I signed up for the insurance and experienced my first issue 8 months in, how are they able to determine that the issue occurred prior to my activation date?