It's not a scam but a pitch worthy of scrutiny
JANESVILLE—Where there's opportunity, there's usually a salesman not far behind.
The bitterly cold winter of 2013-14 provided the opportunity, and sales pitches are now pouring in to homeowners in Janesville and other communities where frozen ground caused water line issues.
In the Janesville area, the most prominent has been a letter from HomeServe USA.
“Dear (Homeowner),” the letter starts.
“Your property … has appeared in a review of our records … and we have found that your exterior water line is not covered with water service line coverage from us.
“…The water service line buried underground on your property could fail without warning, leaving you responsible for … thousands of dollars in unforeseen expenses.”
The water service line is an underground pipe that brings water to a home. Homeowners are responsible for the water service line that runs from the property line to the home.
The company notes in its letter that it is independent from the homeowner's local water utility or municipal government.
It also notes that the insurance coverage it offers—about $60 a year for an annual benefit of $6,000 in Janesville—is optional.
State and local officials said the HomeServe insurance is not a scam, but they said homeowners should research their options before responding. In many cases, they said, existing homeowners insurance policies cover water service lines.
David Botts, director of Janesville's water utility, said HomeServe approached the city about endorsing its insurance product.
“The city is not in the business of endorsing products, so we declined, but, as any independent business, they were welcome to approach the citizens to offer their services,” Botts said in an email.
Botts said the water utility has received many calls from local homeowners who have received the letter. His advice is that homeowners do their research and see if the insurance would benefit them.
Other communities agree.
The city of Madison recently issued an online notice to its residents that the official-looking letters are simply part of a widespread sales campaign.
“While it is true that water service line repairs are a homeowner's responsibility, it's a good idea to read the fine print before buying any insurance policy,” the notice reads. “You can also check with your current homeowner's insurance company to see if lateral damage is already covered by your current policy.”