Ferndale Promotes Sewer Line Insurance Program
(Crystal A. Proxmire, Nov. 15, 2014)
Ferndale residents have until Nov. 30 to sign up for low rates for sewer line insurance through Service Line Warranties of America, a program approved by the City of Ferndale. Though SLWA is an outside company, The City of Ferndale has endorsed the plan and allowed the company to use the City’s logo and name while marketing it.
The plan covers damage to the line that runs from a house to the main sewer line. Often these lines can be damaged by tree roots or old age. What most don’t realize is that homeowners insurance does not cover the lines, so when they collapse or fill up the homeowner can face repairs in the thousands of dollars.
The insurance costs $7.25 per month or $82 for an entire year. The City does not get any financial incentive from the endorsement, but according to Councilperson Greg Pawlica, the City Council wanted to make sure residents had a program that was legitimate and a good value.
Some residents have been surprised to see the City of Ferndale logo on letters for an insurance program, and have questioned how the relationship between the City and SLWA came about.
Councilperson Pawlica explained. “Back in March I went to the MML [Michigan Municipal League] Conference in Lansing with [Councilperson] Melanie Piana and at that time Eastpointe did a presentation on how they self-insured their sewer line program. Homeowners paid for the insurance and the City’s DPW made the repairs. They felt they could provide better service at a lower cost than the insurance companies out there. It seemed like a great program. In Ferndale with the homes being so old a lot of people need this kind of repair,” Pawlica said. “I wanted to see if we could offer a program like this for our residents. So I came back and asked the City Manager and DPW Director to look into it.
“The thing is, if the City does it, then the City becomes responsible for the repairs, cost and management. …You have to have enough city and staff, and the city becomes liable if the repair is not done right. The conversation was also do we really want to assume this liability?”
Instead Pawlica, City Manager April Lynch and DPW Director Loyd Cureton began researching other options.
“I personally looked at several programs, compared what is covered and looked at online complaints. When all was said and done the SLWA program seemed the best. Loyd and April came to the same results on their own too, so that is why we contacted them.”
City leaders also had sewer drain lines on their minds after investing in cameras to video sewer lines in areas of the City prone to basement flooding. In 2013 they contracted an outside company to scope the drain lines, and eventually purchased the equipment themselves with the intent of inspecting the entire system over time. The cameras focus on the city’s part of the pipes, but can catch areas where roots are blocking a particular home’s connection to the main line.
Some sewer line insurance companies have bad reputations, singing up homeowners for low-cost coverage, but then denying claims. Even in the past few weeks since the City approved the endorsement, other companies have been sending letters on their own in hopes of gaining new customers. But only SLWA has been vetted and endorsed by the City, and they should be the only company using the City logo.
SLWA is affiliated with the National League of Cities, and currently serves 210 communities across the country, including 11 cities in Michigan. Royal Oak, St. Clair Shores, Clawson, Huntington Woods and Berkley are among the cities.
Mike Chambers, Regional Account Manager with SLWA shared some statistics to show that their plan delivers.
“We can say that from more than 210 municipal partners, we have serviced more than 23,000 claims. More than 97% of all submitted claims are approved and all claims are evaluated by a Warranty Analyst to ensure the repair recommended by the contractor is the least disruptive but most beneficial to the homeowner,” Chambers said. “From our current Michigan City partner base, we have completed over 1300 claims, totaling more than $755,000 in repairs completed. Of these claims, only 1.4% have been denied.
“Our Terms and Conditions provide a broad array of coverage options that meet diverse needs. As a result, in 2013, the program denied just 2.45% of all submitted claims nationwide. The three reasons for claim denial were: excluded from the Terms and Conditions (1.13%); customer who never enrolled in a product (0.26%); and the customer was not enrolled in the warranty product (i.e. enrolled in water and had a sewer issue) (1.06%). For denials based on exclusions, residents receive a letter with specific reference in the Terms and Conditions document as to why the claim was denied.”
Frank Goodroe in Huntington Woods bought the coverage three years ago, when the price was slightly lower. He was very happy with the service. “I recently went through a house sale, and the buyers had a home inspection. They took a video of the sewer drain, and discovered broken sewer line, roots, and some standing water. A sewer plumber quoted me at least $4,000 for the repairs.
“I contacted the insurance company, they immediately responded, a plumber that they selected estimated the repairs at $4,700. Since this was an issue at the time of closing on the house sale, I agreed to accept $4,000 and have the repairs done. It took approximately 3 weeks to get the payment. …It was the best 59.00 I ever spent.”
Realtor Lori Davis has also seen the impact of a city promoting the coverage. “This has been a huge success in Huntington Woods for years – it’s a great selling feature that buyers just love.”
Amber McLincha-Herrick in Pleasant Ridge also successfully used sewer line insurance when her drain was not working properly. The inspection showed that the drain only needed to be snaked, not replaced. “I expected it to be some pain in the butt with hoops,” she said. “[But it was the] easiest experience ever.”
The insurance does not cover routine cleaning, but if there is a problem with the drain they will pay for snaking if that is the resolution, Pawlica said.
Sewer line insurance also has nothing to do with damage from major rain events, such as the flooding that impacted SE Michigan on Aug. 11. In that case there was so much rain in so short a time period that drain systems regionally over-flowed and thousands of people through south Oakland County, Wayne and Macomb counties experienced flooding in their homes.
To view the Sept. 22, 2014 City Council meeting where the endorsement was approved, go to http://ferndale-mi.granicus.com/MediaPlayer.php?view_id=3&clip_id=474.
To sign up or for more information, visit http://www.slwofa.com.
Ferndale Promotes Sewer Line Insurance Program