Reviewing Des Moines Water Works' line protection plans

👋 Jason here. I received an offer for a $15.49 monthly sewer line protection plan a few months ago.

• It prompted me to ask questions about whether it was different from my $6.49 monthly water line protection plan through Des Moines Water Works.

Why it matters: The fee has been touted as a way for consumers to save money should something catastrophic happen, but the reality is you might already have this covered.

• I discovered they were separate plans, but I didn't need either of them — my homeowners' insurance already covers sewer (outbound) and water (inbound) lines.

Zoom in: The warranties generally cover exterior sewer lines or water lines and equipment between a water main along a city street and a home's inside meter, which are the owner's responsibility.

• Repairs can cost thousands of dollars.

Flashback: Water Works began billing for HomeServe USA's water line protection plan in 2012.

• The utility received a $100,000 upfront payment from the Connecticut-based company and keeps 5% of fees it charges customers for the optional protection.
• Former Water Works CEO Bill Stowe promoted the service, warning that coverage offered by other companies was not customized for the metro nor recommended by the utility.

State of play: The contract has been renewed or amended at least four times, increasing the initial $4 monthly premiums in 2012 to almost $6.50 now.

• Under its contract with Water Works, customers will be sent notices at least 50 days before another 50-cent rate increase takes effect next year and can opt out at any time by contacting HomeServe.

By the numbers: Water Works customers collectively paid more than $2.6 million in water line protection premiums in 2022. That resulted in almost $131,000 in billing service revenue for the utility, records show.

• Under contract terms that began last year the utility company also receives $20,000 a year from HomeServe for a program that helps low-income households pay bills.

Be smart: After discovering the HomeServe protection billed by Water Works only covers water lines, I called my insurance agent about finding cheaper coverage than HomeServe's $264 per year policies.

• The more costly sewer protection is separate and billed directly through HomeServe.
• I learned that my homeowners' policy already covered all the lines through a $1,000 deductible.

The other side: Dozens of people who identify themselves on neighborhood social media app Nextdoor as metro-area residents say the plans covered expensive repairs and saved them money.

• HomeServe has completed about 5,000 jobs since partnering with Water Works, which paid for nearly $9 million in repairs over the last 13 years, Water Works director of customer service Laura Sarcone tells Axios.

What they're saying: HomeServe encourages residents to review their existing insurance, but company officials believe it's unusual for homeowners' policies to cover both water and sewer lines, Myles Meehan, a HomeServe spokesperson, tells Axios.

Of note: The consumer advocacy group Consumers' Checkbook in a 2020 review found water and sewer line protection policies cover unlikely repairs, concluding people shouldn't bother with them.

Editor's note: This article first appeared in the Axios Des Moines newsletter.

Go deeper: HomeServe has faced legal challenges in multiple states