By Elaine Rassel
An area city reported that their City Council had been contacted by a xxxx xxxx Corp as far as providing residential service line protection in the city. They had been first aware of this Corp in February. It was described as a program that would allow property owners a variety of coverage’s as far as unwanted “water” was concerned. They had an External Sewer/Septic Line Plan; an External Water Service Plan; and were also offering an Interior Plumbing and Drainage Plan.
The Council of this City, at that time sent out a Request for Proposal to see what other companies would provide and the amount of city involvement. The City sent out two requests and the one from xxxx xxxx Corp was the only one that responded.
Just what would this Corp program provide? It’s program would provide service plans for residential exterior water service lines and residential exterior sewer service lines. Enrollment in this program is not required by the City and is 100% voluntary. The only thing the city would be involved in would be in the form of a partnership through the marketing of their program.
However, the city would receive 10% commission on enrollments and there would be no cost to the city for participating in the program. The Corp did have a request _it was asking for in its agreement to use the City of xxx logo on letterhead that would be sent to homeowners about this insurance plan.
This brought some input from the City’s attorney who stated that there was such a program in Sioux City. Because the city letterhead was used, there were citizens that thought the program was being offered by the city_it was NOT. He thought it would cause this city to get more calls than necessary.
Would there be any reason why a citizen might be interested in this Corp program? One advantage might be that citizens would get a cheaper monthly rate on the Corp’s insurance rather than adding it to their homeowners or property insurance plan.
The person recommending this plan stated that citizens would be educated that service lines are theirs and they own them. These lines cover from the tap on the main to the meter. If a person has a bad valve in their basement that’s not working before the meter, it’s covered. If their curb box doesn’t work, its covered. This is what this City’s code requires just in case property owners aren’t aware of it.
One of the Council members had talked with his insurance agent about the Corp program. The Council member stated that you don’t have to take it however, it is a good value if you should need either of these services (external or internal). The program covers all single family houses and the coverage is purchased by the property owner.
Another Council member was pleased that some research had been done but he still had concerns. The City would be endorsing this company. He was concerned that if the company went bankrupt 20 years or so, would the homeowners come back to the City and accused the City of bringing these people in? Would there be some liability for the City? He just didn’t have confidence that this company would be here for any long length of time.
Another Council member was concerned on the endorsement part of the agreement. He didn’t like endorsing any business to sell their business within the city. This would give them the right to the City’s mailing list of homes to go and sell to. He stated that there would be 100 people that understand they own that service line, but on the other hand, there would be over 4,000 that don’t know this.
Another Council member thought the City would have to come up with an agreement with this Corp as to how it would be advertised. Another Council member was concerned as to what property owners would think when the letter sent to them advertising this Corp program had City of xxxx on the letterhead.
The City attorney spoke up and stated that the Corp absolutely wanted the city’s letterhead to go out on their promotional letters.
A Council member made a motion to authorize staff to prepare a marketing agreement with xxxx xxxx Corp to provide residential service line protection.
Three times there was asked for a second to the motion and as there was none the motion died for a lack.
(Have you checked with your insurance policy about coverage for water damages? Some have and have found out that their policy would be cheaper and safer in the long run. It is just like these insurance companies on television that are promoting dental, household, or vehicle insurance. Check with people that you would be using these insurances with_if they won’t accept them (chances are they want exactly what their service charge would be, not a cheaper settlement from an insurance company) then don’t sign a contract and find out it can’t be used. Are there towns or cities that are going to fall for this plan just to get 10% from each endorsement?)