HomeServe USA, the warranty company that Baltimore is partnering with to sell residents pipe insurance, included a $150,000-a-year pot of funds to aid low-income and senior residents unable to purchase the service.
The hardship fund was touted as part of the company’s winning bid last May.
But it now turns out that the full $150,000 amount won’t be available until the program is in its second year – after August 2015 – and is tied to the company meeting its “enrollment targets” in the first year.
“HomeServe is making $25,000 available immediately, and that number will rise as enrollment targets are reached,” Jeffrey Raymond, spokesman for the Department of Public Works, said.
If the enrollment targets are not met, the assistance program paying for repairs to broken utility lines may not be fully funded, Raymond acknowledged.
“What happens if enrollment targets are not reached,” The Brew asked Raymond.
“Then it stays at $25K plus for the first year before the $150K kicks in at year 2,” he responded in an email.
So far, 6,900 city residents have signed contracts with HomeServe to provide insurance in case a water or sewer line breaks between the city system and the exterior of their house, which is the responsibility of the property owner.
The $150,000-a-year hardship fund was supposed to help low-income and senior residents finance such repairs. Raymond said that HomeServe will administer the program, and DPW will determine which customers are eligible.
Brew’s coverage of HomeServe and pipe insurance coverage:
• City to offer plan to ease the financial pain of water and sewer repairs (5/27/14)
• Concern and confusion as city promotes water pipe warranties from one company (9/17/14)
• Kamenetz says water pipe insurance is not needed (9/18/14)
The eligibility requirements for HomeServe assistance are the same as those for DPW’s Low-Income and Senior Citizens Water Assistance Programs: a sliding scale based on household income and number of residents. Both programs are available only to city residents.
“The eligible repairs will likely be those that are covered by the regular service offered by HomeServe,” Raymond added. “People who have a need to repair their water or sewer service lines and think they qualify for this assistance should contact our Customer Support and Service Division, and DPW will forward their information to HomeServe.”
In August, the city sent residents a letter, under DPW director Rudolph Chow’s signature, inviting them to buy the optional pipe “insurance” coverage, which is not technically insurance but a warranty.
The letter sparked many questions and expressions of concern by residents who wondered why the city was promoting the program.
Baltimore County executive Kevin Kamenetz has described such insurance as unnecessary.
His administration has set up a financing plan to help homeowners pay for the “extremely rare” cases where private-line pipes will be damaged.
The city’s solicitation said for $5.99 a month during the first year (and a to-be-determined renewal price thereafter), homeowners could purchase exterior water and sewer line coverage with no deductible through HomeServe.
Worry over Aging Pipes
The city’s rationale for promoting pipe insurance to city residents is not clear, but fears that upcoming utility repairs, including the installment of “smart” or electronic water meters, could lead to breaks on private property were indicated in a memo by city purchasing chief Timothy M. Krus.
The May 20, 2014, memo to Mayor Stephanie Rawlings-Blake and the Board of Estimates said, “The City wishes to increase participation in water and sewer line protection programs due to the age of the City water system and the likelihood of citizens having to pay large amounts to pay for broken lines on their property.” HomeServe was selected by the Board of Estimates after receiving the highest score of four bidders.
HomeServe offered “a fund of $150,000 annually to be used to provide repair [sic] for qualifying low-income or senior residents unable to purchase the services,” Krus wrote in describing the company’s winning bid.
As part of its agreement with HomeServe, the city provided the company a list of water and sewer customers for direct marketing purposes, and allowed HomeServe to use city and DPW logos to “co-brand” HomeServe products and services.
HomeServe has similar partnerships with several municipalities across the country, but Baltimore is the first one in Maryland.
While the “reply by” date on the Chow solicitation letter was October 7, enrollment is ongoing. “Residents can sign up whenever they like,” said Raymond.
DPW is currently advertising the HomeServe warranty program via co-branded brochures as well as on its website.