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Do Homeowners Need Water Line Insurance Sold by Utility Companies?

It depends on the age of the house and the balance of your emergency fund

closeup looking into muddy hole with broken water pipes

iStock / Getty Images

En español | There are two ways to discover that your water main is leaking: slowly, and suddenly. The slow way is when you notice that your water bill keeps creeping higher, and that one part of the lawn seems to be growing much faster than other parts. The fast way is when you see a new brook bubbling up gaily in your azaleas. Either way, you could have a major household repair at hand.

Your homeowner's insurance likely won't cover water pipes outside your house, and your friendly local water utility won't come out and fix it for free, either. The average cost to replace your main water line is $3,750, according to Fixr.com. You can get coverage against water line breaks. Should you?

How water line coverage works

Your utility company probably offers “insurance” against water main breaks. Typically, these are home warranty contracts, not insurance, and they are usually offered by a third party, not the utility itself. This is a common arrangement: Most utility companies don't want to repair water lines, and they get a cut of the contract cost from the home warranty company.

For example, CenterPoint Energy advertises a service repair contract for water line breaks for $5.99 a month, which is added to your gas bill if you choose to accept the contract. National Home Repair Warranty is the issuer of the service contract, which is administered by a third company, HomeServe USA Repair Management Corp.

The contract typically covers the water line from the edge of your property to the outside wall of your house. In most cases, plumbing inside your house is covered by homeowner's insurance unless the leak has been caused by neglect. If you have a well, the coverage typically runs from your home's outer wall to your well casing.

The water line contract isn't an insurance policy, but it will have exclusions. Read them carefully. For example, there's often a 30-day waiting period before the contract goes into effect. Pipes broken by natural disasters, such as earthquakes, won't qualify.


For tips on building an emergency fund to help cover unexpected home repairs, check out the AARP Money Map.


Is water line coverage worth it?

For a limited number of people, it can be. First, barring some very shoddy plumbing work, water mains tend to last a long time — typically 50 years or more. If you have a new house, a water line leak is unlikely, and you probably don't need a warranty contract. “If your water main is 50 years old or more, you're probably rolling the dice a bit,” says Jason Kiddy, an engineering consultant in Gambrills, Maryland.

Second, the cost of replacing your water line varies according to the distance between your house and your property line, the type of pipe you use, and whether you must dig up the old line (more on that in a moment). A short water line means a more affordable fix, and you may be able to cover the cost from your savings without the need for a warranty contract.

The longer the pipe to your house, the more pipe you'll use, and the more your replacement will cost. The cheapest pipe is PVC at about 50 cents to $5 per foot; the most expensive (and most durable) is $20 to $30 a foot.

Not all water main breaks mean that the entire pipe has to be replaced. Sometimes plumbers can determine where the leak is, dig down and replace the broken section. In that case, the repair bill could be as little as $500 or so.

Fixr.com estimates that replacing a 10-foot PVC pipe will run an average $1,215, assuming you don't have to dig a trench to do it. A trenchless replacement means that workers dig a hole at both ends of the old pipe and thread the new pipe below ground. The process has lower labor costs and is a lot easier on your lawn and bushes.

The more intrusive way — bringing in a backhoe, digging a trench across the yard, removing the old pipe, putting in a new one and refilling the trench — is more expensive because it requires more labor. A worst-case scenario would be a 100-foot-long trench with copper replacement pipe: $22,500, according to Fixr. “If it's short and it's shallow, that's not as bad, and if it's long and it's deep, it's going to be more expensive,” Kiddy says. “It's not an easy repair, it's relatively disruptive, and that's why it has some cost to it."

Bottom line

It's decision time: Do you really need water line coverage? If your house is relatively new and you have savings set aside for emergencies, probably not. Why throw money toward monthly premiums for coverage that odds are you will never use? Stash the cash in your emergency fund instead.

If your house is older and most homes in your neighborhood were built around the same time, ask your neighbors if they have had to have their lines replaced. That's a very good indicator of whether a water line repair could be in your future. If several neighbors answer yes, consider purchasing a warranty.

You might also strongly consider a warranty if you live in an old house, your water bill has been creeping up, and you don't have an emergency fund. Waiting until you see a merry little stream bubbling out from your sidewalk will be too late.

John Waggoner covers all things financial for AARP, from budgeting and taxes to retirement planning and Social Security. Previously he was a reporter for Kiplinger's Personal Finance and USA Today and has written books on investing and the 2008 financial crisis. Waggoner's USA Today investing column ran in dozens of newspapers for 25 years.

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