American Water Resources warranties are not a scam, and Philly recommends them

A pipe was cracked near the sewage line in front of Rodney Robinson’s Upper Darby home, and sewage was backing up into the street. He was told it would cost him more than $5,000 for the underground plumbing repairs.

His final bill: $0.

His water and sewer line warranty covered the entire cost.

“It was done, and there was no out of pocket,” said Robinson, 53, who works in hospital security. “In my opinion, it paid itself off.”

Since then, he has never hesitated to pay about $50 a month for several HomeServe protection plans, including plumbing, heating cooling, and electric.

Homeowners across the region — some of whom may not know they are responsible for the underground plumbing on their property — have probably seen advertisements for warranties from companies such as American Water Resources, which offers optional protection to city residents.

On community Facebook groups, some have turned to neighbors to ask: Anyone have this? Is it a scam? Do I really need plumbing protection?

The Philadelphia Water Department recommends it, as homeowners are responsible for the exterior plumbing from their home to the street’s main water and sewer mains.

“We really do, especially if you have an older home, and you haven’t had plumbing updated in awhile,” said spokesperson Brian Rademaekers.

Water line repairs typically cost between $350 and $1,575, according to Forbes, while water line replacement can cost anywhere from $1,500 to $12,000.

If you’re weighing whether to sign up, here are some answers to questions you might have.

Is this American Water Resources flier legit?

Yes.

After a competitive bidding process, American Water Resources (AWR) was selected in 2018 to partner with the Philadelphia Energy Authority (PEA) to offer homeowners optional water and sewage line protection at a discounted rate. The program covers normal wear and tear — think leaks, clogs, blockages, or breaks — but not third-party damage.

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“In Philadelphia, we have some of the oldest water infrastructure in the country,” said Emily Schapira, PEA’s president and CEO. “If you don’t know when your water and sewer lines were replaced, you should probably have the coverage.”

The public-private partnership drew some controversy in 2019 when all 10 district Council members signed letters to constituents promoting the warranties — without disclosing that the authority was getting 20% of the sales revenue plus $100,000 a year.

The multiyear contract was renewed in December, but the energy authority’s revenue share has been reduced to 15%, according to Alon Abramson, PEA’s director of residential programs.

The independent municipal authority, which focuses on energy affordability and sustainability, expects the program to bring in about $800,000 a year in revenue, an increase from the initial budgeted revenue of $500,000 as AWR enrollment exceeded expectations, according to authority officials. The funds go toward the PEA’s operating budget and other energy programs.

As of this week, about 88,000 Philadelphians paid for AWR warranties, Abramson said, and the warranties have saved them almost $62 million in repair costs. Philadelphia homeowners pay about $15 a month for water and sewage protection through AWR, which did not return several requests for comment. Consumers are also free to shop around to other warranty companies.

Do consumers think these kind of warranties are worthwhile?

It depends whom you ask.

Robinson, the Upper Darby resident, for example, has always tried to be one step ahead of large, unexpected expenses. He said he would rather budget about $600 a year for insurance than risk having to suddenly shell out thousands for one emergency.

In Norristown, Tony Pham, 37, said his plumbing warranty — which costs less than $10 a month — proved worthwhile when he got a $10,000 repair covered. His only complaint was that the contractors who came out to excavate and repair the pipe took months for the repair, said Pham, 37, who works in finance. Homeowners with warranty protection can’t choose their contractor.

Other potential consumers say they feel OK opting out of these warranties, betting that an emergency is unlikely and that they’ll find a way to afford repairs if it does.

“I don’t think it has to be for everybody,” especially if you know your water and sewer lines were replaced recently, Schapira said. For some, though it provides “a lot of peace of mind.”

What are my other options?

Most home insurance policies only cover peril, not normal wear and tear, but you can check with your insurer to see if you have an option to add additional coverage.

If an emergency occurs, you can also apply for a five-year, zero-interest homeowner’s emergency loan through the Philadelphia Water Department’s website.

Consumer Reports experts recommend people set aside the money that they would put toward a warranty in a savings account instead of paying a company each month.