An Insurance Policy You Probably Don't Have

M.P. McQueen, The Wall Street Journal Online

A number of home and business owners hit by the massive weekend storm in the Northeast are discovering yet another type of coverage they didn't know they needed -- sewer-backup insurance.As flood waters and runoff overwhelmed many sewer systems in New Jersey, New York, Massachusetts, Connecticut and elsewhere, sewage backed up in residents' bathrooms and basements. But some property owners there are learning that they aren't covered for backed-up sewage, just as many learned after 2005's Hurricane Katrina that they weren't covered by homeowner insurance for damage from flood waters.

It's a potential problem in many parts of the country, especially in areas vulnerable to heavy rainfalls and flash floods. Claims from backed-up sewage can run as high as $10,000 to $20,000 per incident, says Loretta Worters, a spokeswoman for the Insurance Information Institute, a trade group. The problem is, most business and homeowner policies don't include coverage for sewer backups unless purchasers pay for a special rider, which costs an extra $40 to $50 per year for $5,000 worth of coverage, added onto a typical homeowner policy. (Higher limits are available, and some high-end homeowner policies do include this coverage.)

But despite the riders' relatively low cost, most homeowners don't take them. Nationally, only about 20% of homeowner policies have the additional coverage for sewer backup, according to data provider ISO.

Frank Tredici, 63, a retiree who lives in Staten Island, N.Y., says his neighborhood is plagued by sewer backups after heavy rainstorms. He suffered three or four himself before he paid to have a backflow-prevention device installed in his sewer line 10 years ago, at a cost of more than $2,000. Mr. Tredici says he has never paid for a sewer-backup rider on his homeowner policy because he already bristles at the $650 the mortgage company requires him to pay for flood insurance on top of his $1,021 home-insurance bill, which recently jumped from $800 a year.

In the wake of severe hurricane damage in recent years, many homeowners learned the hard way that their policies generally don't cover damage from ocean or river storm surges, rain runoff or water-main breaks, and sales of flood insurance have grown. A National Flood Insurance Program spokesman says sales increased nearly 11% nationally in the 12 months through February, with 5.4 million policies in effect; for more information, go to www.floodsmart.gov or call (888) 379-9531. More than 100 private insurers make flood insurance available through their agents.

To minimize the risk of damage from backed-up sewage systems, insurance experts say you should take these precautions:

• Avoid putting grease, paper towels, diapers and other refuse in toilets or sinks to prevent clogs in pipes connecting your home to the city sanitary main.
• Don't connect sump pumps, French drains or other flood-control systems to city sanitary mains, which is typically illegal. Have a plumber remove illegal connections.

• Install a backflow-prevention device. The cost ranges from about $500 to $5,000 plus installation, depending on the type of plumbing in the building and valve required.

In the event of a backup, it's important to thoroughly clean the affected area with disinfectant and completely dry it to prevent disease and further damage from mold and mildew.

Backup Plans
After recent storms, some homeowners are finding out the hard way about a type of insurance few have:

• Sewer-backup coverate isn't included in most homeowner policies.


• A rider is usually availablef or an extra $40 to $50 a year


• Only 20% of homeowners have paid for the coverage, though the problem is common.