A lot of Hamilton homeowners are wondering about a letter that arrived recently featuring a city logo and a city manager’s signature. But it’s actually an advertisement for a new water and sewer line warranty program offered by a private U.S. Company.
70-thousand homes received this letter. If you didn’t receive it, you’ll get one with your next water bill. They’ll go out to all of Hamilton’s 135-thousand homes in the next month that way.
This is a warranty program that has been gaining popularity in the U.S. since about 2010. More than 200 U.S. cities are offer something like this. Hamilton is the first Ontario city to join — the first foray into Canada for Service Line Warranties, a company based in Pennsylvania.
This machine is used to burrow a path for a new water pipe. It’s going under this Welland home with a length of new copper tubing. The homeowner noticed a drop in his water pressure, then found a few feet of water in his crawlspace. In wartime-era homes like this, worn-out pipes are not uncommon.
Rob Birnie is with Thos. R. Birnie & Sons: “Pipes do wear out. We have old clay tile pipes. They have gaps, tree roots get in. It is a large problem.”
This is a 35-hundred dollar job. Many people don’t realize they are responsible for the sections of water and sewer lines that run onto their property.
Rob Birnie: “We’re doing it every day. Sewer repairs, sewer liners every day. “It’s a large problem. It’s what keeps us in business. Tree roots are our bread and butter.”
In 2011, Service Line Warranties was in Canada offering a deal to municipalities. It would cover residential water and sewer line repairs, rarely covered by insurance, and the city gets about five per cent of the revenue from premiums in exchange for the use of the city logo on mailouts.
The company, Service Line Warranties, says having the city logo on their mailouts is key to their business plan. Without the city logo, most people would treat this like junk mail and throw it out without looking at it. The city logo gives it legitimacy. More people sign up right away and the volume of customers allow the company to offer these warranties at a low rate.
Hamilton is the first Canadian city on board, lured by a promise to protect homeowners and generate money.
Mike Zegarac, Hamilton Finance Manager: “That non-tax revenue would be applied to mitigate the need for high water and sewer rates for all property owners. So there is a potential benefit to the city in royalty revenue, it would be applied to reduce rates going forward.”
The Birnie family plumbing company in Hamilton is almost a century old. When the warranty letters went out — Rob Birnie: “It blindsided us too. It was, oh my goodness.”
He’s trying to become one of the approved local contractors for the warranty company, in part, to make sure he stays in business.
Rob Birnie: “In a way, I think it’s too good to be true. 65 dollars for the sewer portion for $8,000 worth of coverage, is a very good price. You pay for 10 years and you’ve only paid 650 dollars out of the deal.”
The company says almost 900 Hamiltonians have already signed up. They expect well over a thousand by the end of the week. And both they and the city of Hamilton hope this spreads to other cities. Hamilton as the trailblazer will get a cut of royalties from the next Ontario cities that sign up.