Column: That official-looking letter on sewer insurance? Here’s what you need to know

Mona Field is among about 700,000 Los Angeles homeowners currently receiving official-looking letters that bear the city’s seal.

The letters aren’t from the city of Los Angeles. They’re from a company called SLWA Insurance Services, which wants you to buy insurance for your sewer line.

Field, 66, an Eagle Rock resident, said the city seal on the envelope was the only thing that prevented her from immediately tossing the envelope into the recycling bin. She took a look at the contents because there was a cover letter ostensibly written by the L.A. Bureau of Sanitation.

“I knew pretty quickly this was a sales pitch,” Field told me.

As did I when I received the same letter this week. But I had a bunch of questions.

Is this company falsely representing itself as a partner of the city?

If not, why is a city agency in cahoots with a business’ direct-mail marketing campaign?

Do I really need sewer-line insurance?

OK, that’s a lot to unpack. Let’s take this step by step.

The letter isn’t a scam. A spokeswoman for the Bureau of Sanitation confirmed to me that the mailer is legit and that the city has signed off on SLWA Insurance Services reaching out to homeowners.

This, however, might be seen as a bit strange because the bureau’s cover letter explicitly declares that “the City of Los Angeles makes no endorsement or approval of SLWA or its agents or representatives.”

Not exactly a vote of confidence for the pitch that accompanies the cover letter, which tells homeowners they’re responsible for any repairs to the line that runs from their house to the municipal sewer pipe.

“If you were unfortunate enough to suffer a break or blockage in this line,” the letter says, “it would be up to you to find a plumber and get the line repaired.” Such work, it warns, can cost “thousands of dollars.”

For $9.06 a month, SLWA says, you can have “peace of mind” that you’ll be covered for up to $12,000 in sewer-line repairs.

Is that a good deal? I’ll get back to that.

SLWA — short for Service Line Warranties of America — is a subsidiary of HomeServe USA, which is in fact based in England.

British authorities fined HomeServe the equivalent of nearly $39 million in 2014 for “serious, systemic and long-running failings, extending across many key aspects of its business.”

These alleged shortcomings included “mis-selling” coverage, failing to adequately investigate complaints and senior managers turning a blind eye to questionable practices.

“Following a rapid expansion in the growth of its business, HomeServe developed a profit-driven culture where profit targets were met by taking advantage of existing customers in pursuit of sales,” Britain’s Financial Conduct Authority said in announcing the crackdown.

The licensing agreement signed by SLWA and L.A. city officials in March makes no mention of any past misdeeds. Instead, it says L.A. has 6,700 miles of sewers and approximately 700,000 “sewer laterals” — the lines that connect city pipes to people’s homes.

“These laterals are the responsibility of the property owner,” the agreement notes, adding that “facilitating a sewer insurance program helps to make both routine maintenance and emergency repair/replacement of laterals more affordable.”

In return for use of the city’s seal in SLWA’s marketing, L.A. officials say they negotiated a 7% reduction in the proposed monthly premium to $9.06 and an increase in the coverage limit to $12,000.

This is L.A.’s first foray into co-branded homeowners’ insurance.

“The city is not receiving any monies for this program,” said Heather Johnson, a spokeswoman for the Bureau of Sanitation.

Myles Meehan, a HomeServe spokesman, said the company has similar arrangements with hundreds of municipalities and utilities nationwide.

He said HomeServe uses official government logos in its mailers “to tell homeowners that this is a valid offer.”

That might prompt people to open the envelope, but it’s also potentially misleading. After all, the Bureau of Sanitation, in its cover letter, says the city “makes no endorsement or approval” of the company.

“That’s true,” Meehan acknowledged. He said different cities impose different conditions on their deals with HomeServe. L.A. officials wanted this language.

He said the city negotiated “a good price” for sewer-line insurance in return for use of the official seal. In reality, though, we’re about average. Meehan said monthly premiums across the country range from $8 to $10.

He also said policyholders are limited to using contractors picked by the company. These contractors are reliable, Meehan said, because “we have to be stewards of the brand.”

This is HomeServe’s first marketing campaign under its five-year contract with Los Angeles. Meehan said the city “will soon be one of our biggest markets.”

So should you purchase coverage for your sewer line? I put that question to independent plumbing professionals (who aren’t on HomeServe’s preferred plumber list).

“This is something I typically tell people to stay away from,” said Jeremy Williams, owner of Glendale-based Williams Sewer Line Inspectors. “Very often, you’ll have problems that aren’t covered, and then they try to sell you as many things as they can.”

Indeed, the letter going out to L.A. homeowners says coverage exclusions include “any non-conforming drain line, such as a basement or storm drain; repairs to any line that branches off the main line; lines that provide service to multiple properties or secondary buildings.”

And the biggie: “Damage from accidents, negligence or otherwise caused by you, others or unusual circumstances.” That, theoretically, can leave a lot of issues uncovered.

Policyholders also “agree to resolve disputes related to this plan by arbitration or in small claims court, without resort to class action or jury trial.”

Victor Curiel of Victor’s Rooter in Beverly Hills said that instead of paying about $108 a year for sewer-line insurance, homeowners should focus on routine maintenance.

He advised spending about $150 for a camera inspection of your line. That will reveal any root intrusion — the most common form of blockage — and suggest how much time you may have before repairs are needed.

“If there’s no root intrusion, you’ll probably have 20 or 30 years before that’s potentially a problem,” Curiel said.

Clearing your line can be as cheap as $100 for a minor blockage. Replacing a pipe can run between $3,000 and $4,000.

Check with your home insurer. Many firms will add sewer coverage to existing policies for a modest additional cost, perhaps as little as $50 a year.

Or you can just set aside $10 a month as a sewer contingency fund. If you need the money, it’s there. If you don’t, it’s still there — yours, not some insurance company’s.