Refunds offered for utility line insurance
PLANO - Several weeks after rolling out a utility line insurance program, full refunds are being offered to any Plano residents who feel they were misled by the city or the insurance company.
The city council first heard a presentation from Service Line Warranties of America (SLWA) at a November meeting. At that time, the council and city staff made it clear they were considering partnering with the insurance provider as a way to not only allow their residents to be protected from costly repairs, but also as a way for the city to earn additional revenue.
The contract was approved with little fanfare in January, but residents began to complain last month when the sign up packets began to be sent out. The complaints mainly center on SLWA's use of the city of Plano logo, which has led some residents to believe the insurance was being offered by the city, not by a for-profit company.
"It is very apparent from the get go that the city of Plano doesn't have any business doing something like this, where they are recommending insurance to citizens," said Plano homeowner Judy Hairston.
Mark Israelson, the city's director of policy and government relations, said the city was not attempting to hide anything from its residents, but admitted the communication could have been better.
"The styling of the letter has confused many residents," Israelson said. "I have talked to a number of citizens via email and the telephone and tried to explain the agreement. We have been up front about this and talked about it with our council in an open meeting. This is a first of its kind as a partnership and in doing so, with the letter coming out and not being as clear as our citizens will like, we will make some adjustments going forward to make sure people know the letter is from a vendor and that it is extremely clear what the relationship is."
The program offered insurance on the utility lines that run from the street into houses, which are often not covered by a standard homeowners insurance policy. Water and sewer coverage cost about $10 per month. In order to use the city logo, SLWA paid the city a licensing fee of $63,730, and also agreed to pay a 12 percent royalty on each contract signed. The city estimated it would bring in about $31,865 in royalties the first year the program was in place.
"We want to do what is in the best interest of our citizens," Israelson said. "We did it as a way of generating additional revenue, but it also presented an area that was at risk with aging infrastructure and shifting soils. This was done to answer a number of issues, and in doing so we have tried to be up front about that."
Hairston said the letter was not clear that the city was using this as a way of generating revenue from its residents. She said since it is possible to purchase utility line coverage through many regular homeowners insurance companies, this partnership was not necessary, and said the payments seemed like a kickback in return for endorsing the company.
"I think they should have let the citizens know that they are receiving money, and that every time we buy a warranty the city gets a cut of it," she said. "It should have been right out there in capital letters."
Brian Davis, a regional account manager with SLWA, said about 3,000 Plano homeowners have signed up for the service, with about 300 of those coming since the initial WFAA television report of the homeowners' concerns. Since that report, he said only two policy holders have canceled and asked for refunds. Davis said his company has a strong reputation and has been vetted by and partnered with the National League of Cities and the North Central Texas Council of Governments.
"We have had this city program for five years and work with more than 125 plus cities and we have never had this problem before," Davis said. "The way the program works is the city wants to make the homeowner aware that this is an issue. They told us they got a lot of calls about this dealing with who is responsible for maintaining the lateral lines. This is a way for the city to say A, this is an awareness campaign, and B, this is a trusted company that we feel can help you out if this is a concern of yours."
Davis said any homeowners who have signed up can call SLWA and receive a refund. He said since the policies are month-to-month, homeowners may simply quit paying their premiums and they will be out of the program.
For information on SLWA, visit www.SLWofA.com.
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