A Baltimore Department of Public Works notice on city letterhead promoting home water pipe insurance from a private company left some homeowners thinking they were being mandated by the city to purchase insurance from the company. But DPW Director Rudolph Chow said there is no such mandate. Rather, the city went through a vetting process and entered into a memorandum of understanding with HomeServeUSA prior to sending out the letter, in order to lock in rates and ensure any work done would be by plumbers certified to do work for the city.
“This is voluntary; it’s not mandatory . . . We didn’t want our 600,000-plus citizens out here having to shop around, do the research on their own and, perhaps, being misled by some fly-by-night operators, and purchase something that when it comes time there’s need, they won’t get the service they need,” said Chow of his department’s decision to request proposals from potential insurers and select a specific company to promote to Baltimore homeowners while testifying at a city council hearing on Dec. 1.
Chow said Baltimore experiences over 1,000 water main breaks annually. Some of the city’s mains are around 100 years old, and many pipes connecting homes to those mains are just as timeworn, he said, necessitating insurance to insulate homeowners from potentially costly repairs should their connections fail.
“How many of our citizens have $5—$6,000 set aside to say, in case of a failure, ‘I’m ready to go’?” asked Chow rhetorically before the city council.
The Rev. Al Hathaway of Union Baptist Church also testified about his concerns regarding the city’s decision to promote only one company—a decision that left some of his parishioners thinking they were obligated to purchase insurance from HomeServe, and remarked on the annual price increases of the insurance plan which starts out at $5.99 per month for the first year and then increases to $8.99 per month for the second and third years.
“The increases in payments in this warranty, as calls it, is another tax. It’s a tax that we pay; it never stops; it only increases,” said Hathaway, later adding, “We need government to protect us, we don’t need a private company to protect us.”
From Chow’s testimony, it seems that DPW sees itself as doing precisely that by partnering with HomeServe, who must come to the city for permission after three years if they want to increase their monthly fee.
“The key is that we have oversight of that contract, that firm, so we can leverage, we can speak on behalf of our citizens to protect them. So this is what I call the best of both worlds,” said Chow.