Septic insurance aims to provide some relief in the case of system failure. The catastrophic failure of your system can be well, catastrophic, and can result in an expensive repair bill. A majority of homeowners will purchase coverage on their home to protect themselves in the event of damage, but often forget about a key component…their septic system. This component is often mistakenly thought to be covered by their homeowner’s policy. The truth is it may be covered, but it probably isn’t, depending on the type of damage it incurs.
With an average tank and system replacement costing between $5,000 and $20,000 or more, depending on the location and type of system, not having it can be a painfully expensive lesson. However, even with septic insurance there are certain things that may not be covered, such as:
- Rust and corrosion
- Third party damages
- Damage to the residence
I’ve only been able to find one company that seems to actually offer this type of coverage; they’re called Powderhorn. In addition, a few other companies, like Choice Home Warranty and Blue Ribbon, offer septic warranties, but they often consider the maintenance, or lack thereof, when determining whether to pay a claim. As a real estate agent who’s worked with them, I would suggest avoiding home warranties and going the insurance route, as home warranty companies are notoriously bad about paying claims.
Neglected Systems Not Covered
It is not unusual for homeowners with a septic to just forget about it. As a lack of maintenance, called neglect by most companies, system failure will not be covered under certain conditions, including:
- Tree roots growing through pipes
- Tree roots growing into tank
- Clogged pipes in the leach field
- Failed effluent filtration
- Lack of or nonfunctioning aeration system
There are many other things that can cause a failure that would not be covered by the such as ground movement caused by an earthquake or if a third-party is performing excavation work that causes damage to the system or the leach field.
Cost of septic insurance will vary greatly based on the type of system in use, the size of home in which it is installed and the age of the current system. Add-on policies can cost between $112 and $250 per year. Some of the terms and limitations that are common among the various policies are:
- Policy limit of $25,000
- Three year coverage limit, requires re-inspection for renewal
- $500 deductible per occurrence
- Inspection and approval required at time of coverage
- Effective date is day the policy was approved
Not all companies offering homeowner’s coverage will also offer septic insurance and those that offer flood insurance will not typically include damage to septic systems in the coverage. Depending on the company and the homeowner’s insurance selected, may reimburse homeowners for the cost of incidental damages caused by tank failure, but not the tank itself.
For example, if the tank failure causes sewage back up into the home, the homeowner’s insurance may cover the cost of clean-up and structural damage to the home but will not pay for the damage to the tank that caused the damage.
Septic insurance purchased separately would be needed in order to have the appropriate coverage. Unlike homeowner’s insurance there is usually an initial inspection required before the plan will go into effect and at the end of the plan period a tank clean out and inspection will be required before the policy will be renewed.