Polybutylene pipes are well-known in the plumbing world, but not for good reasons. They are a danger to the home and homeowner.
Being so well-known, insurance companies likely have provisions associated with PB (polybutylene) pipes. Whether the insurance company covers your home or covers everything but the pipes depends on the size and finances of the company, as well as other factors.
Homeowner’s insurance can cover polybutylene pipes. However, it is more likely that you will be given insurance, excluding cover for pipes and water damage. Some insurers may refuse cover, some may offer provisional cover, and some may offer cover at very high premiums.
No Insurance Company Is Going to Ignore PB Pipes
There are a variety of red flags that an insurance company may look for when debating their coverage, and the presence of polybutylene pipes is one of those red flags.
These pipes are a concern for homeowners and insurance companies alike because polybutylene pipes have a dangerous main problem: they are bound to fail within 15 years of their installation.
Although polybutylene pipes were initially favored for their strength despite their flexibility, this strength only lasts so long.
The chlorine that is added to the water supply reacts with the polybutylene pipes and causes scaling, flaking, chipping, and the weakening of the pipes in general.
Cracks and weaknesses can occur within a year of installation, or it may take 10-15 years until the failure of the pipes occurs.
As insurance companies know that polybutylene pipes are doomed to fail far faster than other pipe alternatives, they will have to take these pipes into consideration when deciding how to insure your home.
Ignoring their existence would likely cost them thousands of dollars in damages.
However, there are a variety of ways in which an insurance company can decide to cover a home with polybutylene pipes—that’s if they cover it at all.
Ways That Insurance Companies Handle PB Pipes
They Won’t Cover Your House at All
The worst possible way for an insurance company to react is to deny coverage for your home.
Rather than cover the costs of the disrepair that will be caused by polybutylene pipe failure, some insurance companies may deny your business altogether to try to limit how much they will have to pay.
Insurance companies want to limit their costs as much as possible. The returns from a customer with polybutylene pipes can be limited in the long run if the insurance company has to shell out thousands or tens of thousands of dollars for a predictable event.
To limit costs, insurance companies inspect for risk, and faulty plumbing is a huge red flag for risk, leading to some insurance companies denying coverage.
If several insurance companies won’t cover a home with polybutylene pipes, the owner may have to replace their plumbing altogether so that they can have home insurance.
However, denying coverage is not likely to happen.
There are a variety of ways that insurance companies can still get their returns while insuring a home with polybutylene pipes.
Monthly Premiums Will Be Very High
More likely than refusing home coverage altogether but still a bit rare is high monthly premiums.
Monthly premiums are a strategy that insurance companies use to get returns quickly from a customer.
If the customer’s home is high-risk, but the insurance company will still cover the risk, they might opt for high monthly premiums to make the policy more worth it on their end.
High monthly premiums are like an agreement on behalf of both the insurance company and the customer.
The customer is gambling with risk since they want to pay as little as possible for an insured home with risk.
The insurance company is gambling since they want to pay as little as possible for damage to a home with risk.
An agreement would be that the insurance company agrees to insure this risk, in this case, the polybutylene pipes, but the customer will have to pay high monthly costs to make it worth the insurance company’s time and money.
Highly monthly costs could make covering polybutylene pipes worth it since the pipes may not fail for a few years and the insurance company may receive more from the premiums that it had to pay for the damage.
Receiving high premiums as fast as possible may not work out for the insurance company, though, since the pipes may fail within a year of the insurance activation.
This is why cover for pipe and water damage may be delayed until a year after the insurance policy has been activated so that the insurance company can still receive its returns.
The usage of high monthly premiums can surely be a huge gamble on the insurance company’s end, making this option rare, but not as rare as refusing to cover your home.
Provisional Coverage
To reduce the gambling nature of covering a home with polybutylene pipes, the customer and company may instead agree on provisional coverage.
This means that the insurance company will still cover your home, but you will have to replace your pipes within a set amount of time.
This is not the most ideal agreement for a homeowner since the insurance won’t cover the replacement of the pipes. However, they might cover the damage done to the home if the pipes begin to leak before they can be replaced.
A homeowner is more likely to agree to this less-than-ideal agreement if insurance companies are hesitant to cover the home and this agreement seems to be the only compromise.
Don’t forget, burst pipes and water damage are not the only things that can cause damage to a house.
Despite the risk of the pipes failing before the homeowner can replace them, this is ideal for an insurance company since they do not have to pay for the replacement and they are insuring a home free of polybutylene pipes after the replacement.
A home free of polybutylene pipes is a home with significantly less risk associated with it for insurers.
Despite this being a more ideal situation for an insurance company than the previous two options, high monthly premiums may still apply in this situation.
In the months or years before the pipes can be replaced, the risk is high for the insurance company since they may have to shell out far more than what the customer has paid them in this short time.
High monthly premiums are meant to offset this risk.
Pipes and Water Damage Won’t Be Covered
Rather than gambling with high monthly premiums to offset damage costs and provisional coverage that may end in the pipes leaking before they are replaced, the safest option for the insurance company, and the most likely one, is to not cover the pipes and water damage.
Provisional cover, in this case, would mean that the insurance company will cover the entire home, but will not cover the polybutylene pipes and the water damage that comes from them.
This takes almost all risk associated with the pipes out of the equation for the insurance company and instead places it all on the homeowner.
The option of replacement is completely up to the homeowner.
They can choose to invest in new pipes to last them a long time or they can wait for their polybutylene pipes to reach their end and pay for the damage and replacement associated with this.
Fittings are sold that can connect polybutylene pipes with PEX pipes, which means that the replacement can be done piece by piece.
This option is the most common response of an insurance company to a home with polybutylene pipes. It is the safest option for them and, therefore, the best as far as they are concerned.
However, is this option the best for the customer?
Well, this type of provisional cover comes with its pros and cons.
For the most part, the difference lies in when a large sum of money will be paid.
This policy would most likely not include high monthly premiums, so the homeowner could be saving money in the first few years of this plan.
The homeowner would also most likely save money in the first few years by having the choice of not replacing their polybutylene pipes through another provisional coverage agreement.
Overall, in this timeline, in the first few months or years, the homeowner would save money through a lack of high monthly premiums as well as not having to replace their pipes.
However, further down the line, the homeowner would have to replace the pipes as well as repair the water damage when their pipes eventually fail.
Whether or not this policy is good for a homeowner lies in whether they are able to spend lots of money immediately or further down the line. However, the overall cost is most likely higher in the plan.
What Influences Which Approach Will Be Taken?
The Size of the Insurance Company
Going through a large insurance company rather than a smaller one can make a difference in which approach will be taken.
A large insurance company will have more assets and more customers and a larger pool of money to work with. They would be more willing to consider cover with higher premiums and/or provisional cover.
Smaller insurance companies with fewer customers cannot afford to pay large amounts of money when they have not collected sufficient premiums to cover. They would likely only be able to offer you cover that excludes pipes and water damage.
Financial Standing of the Company
Furthermore, the financial standing of the company can impact which approach will be taken.
If the company is very successful and has limited financial problems, it may be more willing to gamble with monetary risk to please its customers.
Covering the pipes and the damage associated with them but with high monthly premiums might be chosen by a wealthy company. This would benefit the customer in the long run.
However, if the insurance company is struggling financially, it may choose not to cover a home with polybutylene pipes at all. There is too much risk associated with these homes and a struggling company would not want to deal with risk.
This company may also opt to not cover the pipes and associated damage at all.
The Size of Your Policy
How big your policy is, or the associated insurance coverage limit, determines the maximum amount of payment the insurance company would have to dispense to the customer for a covered claim.
If you have a high insurance coverage limit, the insurance company might have to pay the entire cost of both the replacement of the pipes and the damage to the area if the pipes are covered by the insurance plan.
With a high insurance coverage limit, the insurance company is more likely to opt to not cover the pipes and water damage associated with polybutylene pipes since they would have to pay for a majority of it.
However, if you have a small policy, the insurance company would only have to pay a small fraction of the costs of pipe replacement and damage repair.
This can decrease the risk of covering polybutylene pipes and may lead to the company opting to cover the pipes at a high monthly premium for the highest returns in a short amount of time.
In addition, if the cover of the pipes and water damage are only a small fraction of your total policy, and the company is collecting large premiums on your other assets, then this can offset the risk. They may be more inclined to offer you provisional cover and/or cover with higher monthly premiums.
How Old the Pipes Are
Seeing as how polybutylene pipes are practically a ticking time bomb with a certain detonation at fifteen years, their age can factor into how insurance companies react to their presence in a home.
If the pipes are only a few years old and have no signs of leakage, they could last for ten more years without problems.
A company may opt to cover the pipes but at a high monthly premium to substantially increase its returns.
If the insurance company does not have to pay for pipe replacement and damage costs for ten years, the monthly premium costs can add up before then to make the coverage of the pipes well worth it.
However, if the pipes are ten years old or more, they are bound to fail soon.
In this case, an insurance company is likely to not cover the pipes or their associated water damage to reduce the high risk associated with these older pipes.
How Extensive the PB Pipes Are
Similar to age, the size of the polybutylene pipe system can affect its risk.
If only a small section of your plumbing is made of polybutylene, the risk is greatly lowered. The repairs and replacement would be less expensive.
This might lead to an insurance company opting for provisional coverage where the small section of polybutylene pipe is replaced within a certain timeframe. This is easier for the homeowner and can be cheaper for both the insurance company and the homeowner.
However, if the plumbing system is quite large and completely made of polybutylene, an insurance company is more likely to opt to not cover the pipes to reduce the risk on their part.
Location of the Pipes
Not only can the extent of polybutylene pipes affect the risk associated with them, but their location can as well.
For example, if your pipes are primarily located over areas such as the living room or kitchen with expensive appliances, then the risk is heightened.
Not only will the pipes have to be replaced and wall and floor damage repaired, but expensive electrical appliances will also have to be repaired or replaced.
With this greater risk, an insurance company is likely to not cover the pipes and the associated water damage.
However, if the pipes are primarily located in an unfinished basement with limited storage and concrete floors, the damage to the area is greatly reduced and the risk is lowered.
Knowing this, an insurance company may opt to offer coverage of the pipes but at a high monthly premium, knowing that the repairs will not be as extensive.
If you were to subsequently finish your basement, you would need to inform the insurance company and they may alter your cover to better protect themselves, depending on what kind of cover you have.