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Ask the Experts: Underground Property

Is it true that underground property such as wells, tanks, and pipes are excluded from property coverage?

Yes and no. While we specifically exclude coverage for underground property, there is an exception for underground property that is specifically scheduled and properly valued. Storage tanks, wells, and pipes are often overlooked when updating scheduled property. However, like most other property, the Pool must have the values of these structures in order to provide adequate coverage.

For most people, the most confusing aspect is coming up with the correct replacement cost. When considering that, ask yourself: What exactly are we covering when all or a portion of the property or piece of equipment is underground? The short answer is everything. The Pool provides 100% replacement cost for partial and total losses.

If a well house that includes an underground well is completely destroyed, we will pay for all costs associated with the complete restoration of the property – including construction, labor, and materials. In some cases, this could increase the value by thousands, even millions, when construction equipment is added into the equation.

The bottom line is that we need up-to-date values so that we can completely replace your district’s property in the event of a loss. If the amount listed on the property schedule is over-valued, we will only pay the cost to repair or replace the property. However, there is a provision that affords an extra 25% on the scheduled building cost, which allows for an extra cushion if property is under-valued.

Trying to figure out how to schedule this kind of property may seem like a hassle, which is not surprising for those that have hundreds of miles of pipes and multiple wells underground. Small backups may seem routine, but sudden ruptures, floods, earthquakes, fracking effects, explosions, or damage caused by contractors (or employees) drilling into the ground, are not out of the realm of possibility.

Accidents like those can incur costs you might not be able to foresee. These could include emergency repairs, cleanup, new code compliance, contractor fees, and more. Having your pipes, tanks, and wells specifically covered on the property schedule could save your district, and your taxpayers, considerable amounts of money if there were ever a serious accident. Many districts will depend on FEMA for payment at the time of disaster, but it is unknown what the future of FEMA funding may be.

If you have questions about what’s covered, how to go about getting your equipment scheduled, or would like a quote, please contact the Pool or your broker.

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