The replacement of polybutylene (often referred to as poly B) piping in homes has indeed become a significant issue in the home insurance and real estate markets in recent years. Polybutylene pipes, which were commonly used in residential plumbing from the 1970s to the 1990s, have been found to deteriorate over time, leading to leaks, water damage, and other costly issues. This has led to increased challenges for homeowners trying to secure home insurance coverage, especially in older homes. Let’s break down the key points regarding this trend and what homeowners can do about it.
1. Be aware of the Risks with Polybutylene Pipes
Polybutylene pipe failures: Poly B pipes, although initially marketed as a cost-effective and flexible alternative to copper, have been linked to frequent failures due to the chemical breakdown of the material over time. These pipes are prone to becoming brittle, cracking, and bursting, often leading to water damage.
Insurance carriers' response: Insurers became more aware of the risks associated with polybutylene pipes in the 1990s and began to either exclude coverage for homes with these pipes or impose higher premiums due to the increased risk of water damage. Over the past few years, there has been a growing trend of insurers becoming more stringent, refusing to insure homes with polybutylene piping unless the pipes are replaced.
2. Increased Difficulty in Getting or Maintaining Homeowners Insurance
Insurance exclusions: In recent years, many homeowners have found it difficult to obtain new homeowners insurance policies if their home contains poly B piping. Some insurers flat-out refuse to cover homes with these pipes, while others may offer coverage at significantly higher rates. The risk of pipe failures, resulting in costly damage claims, is seen as too high.
Mortgage companies’ involvement: Lenders, particularly in areas where poly B was commonly used, may also require a replacement of polybutylene pipes before they will approve a mortgage, further complicating the situation for buyers and current homeowners looking to refinance or sell.
3. Increased Awareness Among Homebuyers and Real Estate Markets
Disclosure requirements: Real estate agents and sellers are often required to disclose the presence of polybutylene piping to prospective buyers. This disclosure can make homes with polybutylene plumbing less desirable on the market, reducing their overall value.
Cost of replacement: The cost of replacing polybutylene pipes can be substantial, often ranging between $5,000 to $15,000 or more, depending on the home’s size and complexity of the plumbing system. This can be a deterrent for potential buyers, even if they are aware of the risk and are willing to replace the pipes themselves.
4. What Homeowners Can Do About It
Replacement of pipes: The most straightforward way to address the issue is to replace the polybutylene piping. Many homeowners are opting for PEX (cross-linked polyethylene) or copper pipes as replacements due to their durability and resistance to corrosion. Although this may be an expensive upfront cost, it can increase the resale value of the home and make it easier to obtain insurance.
Insurance policy endorsements: If homeowners cannot afford or do not want to replace the pipes immediately, they may be able to secure insurance coverage with specific endorsements or exclusions related to polybutylene pipes. Some insurers may offer coverage with the condition that the homeowner agrees to sign a waiver or liability release, which reduces the insurer's financial exposure.
Negotiating with insurers: Homeowners who already have polybutylene pipes in place may be able to negotiate with their current insurers for a more affordable policy. In some cases, homeowners may be able to prove that the pipes have been regularly maintained, reducing the perceived risk.
Home inspection and insurance company negotiations: Homeowners can often reduce insurance premiums by having a home inspection done, showing that the home is in good condition despite the presence of polybutylene pipes. The inspection report may highlight the efforts made to prevent damage or leaks, which could lead to more favorable terms with insurers.
5. Type of Demands Insurers Are Making
Replacement requirements: Insurers are increasingly demanding the full replacement of polybutylene pipes before they’ll offer coverage or may offer only limited coverage for water damage or pipe failure.
Increased premiums and deductibles: If replacement is not an option or hasn’t been completed, insurers may agree to insure the property but at a significantly higher premium. In some cases, they may also increase the deductible for water damage claims, making it more financially burdensome to homeowners.
Waivers and exclusions: Some insurance providers may offer policies with exclusions related to polybutylene pipes, meaning they would not cover water damage due to pipe failure. Homeowners may be required to sign an agreement acknowledging this exclusion.
Insurance surcharges: Some insurers might allow coverage for homes with polybutylene piping but will impose an additional surcharge to account for the increased risk. This is typically not an ideal option for homeowners as it adds ongoing costs.
6. The Issue with Polybutylene and Mortgage Lenders
Mortgage lenders may balk at insuring homes with polybutylene piping: If a home has polybutylene plumbing and the homeowner cannot find affordable insurance that meets the lender's requirements, the mortgage may be jeopardized. The lender may either reject the application outright or ask for the pipes to be replaced, which adds an additional cost for the borrower.
Verification of insurance at closing: Before finalizing the mortgage, the lender will often require proof of homeowners insurance, typically by asking the buyer to submit an insurance binder (a document proving coverage) from the insurance company. This ensures that the property will be insured once the loan closes.Homeowners with polybutylene piping should start by understanding the risks associated with their plumbing system and the potential insurance challenges they might face. Replacing polybutylene pipes is the best solution, especially for those looking to sell or secure affordable home insurance. In the interim, homeowners may need to negotiate with insurers or consider specialized coverage options, but being proactive in addressing the problem is key. Homeowners can also stay informed about legal developments and settlement opportunities, which might help offset the cost of pipe replacement.
For mortgage lenders, homeowners insurance is a crucial part of the loan process. Without it, the lender’s financial interest in the property is at risk. Homes with polybutylene pipes complicate this by increasing the likelihood of damage due to pipe failure, which in turn makes insurers hesitant to provide coverage or forces them to offer more expensive, limited policies. Homebuyers or current homeowners looking to refinance need to understand how the presence of polybutylene piping can affect their ability to secure both insurance and a mortgage, and the steps they can take to address the issue, whether through pipe replacement or negotiating insurance terms.