Bamboozled August 29, 2016: Water company kicks homeowners out of water line protection program

New Jersey’s aging infrastructure means that sometimes, underground water or sewer lines leak. Other times, the lines are no match for powerful tree roots.

Homeowners are surprised to learn they’re usually responsible for the repairs.

They think the utility company should be responsible.

Many utilities offer “protection programs.” These are like insurance policies or warranties, covering damage to certain lines under certain circumstances.

Such coverage has been plaguing Louise and Ron Habakus for more than two-and-a-half years.

The couple has owned their home in Red Bank since 2002. Two homes, actually.

The home they live in was built in 1986. We’ll call this the “main house.”

The property also has a second home built in the early 1970s. We’ll call this the “rear house.”

We’re going to get a little technical here, so take a look at this diagram.

MAP OF PROPERTY with repair mark.jpg
A map of the Habakus’ property.

When the first home was built, the main water line on the property stretched from the street to the rear house. The water line includes areas we’ll call Section A and Section B.

When the main house was built, new service was added with a branch coming off the original water line. That’s marked as Section C, or the “branch.”

The property’s water and sewer service is provided by New Jersey American Water, which falls under the umbrella of American Water Resources (AWR).

When the water company offered an AWR “protection plan” for the water line in 2003, the couple signed up. In 2005, they purchased a plan for the sewer line.

They had claims and received service on the water line in 2004, 2007 and 2010. The 2010 repair was never done correctly, the couple said.

They believe that fix led to new trouble, which started on March 3, 2014, when the couple received a bill showing water usage that was double the normal amount.

Fearing a leak, they reported it immediately, they said. A technician came and determined the leak wasn’t in the home, so the couple filed a claim with the protection plan, records show.

The response was confusing. One rep said their claim was denied, another said it was being reviewed, and others promised a supervisor would call, but the couple said no one did.

To stay current, they paid an amount equal to their regular monthly water charges, but they didn’t pay the charges from the still leaking water.

They wrote a letter on April 14 requesting a repair, and they were denied in writing on May 30.

The latest case Bamboozled encountered was in Roselle Park, a Union County borough that belongs to the New Jersey Intergovernmental Insurance Fund (NJIIF), a self-insurance pool of more than 30 municipalities. NJIIF is serviced by Inservco Insurance Services, a subsidiary of Penn National Insurance of Harrisburg, Pa. — the same organization that denied homeowner claims in Clifton.

The denial letter said the water line leading to the rear house — Section B — is considered a secondary line. Only the main line is covered. The letter identified the main line as Sections A and C.

But that couldn’t be, the couple said.

The main line was always the one from the front of the property to the rear house, they said. That was the original line.

They didn’t understand how Section C, which was added in 1986, could now be considered the main line.

They responded in writing on June 27, detailing problems with past repairs and the current issue, again requesting coverage.

The company didn’t respond, they said, so they sent more letters and finally involved Tom Hoffman, who works with New Jersey American Water’s office of the president.

Hoffman put their account on hold so they wouldn’t have to pay the astronomical water bill pending a resolution, and he promised to facilitate communication with AWR, the couple said.


“It took us a year from our June 27, 2014 letter to speak with someone from AWR,” Habakus said.

By then, the water bill was $748.21.

They finally to spoke to Reneé Riebe from AWR’s legal department on July 17, 2015.

Louise and Ron Habakus at their Red Bank property, which has an underground water line leak.

“It became clear during the call that the information they’re relying upon is not consistent with our notes, conversations with AWR reps, and detailed on-site interactions with the contractors,” Habakus said. “They acknowledged that the leak should’ve been fixed as part of the plan and they even changed their mind about what constituted the main line.”

Later in a conversation with Bamboozled, AWR denied it ever changed what it considered to be the main line.

The couple requested copies of all records, including contractor reports and diagrams.

In an Aug. 25 email, the company offered its narrative of previous repairs. It denied coverage again, and it included a few diagrams of the property.

Point for point, the couple disputed the company’s statements in writing on Oct. 2.

And the water bill grew to $1,561.37.

Homeowner fights her water company to cover repairs under a protection plan.

On Jan. 14, 2016, AWR made an offer.

It said it still believes the denial was the correct decision, but it offered $5,000 — the protection plan maximum — to “resolve this matter.”

“… as part of this agreement, your Program will be canceled.”

The couple didn’t want to be kicked out of the protection program.

“We want the protection,” Louise Habakus said. “It seems as if they want to punish consumers for having leaks. We did nothing wrong.”

The Habakus’ made a counter-offer.

They called in a contractor previously hired by AWR, who estimated the fix would cost $6,500, not counting overruns, which could happen once the digging started.

The couple asked AWR pay the $5,000, and then split any overruns 50/50. They also requested the company cover the bill for the leaked water.

“We feel the process has been unduly onerous, excessively drawn out, and has required herculean efforts of documentation and communication to reach where we are right now, to the point of what could be reasonably construed as bad faith on your part,” Louise Habakus wrote.

The couple noted that they’d pay to restore the driveway, landscaping and other items.

They once again requested a complete copy of the records, and finally, they declined to exit the protection program as part of the deal.

AWR refused to accept the counteroffer via email on May 9.

A look at the water bill, which shows a giant leap when the leak began.

Through May 18, the water bill was now $2,228.35.

They were again threatened with water shutoff.

They said they contacted Hoffman of the president’s office, who they said again promised the shutoff would be on hold. But on June 3, Hoffman said via email that the account hold would lapse on June 8.

The couple asked who was going to pay for all the leaked water — water they say wouldn’t have leaked had the company acted sooner.

Hoffman said in a July 19 email that the usage doesn’t meet the company’s criteria for a “leak adjustment” but the company would be “open to offering a small percentage off the balance.”

The couple reached out to Bamboozled.


We reviewed the Habakus’ detailed records on the water leak and the history of the water line repairs. We also examined diagrams of the property and reviewed the written documentation between the parties.

Then we reached out to AWR.

Company attorney Riebe disputed the couple’s assertion that the company changed its mind about which part of the line was the “main line.”

She reiterated the $5,000 offer.

We asked about the couple being removed from the protection program.

“It seems that the customer’s expectation and the way the program was designed don’t meet,” she said. “Part of the terms and conditions allow us to terminate a business relationship with the customer.”

So the couple could take the $5,000 and be kicked out of the protection program, or they could just be kicked out of the protection program?

Yes, Riebe confirmed.

We took that back to the couple.

They wanted a better offer.

A homeowner’s bill says he used nearly 100,000 gallons of water in a three-month span. That’s enough to flush a toilet 77,000 times

In an Aug. 2 conversation with a company rep about the huge water bill, Habakus said it was trying to “strong arm me into setting up a payment plan” and it said the local office has nothing to do with AWR or the leak dispute.

“NJAWC promotes and explicitly endorses AWR’s program by including marketing literature in their bills. They have integrated billing and allow AWR to charge water company customers on NJAWC bills,” Habakus said. “They’re in it with both feet and they know there’s a big problem.”

Her response brought a new counter: AWR would pay the $5,000 and then split any repair costs above that amount.

Habakus responded, again saying they didn’t want to be kicked out of the program. She asked that the account stay on hold until repairs were completed and once the repairs were done, the company absorb the full amount of the leak overage.

Again, she requested copies of all the records.

We checked in with the company for an update, but it said it was still working on a resolution with the couple.

The couple came home from a vacation on Aug. 19 to a bill totaling $2,357.12, but said they had no new calls from the company.

Finally on Aug. 26 — more than two-and-a-half years after the leak was discovered — the company made what it called its “final offer.”

It said it would pay the $5,000 and split the difference on any additional repairs needed.

So after weeks of “working on a resolution,” the company didn’t change its position.

“Once the leak is repaired, Ms. Habakus can contact New Jersey American Water about any adjustments to her water bills,” spokesman Richard Barnes said. “Because Ms. Habakus’s expectations of the water line protection program go beyond what is offered, American Water Resources will not retain her as a customer.”

We asked how many other customers have been kicked out of the program, but it said it wouldn’t “be able to provide that information at this time.”

By publication time, the couple hadn’t heard the offer directly from the company.

“They have zero incentive to complete the repairs correctly since, if the leak reappears, they would no longer be obligated to help fix it since we’re no longer in the program,” Habakus said. “A company with integrity would stand by its program, its contractors, and its repairs and not boot people who try to hold them to their commitments.”

We’ll let you know about the repairs, plus, the couple still has a fight ahead about the water bill. We’ll keep you posted.

Have you been Bamboozled? Reach Karin Price Mueller Follow her on Twitter @KPMueller. FindBamboozled on Facebook. Mueller is also the founder of Stay informed and sign up for’s weekly e-newsletter.