When a major underground pipeline ruptured Aug. 30 in the Knolls of Breckinridge development, 1-2 feet of water flooded the home of Sylvester and Martha Lee. With the question of liability hanging in the balance, the Lees are still living there today.
Their insurance company has agreed to pay the cost of structural repairs but has also issued the Lees a “reservation of rights” letter, which effectively allows the company to deny coverage of dwelling repairs at a later date.
A claim for their personal property loss—which the Lees said amounts to thousands of dollars and includes both their vehicles—is under investigation but has so far been denied.
“Our lives are on hold because of this, and there just doesn’t seem to be any empathy there,” he said. “We are disappointed by that, because we thought we had the best company out there. … Now that we need them, they just aren’t there.”
The failure of the 72-inch underground pipeline caused a 6-foot geyser to erupt through Crystal Mountain Drive, damaging 13 homes.
Because of the incident’s unique nature, knowing where to turn for coverage has been a struggle for most neighbors. In absence of compensation by the North Texas Municipal Water District’s insurance carrier—which has denied claims on the basis of sovereign immunity—some of the affected residents say they are struggling to chart a path forward.
FLOOD INSURANCE ELIGIBILITY
Ken and Melinda Hutchenrider live next door to the Lees. Flooding from the water main break resulted in around $300,000 worth of damage to their home, and a structural engineer has determined that a portion of its foundation will have to be rebuilt.
Like Sylvester Lee, Ken Hutchenrider said his first instinct was to seek compensation through his homeowners insurance. He quickly learned that in Texas most homeowners policies do not cover flood events.
The Hutchenriders were also told their home is outside of a flood plain designated by the Federal Emergency Management Agency, rendering them ineligible for flood insurance through the National Flood Insurance Program.
A standard flood hazard determination form obtained by Community Impact Newspaper shows the Hutchenriders’ address is located within a FEMA-designated X zone, meaning low-to-moderate flood risk each year.
Some experts in the insurance field refute the claim that homes at low risk for flooding are excluded from flood insurance.
Mark Hanna, manager of public relations for the Insurance Council of Texas, said living outside a high-risk flood plain does not prevent a homeowner from purchasing flood insurance. The only requirement is that the homeowner’s community participates in the National Flood Insurance Program, and the city of Richardson is a member.
“The issue is that you never know what is going to happen,” he said. “When it rains 2-3 feet within 24 hours, everything floods.”
And although what occurred Aug. 30 was not a catastrophic rain event, a standard flood insurance policy from FEMA defines a flood as “a general and temporary condition of partial or complete inundation of normally dry land areas from the unusual and rapid accumulation or runoff of surface waters from any source.”
This line in FEMA’s policy would include flooding caused by a water main break, according to the agency’s Region 6 office, which oversees federal emergency management in Texas.
According to FEMA, more than 20 percent of flood claims come from properties outside the high-risk flood zone. Furthermore the agency says that homeowners living in an area with low-to-moderate flood risk are five times more likely to experience a flood than a fire in their home over the next 30 years.
Among the companies that were able to find coverage in their homeowners’ policies was State Farm. Claims team manager Mitzi Mickleson said the “domestic water leak” provision was applicable in this case since the water that flooded the homes originated from a domestic supply line, or a pipe that brings drinking water into a home.
“It wasn’t a matter of deciding to extend coverage, but rather the coverage was included in the policy,” she said.
Competing narratives over who is eligible for flood insurance is an issue state Rep. Jeff Leach, R-Plano—who presides over the area of Richardson where this incident occurred—is determined to get to the bottom of.
“I am hopeful that at some point, whether this fall or next [legislative] session, we are able to hold a public hearing on this issue and get all the parties on the record as to what is going on here, who is telling the truth and who is not, and how we can take care of these homeowners who are impacted to make sure something like this does not happen again,” he said.
In the days following the pipeline rupture, the NTMWD advised affected residents to submit claims to its insurance carrier—the Texas Water Conservation Association Risk Management Fund, a state-run liability insurance group that covers Texas water districts.
In an email sent to affected homeowners Sept. 7 the TWCA Risk Management Fund cited sovereign immunity—a judicial doctrine that protects government entities from liability claims—as its reason for denial of coverage.
“Moreover, under the Texas Constitution, a public entity may not use public funds to pay private claims where, as here, it is immune. … We cannot in good faith pay you any money in response to your claim,” the email said.
The letter also stated that the only exception to sovereign immunity would stem from “property damage caused by the wrongful act or the negligence of an employee acting within the scope of his employment.” Damage caused by negligent operation of a motor vehicle was cited as an example of this exception.
Still, the district is helping pay for costs associated with temporary displacement. On Sept. 14 the NTMWD board approved $20,000 total to reimburse affected residents for lodging, meals and transportation expenses.
PIPELINE A “TICKING TIME BOMB”
An investigation into the cause of the break by two outside consulting firms is ongoing and expected to last several months, water district officials said.
Experts have been tasked with conducting independent forensic analysis of the ruptured pipeline to determine the most likely cause of the failure, said Mike Rickman, NTMWD deputy director of operations and maintenance.
“The ongoing investigation will examine the section of the pipe that broke, soil conditions around the pipe and other factors that could have contributed to the cause of the break,” Rickman said.
According to Rickman, the section of pipe that ruptured was installed in 1981 and expected to last 65 to 70 years.
There is no law on the books that says a water district must notify nearby homeowners of their proximity to a major pipeline, Leach said. To address that shortfall, Leach is working with his colleagues in the state Legislature to determine whether such notice should be required.
“There is no formal notice required, so why would someone in that instance go out and seek flood insurance?” he said. “Those are the types of things I am troubled by.”
In the meantime Leach said the question of when sovereign immunity applies should be further explored.
“I am doing everything I can to make sure these people are taken care of, but I fear this can happen again and will happen again in the future,” Leach said. “I would hate for us to sit on our hands and say, ‘this is the current law—tough, deal with it.’”
Ken Hutchenrider shared similar concerns, calling the pipeline—which begins in Wylie and proceeds through sections of Garland and Sachse before reaching delivery points in Richardson and Plano—a “ticking time bomb.”
Regardless of who manages the infrastructure, Sylvester Lee said he believes the onus for coverage rests on his insurance company.
“We intend for them to honor their obligation, whatever it takes,” he said.
The process of arranging for a contractor to repair their home is in the works, and things are “looking up,” but both Sylvester and Martha said they hope others will see their experience as a cautionary tale and take all the steps necessary to protect themselves from a similar catastrophe.
“People need to realize they are not immune to this, and they need to look at our experience and make a decision of whether they have the right insurance company,” Sylvester Lee said.
After days of uncertainty, the Hutchenriders were notified that their insurance policy would cover the damage to their home and property.
“I think we all get frustrated on a year-by-year basis when you see insurance premiums,” Ken said. “Sit down with your agent, and make sure you are covered. … Trust me, when you get into a situation like this, it is well worth it.”