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<br />/" <br /> <br />. .~ <br />e <br /> <br />~~i.J.J-r <br />~/'IZ-ooa <br /> <br />February 25, 2000 <br />Re: SB 201 Water Damage Insurance <br /> <br />ISSUE: It is virtually impossible to purchase insurance for water damage <br />resulting from a break or leak of utility owned facilities such water mains, <br />ditches, sewers and drains and similar facilities. <br /> <br />e <br /> <br />LEGISLATION: Requires insurance carriers to offer water damage <br />insurance as a part of their product line for homeowner's insurance. The <br />consumer is not compelled to purchase the insurance. <br />· "Water damage insurance" is defined as "insurance against loss of or <br />damage to property by water resulting from a break in or leak from utility <br />owned and maintained culverts, drains, sewers, water mains, ditches, <br />canals and cesspools including water that backs up through sewers or <br />drains. " <br />· If an insurance company has less than 25% of its insured who are <br />connected to utility sewer or water mains, then it does not have to offer <br />the water damage insurance product. <br />· Insurers may use the appropriate underwriting criteria, deductibles and <br />policy limits in offering water damage insurance. <br />· Insurers can put a cap on the insurance. It is presently limited to <br />$10,000.00. <br /> <br />DENVER WATER EXPERIENCE: Given the size of Denver Water's <br />system, main breaks are a fairly common experience. Denver Water <br />averages about $150,OOO/year in claims paid for water damage. <br />· 1997: 308 breaks resulting in 78 claims for which Denver Water paid <br />$277,115.47. <br />· 1998: 222 breaks resulting in 23 claims for which Denver Water paid <br />$124,237.46. <br />· 1999: 253 breaks resulting in 24 claims with $84,674.51 paid by Denver <br />Water. <br /> <br />e <br /> <br />IMMUNITY: Colorado Statutes recognize that a water system is a high <br />hazard operation. More specifically main breaks are an inevitable outgrowth <br />of operating a water system. In order to provide water for the public good, <br />there are limits on the liability of public entities that undertake this <br />inherently dangerous activity. Absence negligence, no public water utility is <br /> <br />1 <br />