Good question. I would think that your homeowners insurance would cover damage to well or septic similar to how it covers damage to your home due to storms, hail, tornados, fire, vandalism, "Acts of God," etc. I doubt if insurance is going to cover damage due to improper design, lack of maintenance, overuse, worn-out components, etc.
I maintain 16 wells and 19 septic tanks. It is not cheap but it costs less than you may imagine. The key is not to abuse either. As for wells, keeping everything in good working order and doing preventative maintenance prevents a lot of no water situations. This maintenance effort is within anyones capability that has a few tools and can remember "Lefty loosey and Righty tightly". For the big job having prearranged with a well service knowing their fees and reputation avoids a lot of surprise. I can get a professional for $65/hour whereas a wannabe well service in the same area the sky is the limit. I buy the well pumps and have one on hand, the service I use knows I will be supplying the pump for example. They also know I will pay immediately for their service. As for septic systems, a scheduled pump out goes a long ways in avoiding major expense with a fouled leech field. Avoiding having a toilet that weeps water continuously into the system is a must. This can be simply tested by pouring a couple of spoonfuls of food coloring in the toilet water tank and watching the bowl for a color change in the bowl. Having an awareness of what is flushed is essential. Having the discipline to attend to the system before they break is a must to avoid undue expense. Otherwise, the systems are not much different than living where utilities are provided. You just spend the money in different places!
The best insurance will be the one you provide yourself. Start putting some money away each month in a savings account specifically for well & septic costs. Use money from that account to pay for the suggested maintainence (pumping the septic tank, etc) and any repairs. I would suggest aiming for your savings to cover the cost of a major repair/replacement in 10 years. For example, if you figure a new well or septic would cost $10k, you should be putting $83 dollars a month into your "insurance" account. Of course, this will be an interest bearing account so you'll also be earning some interest on it. Once you get a comfortable savings built up then scale back the monthly contributions to enough to cover the maintenence.
We've had lightning strike here on the ridge where we have lost the well pump twice. We used the homeowners insurance to cover the $800 the first time, but then the insurance company notified us that they would 'drop' us the next time we renewed if we had more than one claim in two years. (The next time it happend we paid out of pocket). I'm thinking it would be really handly to have one of those come-along-thingies on the pickup truck so we could pull the pump ourselves next time it happens.
For only $800 I would have paid out of pocket to have the pump replaced. When ours was hit by lightning it cost well over $3000! And we paid more than $800 out of pocket because the ins didn't cover required upgrades. Our neighbor had to have a well drilled after their pump went out because the ground shifted and broke the well shaft, this would have been covered if they had earthquake/ground movement insurance. But as for insurance to repair use, wear and tear, abuse, normal maintenence charges, etc, no, I don't know of any ins that covers that.
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