Why is insurance necessary for HVAC contractors?
Let’s start with why you need HVAC insurance. Aside from the fact that most HVAC contractors in the U.S. are beginning to get insured, what are the reasons you need to purchase insurance?
- Insurance protects you from the risks you face every day. As an HVAC contractor, you must work with heavy loads, electricity, and sometimes dangerous gasses. Insurance ensures you don’t have to deal with all the costs and setbacks alone.
- Your equipment may get damaged while at work, and you’d need to replace or fix it immediately. The right insurance coverage will ensure you don’t take the hit alone.
- Legal risks (or lawsuits) might come along the way, requiring you to spend money. These risks are also almost unavoidable since you work with people’s cooling and heating systems in their houses or workplaces.
- Insurance could position you for even better jobs since it makes you seem professional. Relatively, some companies vet an HVAC contractor based on their availability of a certificate of insurance in case of any possible installation problems.
- In some states, like Ohio, legal policies require you to get HVAC contractor liability insurance to maintain your license. While this might not be true for other states, most municipalities require that you show proof of coverage to get jobs.
An overview of the leading insurance providers in the HVAC industry
Now that you know why you need insurance, here are three leading HVAC industry insurance providers: these insurance companies have unique provisions, so they may not all cater to your needs.
The Hartford: best if you need a solid insurer
Hartford is one of the longest-standing companies in the U.S., with a reputation for offering solid insurance backing to over a million businesses over the past 200 years. They offer many types of insurance coverage, from commercial auto insurance to commercial property and professional liability insurance. They also cover HVAC contractors, which makes them appear on this list. While you might not be able to get a quote online, you can call their agent and get started right away. Despite their experience and competitive cost, the only con is that you may not get special treatment since the company applies to the general public.
Hiscox: it’s best if you want a flexible payment option
Hiscox is another HVAC contractor liability insurance company that might have been around for less than 100 years but caters specifically to HVAC contractors. The payment option is also flexible, which is an excellent benefit for independent contractors. However, you may not be able to get a quote online for this site since the website is confusing.
Next: best if you want online quotes
Since the last two insurance companies needed to improve in that area, Next offers a better digital experience. The website is easy to navigate through, as is the online quoting medium. On top of this, Next offers a discount for those willing to purchase more than one type of insurance for HVAC contractors (more on this soon). The best thing is that while Next caters to HVAC contractors, they also offer insurance coverage for other small businesses, making it an excellent place for you if you have several companies. However, Next is only available in some states, so check to ensure they cover your state before signing up.
Types of insurance needed for HVAC contractors
The following are the types of HVAC contractor insurance you can obtain right now:
Commercial General Liability Insurance
General liability insurance for HVAC contractors is the coverage you need to get if you wish to take up HVAC as a commercial business. This insurance will help protect against the costs of damage to third-party property or injuries caused to a third party. This insurance does not cover you directly. It protects your business from falling when your customer or any other person, not you, is affected by your work. In addition to this, this insurance also covers possible lawsuits with around $1,000,000 per claim and a limit of two million.
Commercial Property Insurance
As an HVAC technician, you need commercial property insurance as part of your contractors’ insurance package, regardless of whether you lease or own the space you operate in. Property insurance covers the expenses acquired in replacing stolen, lost, or damaged equipment as specified in the policy. Additionally, it will cover the repair costs for damages that fall within the policy’s coverage, which is excellent. Property coverage costs depend on the type of equipment and materials you are insuring. Opting for a bundled insurance package, such as a business owners’ policy, often offers a more affordable solution.
Business Owner’s Policy
The Business Owners Policy (BOP) is another business insurance for HVAC contractors that insures your business against common risks. It’s like general HVAC contractor liability insurance, commercial property insurance, and business interruption insurance merged into one. The contents of a BOP can vary based on several factors, like the size of your company, since larger businesses may require additional coverage or higher policy limits compared to smaller firms. Other things that can affect the contents of a BOP insurance policy are the type of equipment you use and the nature of your business’ potential legal risks.
Professional Liability Insurance
Simply put, this type of insurance covers you when you make a professional mistake. It could happen while fixing or installing a piece of equipment. It could also occur while giving professional advice, resulting in property damage or complete loss. Most customers tag this as negligence and, as such, could sue you. If this happens, professional liability insurance will save you from legal costs.
Surety Bonds
You must have heard of this type of insurance because it is also one of the most commonly demanded when securing a job. Most customers request proof of this insurance because it assures them of a complete job, no matter what happens. However, even though a surety bond is the type of insurance that helps you keep your license as an HVAC contractor, it does much more than that. As an HVAC company insurance policy, the surety bond company also covers property damage up to the sum stipulated if something goes wrong with a project and the project owner files a claim.
Commercial Auto Insurance
If you have or use a vehicle while working (which is almost inevitable), you need this type of HVAC insurance coverage. Commercial auto insurance is like the usual one, but it’s not for your car now. In the case of accidents or any other situation, the insurance company will cover the costs of up to $1,000,000 in the case of property or bodily damage to both you and a third party. Of course, if you own a larger company with a fleet of vans and more in stock, the amount could be increased according to your company’s needs.
Inland Marine Insurance
No, this is not insurance for when you are out at sea. It is for your tools and equipment. Whether in the middle of the ocean or the center of a bustling city, this insurance for HVAC contractors (as long as the company covers the state you’re in) protects your tools and equipment, from the smallest hand wrench to the essential leak detector.
Workers’ Compensation Insurance
If you work independently, you might not need this insurance. But this is a practical requirement if you work for or own a company with more than one employee. The worker’s compensation HVAC company insurance favors you as a worker because it covers your medical bills and lost wages related to the company. Also, if you are the employer, the insurance covers you with cash benefits if a worker sues you on the grounds of injuries sustained while at work.
What is the cost of insurance for HVAC contractors?
HVAC insurance has no standard price because various factors determine the ultimate cost. Some of these factors include:
- the type of installation you perform,
- the size of your business,
- the location of your business,
- the number of employees you have,
- your years of experience,
- the size of the area you serve,
- your annual revenue, and
- the limit of the insurance plan you wish to have.
While these factors influence the ultimate HVAC contractor insurance cost, you can be confident that the insurance plan will be reasonably priced.
On average, HVAC insurance costs between $300 and $10,000 annually. But insurance companies charge as little as $29 a month for a single type of insurance.
BOPs cost much less than most insurance types, with an average of $62–$730 yearly. Also, some insurance companies offer a discount if you are working with them for the first time or getting more than one type of insurance (as in the case of Next above).
What does insurance for HVAC contractors cover?
As mentioned in the types detailed above, each type covers different aspects. While commercial auto insurance targets the protection of your vehicle, inland marine insurance is for your tools and equipment. However, each HVAC policy will cover the following list of essential things: Note that you might need more or less of these things, so don’t hesitate to discuss them with your agent when you give them a call.
- Commercial property damage (both personal and for the third party),
- Bodily injury (both for you and the third party),
- Medical expenses and lost pay for workers injured on the job,
- Damage caused by incorrect counseling,
- Job negligence or failure to perform required services
The main benefits of insurance for HVAC contractors
If you have reached this point and you still think getting insurance for HVAC contractors is unimportant, check out these three benefits you stand to gain:
- You get to save yourself from financial loss. Picture getting sued, having one of your vehicles involved in an accident, or worse, suddenly damaging a piece of equipment. Wouldn’t it be far better to have an insurance company cover the expenses of dealing with such a loss alone?
- You look professional. People tend to trust you when an insurance company backs you up because they are sure they are also guaranteed. Having proof of insurance also gives you an edge over other technicians in your area.
- You’ll be following the law. Finally, several states require you to retain your license with a certificate of insurance. So, even if you don’t want to, you must do it to keep your job.
Tips to take into account when purchasing the insurance
Follow these tips if you want to find the best insurance for HVAC contractors:
- Get quotes online.
- Compare two or more selections.
- Ask many questions, including the one about hidden policies.
- Ask what the company will cover and by how much.
- Review your state laws to know if you must follow some procedures.
Conclusions
The HVAC industry is in high demand, with every structure having an HVAC system. However, accidents happen, so you need business insurance to protect yourself. Since there are different types of insurance, list what you need coverage for, compare several quotes, and speak to an agent to find an insurance provision tailored to your business and your needs.
