Why is insurance a must for HVAC contractors?
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6 policies every HVAC contractor should consider
General liability insurance
A general liability policy protects HVAC contractors against legal and medical costs related to client property damage and injuries. It's often required by state laws and contracts.
- Medical bills from client bodily injuries
- Damaged customer property
- Advertising injury and copyright lawsuits
Business owner's policy
A BOP bundles commercial property insurance and general liability coverage at a discount. It's often the most cost-effective type of business insurance for an HVAC company.
- Client slip-and-fall injuries
- Accidental damage to a client's property
- Theft and vandalism
Workers' comp insurance
Most state laws require businesses with employees to carry workers' compensation insurance to cover workplace injuries. In some states, even sole proprietors who work in construction must carry this policy.
- Medical expenses from work injuries
- Disability benefits
- Lawsuits from workplace accidents
Commercial auto insurance
An HVAC technician with business vehicles must carry a commercial auto policy to comply with state laws. It helps pay for financial losses in an accident, including legal costs and property repairs.
- Auto accident injuries
- Auto accident property damage
- Theft of a construction vehicle
Contractor's tools and equipment
A type of inland marine insurance, this policy covers your HVAC equipment and tools wherever you bring them. That includes items in transit, stored off-site, or used at a jobsite.
- Saws, drills, and other tools
- Hard hats and other safety equipment
- Excavators and forklifts
Professional liability insurance
Professional liability insurance covers legal fees related to a mistake, missed deadline, or other accusation of professional negligence. It's also called errors and omissions insurance (E&O).
- Project delays and budget overruns
- Wrong equipment and other mistakes
- Breach of contract
HVAC contractor insurance costs
Here's a quick look at the average costs of HVAC contractor insurance policies purchased by TechInsurance customers:
General liability: $78 per month
Business owner's policy: $124 per month
Workers' compensation: $223 per month
Factors that can influence your HVAC insurance costs include:
- Types of HVAC services offered
- Number of employees you have, including subcontractors
- Types of insurance purchased
- Policy limits, deductibles, and other coverage options (e.g., additional insureds)
- Claims history
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Common questions about HVAC business insurance
Do HVAC contractors need a license, certification, or bond?
Whether you need a license or not depends on the state you live in. Similar to masons, most states do require HVAC contractors to obtain a license before they can work, but there are some that do not.
For example, Texas requires HVAC contractors to get a license from the Texas Department of Licensing & Regulation. Depending on the size of the HVAC systems you work on, you would either need to obtain either a Class A (any size) or Class B (smaller sizes) license.
On the other hand, HVAC contractors in Illinois do not have any state licensing requirements. For this reason, it's important to check your state laws to see whether you need a license or not.
Even if your state doesn't require a license, you'll still need to obtain an EPA certification to work with coolants. This requires a one-time test. In addition, you may also need a license to bid on certain jobs, sign a client contract, or meet local government requirements.
In addition to licensure, some states may also require you to show proof of bonds. For example, all HVAC contractors in Alabama must have a $15,000 performance bond before they can start working. In addition, client contracts may demand general contractors of all types to obtain bonds, like a surety bond, as an extra safeguard.
What other insurance policies do commercial HVAC contractors need?
Depending on the type of HVAC services you provide, you may have additional insurance coverage requirements and will have greater insurance needs.
Specific coverages to consider include:
- Builder's risk insurance: Also called course of construction insurance, this policy helps pay the repair costs of damage to a structure in progress and construction materials.
- Inland marine insurance: Commercial property insurance only covers items at your business address, so you may need inland marine insurance for items in transit (i.e., an air conditioning unit) or at a jobsite. There are two types of this HVAC equipment coverage: contractor's tools and equipment insurance and installation floater insurance for materials awaiting installation.
- Commercial umbrella insurance: When your underlying general liability, commercial auto, or employer's liability policy reaches the coverage limit on an insurance claim, an umbrella policy activates to provide additional coverage.
Does installation floater insurance protect HVAC installer equipment?
Yes, installation floater insurance will protect your HVAC installer equipment. This coverage is a type of inland marine insurance and will cover the repair or replacement of your HVAC installer equipment if it's damaged due to a fire, storm, or vandalism.
Since standard commercial property coverage doesn't protect business property in transit or at different jobsites, this insurance is especially critical for HVAC contractors who often travel from one worksite to another (like clients' homes or offices) or store equipment off site.
