How much does insurance cost for HVAC contractors?

HVAC contractors spend an average of $78 per month, or $941 per year, for general liability insurance.

Though usually not required by law, a general liability policy may be needed in order to sign a lease, get licensed in your state, or work with some clients.

General liability coverage protects your small business from common third-party risks, such as customer property damage or bodily injury. It also pays for lawsuits related to copyright infringement and defamation, including slander and libel.

Most policies include product liability insurance, also called products-completed operations insurance, which covers defective air conditioners, furnaces, and other units. For example, if a newly installed air conditioner leaks and damages a client's floor, this policy would pay for the repairs and any legal defense costs.

Below is the average general liability policy for HVAC contractors who buy from TechInsurance:

Premium: $78 per month
Policy limits: $1 million per occurrence; $2 million aggregate
Deductible: $500

The cost of general liability insurance is based on several factors, including the types of services you offer, policy limits, size and location of your business, and any subcontractors or additional insured endorsements you may have.

On average, HVAC businesses pay $124 per month, or $1,493 per year, for a business owner's policy (BOP).

A BOP combines your general liability and commercial property insurance coverage together at a discount. It protects your small business against both property and liability risks, such as stolen business property, a fire, or an accident that harms a client.

This is the average business owner's policy for HVAC contractors who buy from TechInsurance:

Premium: $124 per month
Policy limits: $1 million per occurrence; $2 million aggregate
Deductible: $500

Many insurance companies include business interruption insurance, also called business income insurance, in their business owner's policies, or you can add it as an endorsement. This policy pays for lost profits and day-to-day operating expenses if a fire, storm, or other incident forces your business to close temporarily.

HVAC companies that qualify for a BOP usually are small in size (less than 100 employees) and low-risk. Learn more about business owner's policy eligibility.

The cost of a business owner's policy mostly depends on the value of your business property. Other factors include the size of your business, your location, the policy limits you choose, and your business revenue.

HVAC contractors spend an average of $223 per month, or $2,672 annually, for workers' compensation insurance. To comply with state laws and avoid penalties, HVAC businesses with one or more employees typically must purchase this policy.

Workers' comp coverage pays for medical costs and disability benefits when you or an employee suffers a work-related injury or illness. For example, if an HVAC technician injures their back while lifting a heavy AC unit, a workers' comp policy would pay for their medical bills and lost income while they recover.

Workers' compensation coverage usually includes employer's liability insurance, which pays for legal costs related to workplace injuries.

Some states require sole proprietors and independent contractors in the construction industry to obtain workers' comp even if they work alone. It's highly recommended in either case, since most health insurance plans can deny claims for injuries that occur on the job.

The cost of workers' comp is based on several factors, primarily the number of employees you have and their occupational risks.

HVAC contractors spend an average of $191 per month, or $2,292 per year, for commercial auto insurance. Almost every state requires this type of insurance for businesses that own a vehicle.

If your company vehicle is involved in an accident, a commercial auto policy would help pay for any damages, including medical expenses, property repairs, and legal fees. You can also buy comprehensive coverage to gain protection against theft, vandalism, fires, and storms.

To protect personal, rented, and leased vehicles used for business purposes, you'd need hired and non-owned auto insurance (HNOA) instead.

The cost of commercial auto insurance depends on many factors, including your employees' driving records, your policy limits, the number of vehicles you own, and the coverage options you choose.

HVAC companies pay an average of $14 per month, or $169 yearly, for contractor’s tools and equipment insurance.

This policy covers replacement or repair costs for tools and equipment that are stolen, damaged, or destroyed. However, it doesn't pay for normal wear and tear. It's designed to protect gear that is on-the-go, covering items that are less than five years old and valued at under $10,000.

Tools and equipment insurance is a type of inland marine insurance, which covers business property that's in transit, stored off-site, or used at jobsites.

The cost of tools and equipment coverage depends mostly on the value of your tools and equipment. Another important factor is whether you choose to insure them for their actual cash value (the value of the used item) or their replacement cost (the cost of a brand-new replacement).

On average, construction businesses and contractors pay $65 per month, or $785 per year, for professional liability insurance.

Also called errors and omissions insurance (E&O), professional liability insurance covers financial losses related to a mistake, missed deadline, or other accusation of professional negligence. This includes attorney's fees and other legal expenses if a client decides to sue over unsatisfactory work.

For example, an improperly installed HVAC system might leak or cause indoor air quality (IAQ) problems. A client could sue your business to recoup the cost of water damage, or medical bills if their health was affected.

This is the average insurance policy for contractors who purchase from TechInsurance:

Premium: $65 per month
Policy limits: $1 million per occurrence; $1 million aggregate
Deductible: $1,250

The cost of professional liability insurance is determined by several factors, including the coverage limits and deductible you choose, the size of your business, the type of work you do, and your claims history.

HVAC contractors pay an average of $82 per month, or $988 yearly, for commercial umbrella insurance.

This policy helps boost the coverage of your underlying general liability, commercial auto, or employer's liability insurance. When the underlying policy reaches its limit on an insurance claim, your umbrella policy activates to help provide any additional coverage that is needed.

Umbrella insurance is typically available in $1 million increments. You need to have another liability policy before you can buy this coverage.

The cost of commercial umbrella insurance depends mostly on the amount of coverage you buy. The same factors that affect the cost of the underlying policies can also influence your premium.

The average cost of a surety bond is $8 per month, or $100 annually, for HVAC businesses.

Surety bonds protect your clients by reimbursing them in the event that your business is unable to fulfill the terms of a contract or agreement. For this reason, you may be required to obtain a surety bond in order to sign a client contract.

Some states require HVAC contractors to have a surety bond as part of their legal requirements for a license. The bond guarantees that your work will comply with local building codes and other regulations.

As with a fidelity bond, the cost of a surety bond is a small percentage of the total bond amount. Unlike insurance, you'll need to repay the company that issued the bond in the event of a claim.