Protect Your HVAC Contractor Business | What You Need to Know

12 Jan 2022

Protect you HVAC Contractor Business so you’ll be there for the long run.

Whether you’re building an HVAC company from the ground up, expanding your services, or searching for additional coverage, it’s fundamental as a business owner to find the right HVAC insurance policy to adequately cover any major losses.

HVAC contractor insurance provides other benefits, too, as it gives customers an assurance your company is financially backed in case of an unforeseen event, such as an accident, property damage, or injuries related to the job.

How much HVAC business insurance your company needs depends on a variety of factors, but an overview of what HVAC insurance policies cover include:

Accidental injuries
Property damage
Employee wages after a work-related injury
Vehicles and equipment
Unintentional faulty workmanship
Legal fees

Don’t let a workplace accident, theft, or a lawsuit from a disgruntled customer suck all of the air out of your business and leave you broke. In this comprehensive guide to HVAC insurance, we’ll help you figure out what types of insurance you should consider as an HVAC contractor.

HVAC Contractors Should Consider a Package of Coverages

It’s important to understand the different types of HVAC contractors’ insurance available, so you can determine which policies best suit your company’s specialized needs.

Popular HVAC business insurance policies include:

General Liability Insurance

HVAC general liability insurance covers accidental injuries and property damage related to your work as an HVAC contractor. Many places require HVAC coverage verification for general liability insurance to obtain an HVAC contractor license, or when signing a commercial lease or customer contract.

Examples of what HVAC general liability insurance typically covers:

Repair costs for property damage to a customer’s home or belongings
Physical injuries sustained on a job site
HVAC installation problems
Moisture damage caused by your HVAC work

It’s imperative you carry HVAC liability insurance because it protects the business if your company’s work causes property damage or bodily injury to customers.

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Workers’ Compensation Insurance

A workers’ compensation insurance policy pays the medical bills and payroll costs of employees injured while working for your HVAC service company.

Many states require workers’ compensation insurance for HVAC businesses with employees and noninsured subcontractors and all of them will have a penalty system in place if an HVAC contractor is found operating without an in-force policy.

Workers’ comp policies compensate for medical care and lost wages if an office employee or HVAC technician gets hurt on the job, and usually protect employers from lawsuits related to job site injuries.

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Commercial Auto Insurance

Whether your business uses one or twenty-one vehicles, all of them must be properly insured under a commercial auto insurance policy.

Commercial auto insurance covers HVAC vehicles and any employees in the vehicles from an accident. A policy is usually required by law if your company owns and operates any vehicles. You can check with your state’s Department of Motor Vehicles to see if commercial auto liability is required.

Commercial auto insurance also covers vandalism or theft of the work vehicle but does not cover the tools or supplies in it. The cost of commercial auto insurance varies depending on how many vehicles you have and the driving history of the named drivers. Employees with bad driving records could cause your annual premium to increase. This insurance typically costs between $1,000 and $5,000 annually.

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Tools and Equipment Coverage (Inland Marine Insurance)

Inland marine insurance is an important policy for HVAC contractors because it covers tools and equipment in storage, in transit, or at the job site.

Commercial property insurance typically only pays for a loss that occurs at or near the address listed on the policy, and commercial auto only covers business-owned vehicles. This means that business property in transit or stored at worksites is uninsured. Inland marine coverage makes sure that property is protected.

Surety Bonds

To obtain and maintain licensing, most HVAC contractors have to have at least a $15,000 surety bond. Surety bonds are sold in specialty divisions of insurance companies but are not insurance. In a claim, the bond issuer pays and then recoups the money from the HVAC technician.

It is unlike insurance that requires a more costly premium, and the insurance company pays claims. State boards use surety bonds to protect consumers without creating huge expenses without expecting repayment.

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Commercial Umbrella Insurance

As an HVAC contractor, you will likely be involved with large clients or government entities that require higher limits than your GL or Commercial Auto insurance policy provides.

In these cases, your HVAC contracting business can purchase a commercial umbrella policy that provides an additional layer of liability coverage over and above your underlying insurance policies.

This means that if you get a large contract that requires $5 million in liability limits, your business can purchase the additional layer of coverage needed to satisfy the contract and then cancel the policy when the job is completed.

It’s not unusual for a school-board or large chain store to require their contractors to have $5 million in liability coverage before they will allow the contractor on their property

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Professional Liability Insurance (E&O)

If your HVAC Contractor business is responsible for any professional services such as plans or architectural services, a professional liability policy should be in place to respond to claims from your customer.

This type of policy provides coverage if your professional services result in a claim that’s due to negligence or unintentional violations of code in the jurisdiction you are operating in.

How to Find an Affordable HVAC Contractor Insurance Package

When you are shopping for affordable HVAC Contractors insurance, it’s likely important to you that the people you do business with have significant experience in HVAC services.

Although this may seem unlikely, there are independent insurance brokers available to you that specialize in all aspects of the contracting industry. No matter the state you operate in, we encourage you to contact Fairbanks Insurance Brokers.

At Fairbanks, you can speak to an experienced and reputable insurance agent who is familiar with your industry and is trained to point out the everyday risks that you need to mitigate.

Since Fairbanks Insurance Brokers represents many of the highest-rated commercial insurance companies, their team will provide you with an affordable solution for all your insurance needs.