Insurance

The Basics of Commercial Insurance for HVAC Contractors

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June 27, 2022

As a business owner, you have unique risks that come with the territory. Understanding these risks and the various methods to mitigate them is critically important to the successful growth of your business. One of the best ways to protect your HVAC contracting business is to have a custom commercial insurance policy.

What is HVAC contractor insurance?

HVAC contractor insurance is a type of business insurance that helps protect Heating, Ventilation, Air Conditioning and Refrigeration contractors from financial losses that could result from claims or lawsuits related to their work. Commercial general liability (CGL) insurance is one of the most important types of insurance for HVAC contractors and often a requirement from your clients and professional associations. CGL insurance protects your business against third-party claims of bodily injury, property damage, and personal and advertising injury.

Other types of insurance that HVAC contractors should consider:

Commercial Property Insurance

Commercial property insurance covers your business’s real estate, contents, tools, equipment and machinery. It helps pay for repair or replacement when business property is lost, damaged, or destroyed. It may also cover you for lost business income you would have otherwise received had the claim not occurred.

Inland Marine Insurance

Inland Marine insurance provides financial protection for a business’s property, whether owned or leased, that is transported on land. This can include equipment, products, parts and materials being shipped “inland” by automobiles, trucks and trains.

Contractors Equipment Floater & Tools Coverage

A contractors equipment floater is a type of insurance that offers protection for contractors against loss or damage to their equipment. In the event that equipment is lost or damaged, a contractors equipment floater can help to replace or repair tools, allowing contractors to get back to work as quickly as possible. For those who work in construction or other industries that use tools and machinery, a contractors equipment floater is an essential piece of insurance.

Workers’ Compensation Insurance 

Workers’ compensation insurance provides medical and wage benefits to people who are injured or become ill at work. The coverage is mandated by each province, unless you are otherwise exempt, and the wage and medical benefits vary by province.

What are some common claims for HVAC contracting businesses?

There are a number of potential claims that HVAC contractors could face. Some of the most common include:

Bodily Injury

If you or one of your employees injures someone while working, they could sue your business for damages. CGL insurance would help protect you in this type of situation.

Property Damage

If you or one of your employees damages someone’s property while working, they could sue your business for the cost of repairs or replacement. CGL insurance would help protect you in this type of situation. If your own business property is damaged due to fire, windstorm, theft or another covered cause of loss, your commercial property policy will cover the costs to replace this property with like kind and quality.

Personal and Advertising Injury

If you or your employees are accused of libel, slander, or false advertising, you could be sued. CGL insurance would help protect you in this type of situation.

How can HVAC contractors prevent or mitigate claims?

There are a number of things HVAC contractors can do to prevent claims, including:

- Hiring qualified and experienced employees, including conducting background checks

- Providing continued training for employees on how to safely perform their job duties

- Requiring employees to follow safety protocols and procedures

- Having a written safety policy in place, which can mitigate liability if an employee was clearly acting outside of this policy

- Carrying adequate insurance coverage

How much does HVAC contractor insurance cost?

The cost of HVAC contractor insurance depends on a number of factors, including the size and scope of your business, the types of services you offer, and your location. For a sole proprietor, premiums may be $1500 or less per year for basic coverage, whereas a business with multiple subcontractors working at various jobsites simultaneously could be much more. Costs will also depend on the amount of insurance you need, not all businesses are equal and some will have to purchase higher limits of insurance for specific contracts than others. The best way to get an accurate estimate of your insurance costs is to contact a broker who specializes in HVAC contractor insurance.

How much HVAC contractor insurance do I need?

It is a common requirement for businesses to carry a minimum general liability limit to satisfy basic contract requirements. The amount of general liability insurance you need also depends on the size and scope of your business, the types of services you offer, the location of your business, and who you are conducting work for. If you are working on a complex industrial site, they have much more to lose financially if their HVAC machinery is not working than a residential homeowner, and the amount of insurance you will need will be higher as you are taking on more risk. As a business owner, you should also consider if you are also being compensated more than you would for a simpler job with less risk.

The amount of property insurance you will need depends on the value of your equipment and any real estate you own. If the equipment is limited to what you carry in the back of your van or truck, you may not need to purchase as much compared to a larger firm which owns a warehouse to store all of their specialized machinery and equipment. Property insurance will also provide an option for business interruption, which means if you have an insured loss, you will be compensated for the revenue you would have otherwise have received until your business is operational again. You will want to have a conversation with your specialized insurance broker so they can understand the risks and advise you on different options for insurance, there is no one-size-fits-all type of insurance policy for an HVAC contractor.

A few things to keep in mind when shopping for HVAC contractor insurance:

- Make sure you work with an insurance broker who specializes in HVAC contractor insurance and understands the risks which are unique to your industry.

- Make sure the insurance broker you are considering is licensed to do business in your province.

- Make sure the insurance broker you are working with is independent and represents multiple insurance companies. This will give you access to a wider range of HVAC contractor insurance options.

- Be sure to compare quotes from multiple insurance companies to get the best coverage at the best price.

- Ask about discounts. Many insurance companies offer discounts for HVAC contractors who are members of professional organizations, have completed safety training, or have a strong history of loss prevention.

Conclusion:

Your HVAC business is unique and your policy should be too. Always make sure to review your insurance policy on an annual basis with your broker to ensure that any changes in operations are still covered appropriately. While the price of your insurance policy is an important decision making factor, having coverage that appropriately protects your business should always take priority. In the event of a serious claim, you will be glad you chose the coverage that properly protected your business, rather than saved a few dollars for a bare-bones insurance policy.

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