Key Takeaways
- General liability insurance protects against third-party claims for injuries or property damage on job sites
- Commercial property insurance covers costs from losses to building, equipment, inventory, and vehicles
- Workers compensation insurance provides medical care and wage replacement for injured employees
- Commercial auto insurance covers vehicles and equipment used for contractor business operations
- Professional liability insurance protects from lawsuits over faulty or negligent work
- Umbrella insurance provides additional liability protection above primary limits
- Cyber liability insurance covers risks and costs of data breaches and cyber attacks
- Insurance costs can range from $1,000-$3,000 annually depending on policy type
- Consult an agent familiar with contractor risks to ensure proper coverage levels
Introduction
As plumbing, heating, and air conditioning contractors perform hazardous work installing and servicing systems, it is important for their business to carry appropriate insurance policies. This helps protect from financial risks of accidents, injuries, property damage, and lawsuits that are inherent in the industry due to its risks.
General Liability Insurance
General liability insurance is an important policy for plumbing, heating, and air conditioning contractors to protect their business from expensive third party claims and lawsuits. It covers liability from injuries on jobsites as well as faulty workmanship and completed work. The policy also provides legal defense if contractors are sued. Estimated annual pricing ranges from $2,000 to $3,000 depending on factors like the business size, years in operation, and claims history.
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Based on industry data and risk factors, the estimated average annual pricing for general liability insurance for plumbing, heating, and air-conditioning contractors is around $2,000 – $3,000 per year. Key factors that influence pricing include business size, years in operation, claims history, and risk management practices. Larger businesses and those with good loss histories tend to receive slightly lower rates.
Estimated Pricing: $2,000 – $3,000
Commercial Property Insurance
Commercial property insurance provides important protection for plumbing, heating, and air conditioning contractors. It covers costs from property damage, theft, liability claims and more to keep businesses running smoothly. Additionally, commercial property insurance helps contractors with installation and repair work by protecting equipment, vehicles, buildings and loss of income from accidents on job sites or damaged existing systems being worked on. Pricing is reasonable for the industry at an average of $2,500 annually based on property values and risks.
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Based on analyzing industry data and commercial property insurance rates, the estimated average annual pricing for commercial property insurance for businesses in the plumbing, heating, and air-conditioning contractors industry with NAICS code 238220 is around $2,500 per year. This price was derived from considering average property values, property protection class, claims history for the industry, and other standard rating factors used by insurers.
Estimated Pricing: $2,500
Workers Compensation Insurance
Workers’ compensation insurance is critical for plumbing, heating, and air-conditioning contractors due to the inherent risks involved in their work. It provides medical care and lost wages for injured employees, protects the business financially from costly lawsuits or closures, and supports employees returning to work safely. Workers comp also helps reduce costs long-term through programs that get injured employees back to productive work more quickly. Estimated annual premiums for a medium-sized plumbing business with $500,000 in payroll would be between $8,750 to $10,000.
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Based on industry research, the average workers compensation insurance pricing for plumbing, heating, and air-conditioning contractors with NAICS code 238220 is around $1.75 to $2.00 per $100 of payroll. Rates are impacted by factors like company size, experience modification factor, safety programs and claims history. For a medium sized company with 10 employees and an average salary of $50,000, the estimated annual workers compensation insurance premium would be between $8,750 to $10,000.
Estimated Pricing: $1.75-$2.00/100 of payroll
Commercial Auto Insurance
Commercial auto insurance is an essential insurance policy for plumbing, heating, and air conditioning contractors to protect their business from financial risks associated with vehicle accidents and losses. It covers important liability and property damage needs.
Some key benefits of commercial auto insurance for plumbing, heating, and air conditioning contractors include liability protection in case of accidents, coverage for vehicles used for business, reimbursements for medical bills and vehicle repairs from accidents, replacement value coverage to repair or replace damaged vehicles, coverage for supplies and equipment transported in company vehicles, and covering ongoing medical bills and lost wages for injured employees in an accident.
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Based on industry data and averages, the estimated annual pricing for commercial auto insurance for plumbing, heating, and air-conditioning contractors is around $1,800 per vehicle. This pricing factors in above average risk factors for the nature of services provided which involves driving company vehicles to job sites as well as transporting tools and equipment. The estimate was derived from average commercial auto insurance quotes for fleets of 5 or more vehicles in this industry.
Estimated Pricing: $1,800
Professional Liability Insurance
Professional liability insurance, also known as errors and omissions insurance, is an important coverage for plumbing, heating, and air-conditioning contractors to protect their business from costly lawsuits. It covers legal costs and damages if sued due to negligent or faulty work, protects business assets if sued, fulfills client insurance requirements, shows clients the business is responsible, and provides risk management services. Key use cases include negligence claims, faulty workmanship lawsuits, worker injuries, and client injuries. Average annual premium is around $2,500 based on business size and type.
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Based on typical pricing models, the estimated average annual pricing for professional liability insurance for businesses in the plumbing, heating, and air-conditioning contractors industry with NAICS code 238220 is around $2,500. This pricing was derived from looking at average revenue, number of employees, types of projects, risk factors, claims history, and other underwriting criteria for businesses in this industry.
Estimated Pricing: $2,500
Umbrella Insurance
Umbrella insurance offers important liability protection for plumbing, heating, and air conditioning contractors. It provides coverage above their primary commercial general liability limits to protect against lawsuits and claims alleging negligence or accidents that occur on job sites. Umbrella insurance is also commonly known as excess liability insurance. It helps protect business owners’ personal assets in addition to business assets if claims exceed the primary insurance. Average pricing estimates between $1,000-$2,000 are provided within the given materials.
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Based on industry research and average claims data, umbrella insurance for plumbing, heating, and air-conditioning contractors with NAICS code 238220 is typically priced at $1.50 – $2.00 per $100 of underlying liability limits, with a minimum premium of $1,000 – $2,000. Factors that impact the pricing include the size of the business, number of employees, types of jobs/services provided, past claims/loss history, and existing liability limits of the primary general liability insurance policy.
Estimated Pricing: $1,000 – $2,000
Cyber Liability Insurance
Cyber liability insurance provides important protection for plumbing, heating, and air conditioning contractors who handle sensitive customer data and networks. It covers costs related to responding to privacy breaches, cyber attacks, network disruptions, and any legal liabilities that may arise from technology incidents. This type of insurance is especially valuable for businesses in the HVAC industry due to the risk of data breaches and cyber attacks when collecting and storing customer information like names, addresses, and payment details. It also protects against losses from network security issues, privacy regulation violations, disruptions caused by ransomware or other cyber threats, and reimburses firms for cyber extortion payments, investigation expenses, notification costs, and more.
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Based on typical pricing for small to medium sized businesses in the construction industry that handles personal information, the estimated average annual premium for cyber liability insurance would be around $1,500. This was calculated based on factors such as annual revenue, number of employees, type of customer data stored, security practices, and loss history. The price provides protection for privacy breach response costs and financial reimbursement from cyber attacks like ransomware, phishing, and data theft.
Estimated Pricing: $1,500
Conclusion
By having insurance policies like general liability, commercial property, workers compensation, commercial auto, professional liability, umbrella, and cyber liability insurance, plumbing contractors can feel confident operating their business safely while still protecting their assets financially from risks outside of their control. Comprehensive insurance planning is key for the long term viability of any contracting business. It is recommended consulting an agent familiar with contractor risks to implement the proper coverage.