HVAC contractor insurance document illustration to the left of a photo of a HVAC technician working on an AC unit

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Heating, ventilation, and air conditioning (HVAC) contractors must protect their business property while reducing the odds that a job-related accident or injury could financially harm their business. Damaged or stolen tools and equipment can erase a considerable investment, and bearing responsibility for damage to another person’s property can mean significant costs for an HVAC business. 

HVAC contractor insurance is the primary way to help protect your financial interest if things go wrong on the job. A business policy covers many common hazards and perils you might face during the course of construction. This contractor’s insurance solution is typically the most cost-effective means to secure coverage and give you peace of mind. 

What is HVAC contractor insurance?

HVAC insurance takes the form of a business insurance package commonly offered by all carriers that issue contractor policies. The policy will help indemnify your business or another party if either of you suffers some financial loss due to a work-related accident, theft, illness, etc. 

The policy includes two main components that help protect the financial standing of the business. Business property insurance covers the value of materials you own to perform your job. Liability insurance will help cover expenses for damage to someone else’s property and/or legal costs if another party decides to file a lawsuit. 

Unique situations could arise for HVAC contractors when installing heating units in residential or commercial buildings. A faulty connection in a heating unit could lead to a fire that results in minor or major property damage. In either case, your HVAC policy will help cover the cost of replacement or repair for the owner of the project if you or an employee is found to have some fault in the cause of the accident. 

Who needs HVAC insurance?

If you work on a job with a general contractor, the contract itself may require that all subcontractors have insurance before the job can begin. This requirement helps assure project owners that all parties have proper coverages in place. The contract may ask that each sub carry a liability amount of $2 million, for example. Often, this amount will exceed the total cost of the project for the owner’s optimal protection. 

As you can see from the liability amount that could be contractually required, a catastrophic loss can severely harm an HVAC business if insurance is not in place. If you were found responsible for the cause of significant property damage or personal injury during your business operations, legal expenses and possible jury awards could drain much, or all, of your business assets. 

Insurance Policies HVAC contractors need

You can tailor an HVAC business insurance program to meet your needs. Policies cover a number of other situations beyond basic liability and business property coverage. 

  • Business owners policy: This policy includes the foundation of property and liability coverages referred to thus far. It may require some customization to suit your HVAC operations. 
  • Commercial auto insurance: A business auto policy covers the value of your vehicles or provides you coverage in case of damage to another party’s property. It also helps cover costs associated with a passenger or pedestrian injury. 
  • Equipment floater insurance: You may own unique tools and equipment, the value of which exceeds the coverage amount provided by a base policy. This policy or policy endorsement helps get you that extra coverage. 
  • HVAC Inland marine insurance: When traveling from project to project, inland marine insurance covers tools and equipment wherever you go. 
  • Professional liability insurance: A professional liability policy or errors and omissions insurance can help protect your HVAC business if it were held responsible for an oversight or design flaw that caused financial harm to another party. 
  • Surety bonds: A surety bond can help indemnify a project owner if your HVAC business could not meet its performance obligations under the terms of a construction contract. 
  • Installation floater: This policy or amendment covers building materials wherever they’re located. The coverage applies to roofing shingles, for instance, destined to become part of a permanent structure. 
  • Workers’ compensation insurance: If you have HVAC employees, this insurance helps cover lost income and/or medical expenses if one of your workers becomes sick or injured on the job. 

How do I get HVAC insurance?

To get an HVAC contractor’s policy, the insurer will ask for specific information. Aside from contact info and an employer identification number (EIN), the company might require payroll and sales information. Often, policy rates are derived from one of these two factors. If you currently have HVAC insurance, the carrier may also ask for a claims history related to your account. 

To buy a basic HVAC policy, you can contact an insurance agent or broker who can guide you through the application process. If your needs reach further than what a core policy provides, the insurer may ask for additional information such as a stated value of tools and equipment, a financial statement, and credit history. After the carrier evaluates your business situation, the policy gets issued. 

How much does HVAC insurance cost?

The cost of HVAC insurance depends on a few variables, including: 

  • The nature of your business and the probability of claims occurrences (an HVAC contractor generally bears less risk than a roofing business, for example)
  • The number of your annual sales or the size of your payroll
  • The overall or scheduled value of tools and equipment you decide to insure 
  • The location or radius of operations within which you do business
  • The number of claims you may have incurred in previous policy years

Your annual policy cost for HVAC insurance will likely have a minimum premium, even if you have a small operation. The minimum premium may average around $1,000 per year and escalate as any of the above factors dictate. HVAC insurance costs trend toward the lower side in most cases, as this business typically presents a low risk to an insurance company. 

Taking the next steps to get insured

HVAC contractors tend to find insurance policies affordable. A broad spectrum of insurance solutions exist to fulfill your needs and obligations. Nearly every Property and Casualty broker and agent can customize a package that suits your business style and operation, and insurance stands as a critical protective measure you shouldn’t run without. 

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