HVAC Insurance: Types, Costs & Where to Find

HVAC insurance refers to a group of policies business owners in the heating, ventilation, and air conditioning industry are often required to buy. While most states only require bonds, HVAC companies may also need general liability, workers’ compensation, and commercial auto. HVAC insurance costs start at $350 but can exceed $10,000 for large companies.

HVAC Business Insurance Providers

When you’re looking for competitively priced business insurance, you can either hire a broker or go directly to a specific insurance carrier. It is convenient to have all policies with one carrier, but a broker might find better coverage or pricing by separating policies. Both brokers and agents can help assist in saving money on HVAC contractor’s insurance.

Our five favorite small business insurance companies for HVAC insurance include:

AP Intego

As an insurance brokerage, AP Intego offers you the ability to work with licensed agents to shop and compare multiple HVAC business insurance quotes from industry-leading companies, such as Travelers. HVAC businesses with employees should use AP Intego’s pay-as-you-go workers’ compensation, which integrates with popular payroll services to automatic determine accurate monthly workers’ comp premiums.

CoverWallet

CoverWallet can get affordable insurance to HVAC contractors fast. You can visit its easy-to-navigate website and submit a simple online application to get instant approval. An insurance certificate is accessible as soon as you purchase coverage. CoverWallet also offers competitive rates, allowing you to get HVAC business insurance for as little as $39 per month.

Hiscox

Hiscox is perfectly suited for HVAC independent contractors or small businesses with crews of five or less. By tailoring policies to meet these business owners’ needs, Hiscox is able to keep costs down. A business owner’s policy from Hiscox can cost as little as $41.67 per month with no additional fees for choosing a monthly payment plan.

Travelers

Travelers is a well-known and financially stable national insure that offers robust coverage for HVAC contractors. Not only does its business owner’s policy (BOP) include off-premises property insurance, but it also automatically includes $25,000 in employee dishonesty coverage. This coverage can be extended to theft of a client’s property, making it ideal for HVAC contractors.

Nationwide

Nationwide is a national insurance carrier offering personal and commercial insurance policies. Nationwide has the ability to work with HVAC contractors and companies of all levels, but it focuses on small independent contractors working on small residential jobs. Being able to choose personal auto for business pursuits helps HVAC business owners reduce costs with proper coverage.

Types of HVAC Insurance

Your state licensing board may require certain types of insurance for HVAC licenses. For instance, HVAC technicians and business owners may be required to carry general liability insurance, a type of contractor’s policy. Those with employees must also carry workers’ compensation coverage in most states, and HVAC technicians with work vehicles most likely need commercial auto.

Commercial General Liability

Commercial general liability insurance covers potential liability for property damage and injuries caused by you or your employees. Installation and repair problems can lead to homeowner injuries or damage to their property. General liability is the most important insurance coverage for HVAC businesses because of their high risk for homeowners’ claims.

Some HVAC insurance claim examples for general liability include:

• Property damage: If you accidentally send a fan through a glass shower door, general liability pays for the repairs.
• Bodily injury: Say a client trips over an air duct your employee left on their floor. General liability can pay her medical bills and your legal costs if she sues for her injuries.
• Product-completed operations: If a ventilation hood falls weeks after you install it, the products-completed operations coverage in your general liability pays for the damage it causes.

Commercial general liability coverage typically costs between $350 and $1,500 annually, depending on where you operate your business and who your clients are. Businesses working on large construction jobs—like hospitals—typically pay more than those working in residential homes.

Workers’ Compensation Insurance

An HVAC business with employees is required by state law and licensing boards to have workers’ compensation insurance. It covers your business from liability related to injuries that employees suffer while on the job. This includes coverage for medical bill costs related to these injuries and lost wages during a recovery period.

Workers’ compensation costs are going to vary based on the type of work you perform and how many employees you have. Annual premiums could range from $300 to $10,000 for coverage up to $1 million per claim.

Commercial Auto Insurance

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.

Equipment Insurance

HVAC equipment insurance is commercial property coverage for the tools, materials, and other equipment required to install and repair HVAC systems. Equipment can be costly for HVAC technicians and is essential for business, yet many HVAC business owners forgo insurance coverage on it.

The cost of covering business property is contingent on the amount of tools and equipment you have. The variety of electric tools and assessment equipment adds up quickly. A basic HVAC property insurance policy starts around $500 annually, with a $500 deductible.

Inland Marine Insurance

Inland marine insurance is an important policy for HVAC contractors because it covers tools and equipment as it moves from place to place. 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. As a result, business property that is in transit or stored at worksites is uninsured. Inland marine 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.

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

Errors & Omissions Insurance

Sometimes referred to as professional liability insurance, errors and omissions (E&O) insurance covers you from any liability related to your work as a professional HVAC technician. Something as small as not properly sealing a duct could lead to mold, causing occupant health problems and building damage requiring expensive remediation.

Errors and omissions insurance is a nice addition to your total insurance coverage, especially if you employ other technicians and aren’t always supervising the work. Errors and omissions coverage extends to your employees and typically costs between $500 and $1,000, depending on the nature of your work.

Technician Umbrella Insurance

Umbrella insurance extends other liability coverages, providing more protection than existing underlying policy limits. Most umbrella policies require minimum limits of at least $250,000 on commercial auto and $1 million on liability for commercial umbrella insurance eligibility. For an extra $1 million per claim, Umbrella coverage costs $500 to $1,000 annually.

If you already have HVAC general liability, workers’ compensation, and commercial auto, getting an umbrella policy makes sense. By doing so, you double, if not triple, some coverage limits for less than increasing liability on all other policies. While it is possible to have an umbrella policy cover other carrier policies, this isn’t cost effective. Insurers prefer underwriting the entire risk, where the umbrella is the highest limit.

HVAC Insurance Costs

Your HVAC insurance costs are made up of your annual premium and your deductible during a claim. If you have all the recommended insurance policies for HVAC businesses, you could pay at least $3,200 annually plus the deductible on any claims. A business owner’s policy saves money by combining general liability and property coverage.

Your deductible is the amount that you must pay before your insurer pays claims. Additionally, if your policy limits exceed a claim, the other party could sue you for the difference. For example, if your general liability policy is set for $500,000 but there is a $1 million claim, the remaining $500,000 could become your responsibility.

Typical Annual HVAC Insurance Costs

How HVAC Business Insurance Can Save You Money

HVAC business owners can save money when policies are combined in a business owner’s policy. BOPs are designed to cover both general liability and business property in one policy. Most BOPs also cover business interruption and loss of income too.

For example, an HVAC contractor without employees most likely has general liability, business property, and commercial auto insurance. Separately, these policies costs him a total of $1,850 to $7,500. However, if he can combine his general liability with business property in a BOP, he pays around $500. That plus $1,000 for commercial auto means his yearly insurance cost is $1,500.

Now assume the HVAC contractor makes a mistake leading to $50,000 in damage. The claim is covered under his HVAC general liability policy, which has a claim limit of $1 million and a deductible of $1,000. The policyholder pays the deductible, and the insurer covers the remaining $49,000. Keep in mind that the more claims filed, the higher the renewal premiums get.

How Skipping HVAC Insurance Can Cost You Money

Not having HVAC business insurance can cost more money than actually getting covered. Say you have an employee working on a project in a large office building. During installation, your employee makes a mistake when installing the draining system for the main air conditioner. Over time, the wastewater builds up, freezes in a pipe, and bursts, causing water damage inside the building. The total cost of all this damage is nearly $100,000.

If you don’t have HVAC liability insurance, then the costs come out of your pocket. However, with HVAC insurance, you only pay your deductible, which could be around $1,000. That’s a significant amount of savings to a small HVAC business, and should be more than worth the annual premium costs you’ll have to pay for coverage.

How to Get HVAC Business Insurance

The application process for HVAC insurance is similar to other businesses, regardless of whether you’re applying directly with an insurance company or using a broker. You still have to provide the same amount of information either way, but the process could take longer if you’re working with some of the larger insurance companies compared to a broker.

The four steps to get HVAC insurance are:

1. Inquire About HVAC Insurance Coverage

The first thing you need to do is to ask for coverage. This process involves inquiring of each insurance company about the specific insurance you need, including their deductibles and premiums. Be sure to confirm that policies cover HVAC insurance claims specifically. Some carriers cover certain contractors but not others.

You can use a broker or go directly to the carrier. Brokers work with many carriers and shop around on your behalf to find the right insurance for an HVAC business in your area. Agents typically work with a single carrier to find its best coverage options and any pertinent bundles or discounts.

2. Provide Necessary Information

The application is the start of the underwriting process. The insurance company needs to understand how to insure the HVAC business. Whether online or over the phone, the application requires pertinent business information, such as logistic information for jobs and financials regarding your company. Most also need licensing and business experience information.

Some information to have prepared ahead of time includes:

• Revenue booked
• Number of employees
• Driving records or driver’s license for everyone driving company vehicles
• Explanation of your business and nature of work

“Typically, in order to apply, you’ll need to answer all the usual questions about revenue, whether the business is run from home or an office, the number of years you’ve been in business, and the amount of work subcontracted. Things can get more complicated depending on the percentage of work that you subcontract, as some insurance carriers will not allow over 20%.”

– Maureen Brogie, Producer, InsuranceBee

3. Negotiate Insurance Terms

Negotiating terms is not haggling over price. Insurance carriers have to follow very specific underwriting risk assessment guidelines. But you can negotiate the options being offered. Consider the limits of coverage and ask about increases and decreases. While equipment limits often have a major impact on price, liability is usually negligible to overall pricing.

Every policy has specific types of coverage itemized in it. Many of these coverages can be increased or decreased, and sometimes even waived. Go over every line item of coverage to understand what it covers and make sure you are paying for what is really important to your business. For example, if you were quoted $20,000 for business property but really only need $10,000 in coverage, you can save money.

4. Sign Documentation

Once the insurance company has offered you something that works for your business, all that is left is to sign the documentation. Once you do, you’ll be covered and ready to use your insurance as needed. Carriers vary on payment terms. Some won’t bind coverage, meaning make it effective, until the first payment is made. Others will bind coverage and bill you for the first premium.

Review the policy annually and inform your insurance agent about any new equipment purchases or new drivers. This could dramatically affect coverage and premium costs. Use your insurance agent as a partner to help keep your business protected against financial threats that naturally arise in claims and accusations.

Benefits of HVAC Insurance

HVAC insurance carries many benefits beyond the actual liability protection from claims you can’t afford to pay. It gives the peace of mind necessary to perform your work at the highest level and confidently make recommendations. From a business owner’s standpoint, there are benefits that help you make more money.

Some of the more specific benefits of carrying the proper HVAC insurance include:

1. Protects You From Your Mistakes

When you’re dealing with ventilation in homes or office buildings, risk is inevitable. One mistake could lead to damage resulting in thousands of dollars lost. Without insurance, you pay the cost of damages. Having the right insurance coverage protects you from that liability and gives you peace of mind in operating your business.

2. Helps You Get Larger Projects

General contractors, building managers, and high-end home clientele don’t want to work with anyone who is not licensed and insured, and may ask to see your certificate of insurance (COI) before they will accept your bid on a project. A COI lists all of your liability coverages and the amount of coverage you have for each, so it can act as proof of insurance.

3. Gives You Confidence to Make Recommendations

Having errors and omissions insurance covers the HVAC business if a recommendation is wrong or professional work is not performed according to code or safety standards. HVAC liability insurance, specifically professional liability insurance, provides confidence to give customers feedback and recommendations without worrying about the downside.

4. Protects You From Employee Mistakes

Everyone makes mistakes, and employees often don’t have the knowledge or experience that HVAC business owners do. It’s impossible to be with all of your employees all the time. Their mistakes are your liability. Reduce the financial burden with HVAC liability insurance.

Bottom Line

HVAC insurance is important to protect you and your business from financial loss due to either a mistake or an unexpected event out of your control. Most HVAC business owners will be covered by having general liability and workers’ compensation coverage (if you have employees). Those working on large projects might find additional insurance is necessary to be fully protected financially.

CoverWallet can help you save money on HVAC business insurance. They can shop your air conditioning insurance with many quality insurance carriers. Their expert insurance professionals can find the best pricing and coverage for your HVAC business needs.

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