Heating, ventilation, and air conditioning (HVAC) insurance refers to a group of policies business owners in the HVAC industry are often required to buy. While most states only require bonds, HVAC companies may also need general liability, workers’ compensation, and commercial auto. The combination of those three insurance policies may start at $8,500 but can exceed $21,300 per year depending on coverage and business needs.
HVAC Business Insurance Providers
HVAC Insurance Provider
HVAC businesses with employees who can benefit from pay-as-you-go workers’ compensation
Low-cost coverage for HVAC businesses that need insurance certificates fast
HVAC technicians looking to save money by making monthly premium payments with no fees
HVAC contractors who need employee dishonesty coverage that extends to worksites
Independent HVAC contractors working on small residential jobs
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 insurance.
Our five favorite small business insurance companies for HVAC insurance include AP Intego, CoverWallet, Hiscox, Travelers, and Nationwide.
As an insurance brokerage, AP Intego offers you the ability to work with licensed agents to shop and compare multiple HVAC 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 determine accurate monthly workers’ comp premiums automatically.
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 basic liability insurance for as little as $39 per month.
Hiscox is suited well to HVAC independent contractors or small businesses with crews of five or less. By tailoring policies to meet these business owners’ needs, Hiscox can keep costs down. A business owner’s policy (BOP) from Hiscox can cost as little as $41.67 per month with no additional fees for choosing a monthly payment plan.
Travelers is a well-known and financially stable national insurer that offers robust coverage for HVAC contractors. Not only does its BOP include off-premises property insurance, but it also includes $25,000 in employee dishonesty coverage automatically. This coverage can be extended to the theft of a client’s property, making it ideal for HVAC contractors.
Nationwide is a national insurance carrier offering personal and commercial insurance policies. Nationwide can work with HVAC contractors and companies of all levels, but it focuses on small independent contractors working on small residential jobs.
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 $8,500 annually plus the deductible on any claims. A BOP 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’s a $1 million claim, the remaining $500,000 could become your responsibility.
Typical Annual HVAC Insurance Costs
Annual Premium Range
Commercial General Liability
$1 million occurrence—$2 million aggregate
Required Surety Bond
Varies based on work you perform
$1 million occurrence—$2 million aggregate
Property deductible from $500 to $1,000
Varies based on coverage amount
*Per occurrence limit to bodily injury/Policy limit for bodily injury by disease/Per employee limit for bodily injury by disease.
Most Common Types of HVAC Insurance
What It Covers
Property damage and injuries to nonemployees
Employees’ work-related injuries and occupational illnesses
Damage and injuries you cause in an auto accident
Business-owned physical assets, such as a building, equipment, or tools
Inland Marine Insurance
Damage or theft of property while it’s in transit
Guarantees a contractor’s works will be completed as promised
Customers’ claims of financial loss due to your professional negligence
Combination of general liability and commercial property
Extra liability coverage over underlying limits
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: If a client trips over an air duct your employee left on their floor, general liability can pay their medical bills and your legal costs if they sue for their 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 $1,500 and $8,000 annually, depending on where you operate your business and who your clients are. Businesses working on large construction jobs, such as hospitals, typically pay more than those working on 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 will vary based on the type of work you perform and how many employees you have. Annual premiums could range from $6,000 to $9,300 for coverage up to $1 million per claim.
Commercial Auto Insurance
Commercial auto insurance covers HVAC vehicles and any employees in the vehicles in case of 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 doesn’t 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 $4,000 annually.
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 for their equipment.
The cost of covering business property is contingent on the number of tools and pieces of equipment you have. The variety of electric tools and assessment equipment adds up quickly. A basic HVAC property insurance policy starts at 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’s in transit or stored at worksites is uninsured. Inland marine makes sure that the property is protected.
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 aren’t 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’s unlike insurance that requires a more costly premium, and the insurance company pays claims without expecting repayment.
Professional Liability Insurance
Sometimes referred to as errors & omissions (E&O) insurance, professional liability insurance protects you from any liability related to your work as a professional HVAC technician. For instance, something as small as not properly sealing a duct could lead to mold, causing occupant health problems and building damage requiring expensive remediation.
Professional liability 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.
HVAC business owners that need professional liability can check out our list of the best professional liability insurance companies.
A BOP is a must-have policy for HVAC business owners and contractors, as it combines both general liability and commercial property, covering you, at a lower premium, for the most common risks business owners may encounter. Some HVAC business owners include business interruption insurance, which covers risks that can stop the business from operating.
Note that not all businesses are qualified to get a BOP, as each insurance company has its own rules. Generally, BOPs are best suited to businesses that have fewer risks, less than 100 employees, annual revenue of less than $1 million, and commercial spaces that they either own or rent.
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 $6,000 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’s possible to have an umbrella policy to cover other carrier policies, this isn’t cost-effective. Insurers prefer underwriting the entire risk, where the umbrella is the highest limit.
Benefits of HVAC Insurance
HVAC insurance brings benefits beyond the actual liability protection from claims that you can’t afford to pay. Aside from the peace of mind it brings, it also helps you save money while doing the following:
- Protects you from mistakes made by you and your employees: Dealing with ventilation in homes or offices has corresponding risks, so having the right insurance coverage protects you if you or an employee makes a costly mistake.
- Helps you get larger projects: Clients prefer to hire businesses that are licensed and insured and may sometimes ask to see your certificate of insurance (COI) prior to accepting your bid on a project.
- Gives confidence to make recommendations: Having professional liability insurance covers HVAC businesses in case a recommendation is wrong or professional work isn’t performed according to code or safety standards.
HVAC insurance is important to protect you and your business from financial loss due to either a mistake or an unexpected event that’s 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 that additional insurance is necessary to be fully protected financially.
CoverWallet can help you save money on HVAC business insurance. They can shop your insurance with many quality carriers. Their expert insurance professionals can find the best pricing and coverage for your HVAC business needs.