HVAC (Heating, Ventilating and Air Conditioning Systems) Contractor is a profession with a higher risk associated with it, no matter what the trade, as compared to other professions. Getting a contractor insurance policy that is not only the right fit for you as a contractor but also suited to your needs as an individual business, is the most important thing you can do for your business. It doesn’t matter if you are hired to remodel bathrooms, install a roof or paint a room, there are a lot of things that can go wrong. From a roof tile falling on someone’s head to a pipe bursting or an employee hurting themselves, the list is long. Suitable insurance can be your only safety net in hard times.
A HVAC (Heating, Ventilating and Air Conditioning Systems) Insurance policy is to be considered a small business insurance policy, which incorporates all the insurances you will need to protect yourself and your business. No two insurance policies can be the same. They have to be written separately for every business. Whether you are the owner of a large construction company that handles multi-million dollar projects or an independent contractor who works alone, insurance is something you will need to keep your business safe and help you prosper, without the risk of going bankrupt for an unintended, honest mistake.
Who might need Contractor Insurance?
Contractors can be broken down into two types;
Contractor: The contractor is responsible for overseeing the whole project to its completion and for fulfilling the contract signed. For example, it can be a remodeling project or a brand new construction project.
Subcontractor: This is a person or company hired by the contractor to do certain jobs or specific tasks on a job site. A contractor usually hires the subcontractor as a specialist in certain trades. For example, a contractor hires a plumber for redoing a kitchen. A subcontractor is usually hired by a contractor not directly by the client.
However, it doesn’t matter if you’re a general contractor or a subcontractor, you’ll need HVAC (Heating, Ventilating and Air Conditioning Systems) Insurance . Insurance will protect you and your business from any work-related issues or accidents. It doesn’t matter which trade from the construction industry you are from, you will need the insurance policy as a safety net in case of claims or medical expenses.
What is covered by Contractor Insurance ?
A good insurance policy has many different types of insurance which can cover you and your business. It is usually written specifically for you as per your needs in regards to your business. Your insurance will cover you and your business for all your needs as a contractor. These issues can include the cost of claims, lawsuits, and damages to your property or other people’s property.
Here’s what the essentials are:
- General liability insurance
This will kick in if you or one of your employees end up damaging a customer’s property or causing an injury on your worksite. It can save you from most of the liabilities that come your way. It is also usually required by clients to ensure that any damage done during work, is covered.
- Worker’s compensation
This is usually an important part of contractors insurance considering that it is a requirement for a contractor license and usually is needed for bidding on large projects. Not to mention, if an employee gets hurt while on a job for you, this will help protect your company and pay their medical bills or lost wages. This, as part of HVAC (Heating, Ventilating and Air Conditioning Systems) Insurance , can be a safety net for your business.
- Commercial auto insurance
It doesn’t matter if you own one small truck or a large fleet of trucks with equipment mounted on them, commercial auto insurance is a staple for your business. The risk of an accident caused by your vehicles or to them can be pretty high. This, as part of insurance, can protect your business.
- Tools and equipment
As a contractor, the tools, and equipment you own are the most precious thing because they are how you complete your jobs. It is extremely important to keep them safe from theft and damage of any kind. Insurance has tools and equipment coverage as per your requirements, so you can replace or get your things repaired as soon as possible to keep your workflow seamless.
- Excess liability
Excess liability or umbrella insurance is coverage that kicks in when your general liability or any other insurance fails to cover you for a certain amount, larger than your policy. It is a part of contractors insurance so you can be protected when you work on large-scale development projects.
- Surety and license bonds
Bonds are a very important part of insurance, because from your license to bidding on projects, you will need several kinds of bonds throughout your career. They are an essential part of contractors insurance
- Builder’s risk
Before you can hand over your project back to a client, the building is under your custody and your protection. Any harm that may come to the buildings, like fire due to an electrical failure or flooding due to a pipe bursting. Avoid the cost of repairs, replacement and reconstruction by getting builder’s risk insurance policy as a part of your insurance.
- Installation floater
Anything, while in transit, is exposed and at risk of getting damaged in an accident, stolen or harmed in any other way. Your machinery, equipment, vehicles, and building materials are just as vulnerable, while it is being transported to and from your worksite. It also covers your surplus materials stored on-site before being used. And as far as your auto insurance, it provides SOME cover, but not complete protection. Therefore, an installation floater is a necessary part of your insurance.
- Professional liability/E&O
Even as a contractor, you can be held liable for errors and omissions in your logs, contracts or any other thing. Though it is not a necessity for smaller construction companies, it is a must-have for larger construction companies who deal with larger projects in their insurance policy.
- Business owner’s policy
As a small business, your business owner’s insurance policy is extremely important for your insurance policy. This actually bundles up general liability, workers comp, and auto insurance all in one affordable package for your insurance.
- Commercial property
This is insurance you must have if you own or rent the building you house your office in. it will also cover your supplies, inventory, warehouses, and other property not covered by general liability insurance. Commercial property insurance can be big life saver as a part of your insurance policy.
Who should buy HVAC (Heating, Ventilating and Air Conditioning Systems) Insurance ?
If you are a contractor or subcontractor with in any of these trades, you must get insurance as per your company size and needs. It is imperative.
It can’t be emphasized enough, how important contractor insurance is for you. Some examples of contractor insurance claims, you can face as a contractor are as below:
While painting a customer’s house, you could possibly damage the furniture. Your general liability insurance will pay for the furniture replacement or repair, as per need.
While unloading material off a truck and placing it on site, one of your employees slips and hurts his back. Your worker’s compensation will not only pay the employee’s medical bills but also compensate them for lost wages. In case the employee was to sue you, the insurance will pay for the claim and the legal fees.
The warehouse connected to your office space gets flooded causing damage, not only to the inventory you had stored, but also causes water damage to your office. Having suitable commercial property insurance will cover you for all the damage.
If there has been a fire due to an electrical fire on an almost completed house you were working on remodeling, your builder’s risk insurance will protect you and pay for the extra damages, without causing you any extra financial loss.
What doesn’t HVAC (Heating, Ventilating and Air Conditioning Systems) Insurance cover?
Some things are not covered by insurance policy. Here is a list of things your insurance does not cover and needs to be separately added to your policy.
- Radioactive fallouts
- Infectious diseases
- Government seizures
- Wrongful termination
- Intentional or fraudulent acts
Cost of HVAC (Heating, Ventilating and Air Conditioning Systems) Insurance
The cost of policy can vary a lot depending on a variety of factors. You can bundle up different policies together to protect your business better, as mentioned before. In general, the main factors determining the cost are
- Claims history (Insurance claims history). History of previous claims can be one of the main and most decisive factors in determining the cost of your contractor insurance. The higher the number of claims against you and your company, the higher the cost of your safety net.
- Experience. The number of years you have been in business is another deciding factor in the cost of insurance since with more experience in your field the less likely you are to face a claim. This can be a factor in deciding the cost of your insurance.
- Industry. Companies in higher-risk industries pay a higher cost compared to lower-risk businesses. For example, a roofing contractor is at higher risk than say a handyman. Also, businesses with greater risk factors, like personal injuries or property damage will have a higher premium total for your contractor insurance.
- Location (Business location). A business located in a highly-populated area with greater risk exposures will pay higher premiums. For example, the construction company will pay more if the project is located in a densely populated area, as compared to a project on the outskirts of the city. Therefore, rates vary based on the state where you conduct business.
- Policy limits and coverages. There are many limitations insurance can possibly have. The more things you include in your policy, the higher its cost will be. Secondly, the deductible amount you choose for your contractor insurance affects your premium. Therefore, if your deductible is higher, you pay a lower premium.
- Gross Receipts (Annual). This is by far the most common premium basis for insurance, based on the amount a business grosses in a year.
- Subcontractor Cost (Annual). This may reduce or increase the cost depending on the carrier.
- Payroll and size. It is the second most used to decide factor for a premium after Gross Receipts, it is used for services or construction industries where the biggest risk of claims depends on the quality and amount of work performed by an employee.
For a small business that needs one million dollars of coverage, the price is based upon the factors above.
Each business is unique, so individual insurance policies from insurance companies need to be treated the same. No two businesses have the same insurance policy. In addition, minimum premiums are involved. The insurance carriers establish certain minimum premiums just to cover the expenses of writing a policy.
There are exceptions, of course. You have the final say in the amount of coverage you purchase. But insurance companies will make recommendations based on a number of factors. Some base the coverage on the size of your company’s assets, while others base the coverage amount on the size of lawsuits companies that are similar to yours have faced.
How to buy HVAC (Heating, Ventilating and Air Conditioning Systems) Insurance
When considering getting insured, consider the following:
- Identify your risks. Be sure to thoroughly analyze the operations of your business and identify potential risks. After that, choose all the coverages you need properly for your insurance.
- Work with an independent agent. An independent agent will help you navigate the complexities of picking the right selection of policies for your contractor insurance by assessing your needs and directing you to the broker that best serves your company.
- Compare quotes. Insurance costs vary between insurers. Consider several quotes to find the best rates and coverage. When searching for insurance coverage it is good to work with a company that has the most options.
At PBIBINS we provide you with the best HVAC (Heating, Ventilating and Air Conditioning Systems) Insurance policy because we use multiple service providers to choose what is best for you.
- Know Where to Look. Compare policies for your contractor policy. A good broker will do this for you. Independent insurance brokers will send your application to multiple carriers to check coverage and price. Remember brokers are independent and will quote to many carriers. Must insurance agents be bound to one carrier and must quote them regardless of the price and coverage is best for you.
At PBIB, we specialize in HVAC (Heating, Ventilating and Air Conditioning Systems) Insurance, we can give you an impartial comparison with a strong background in Construction industry.
- Bundle Your Policy. You can save money by bundling your policies together. For example, a business owner’s policy includes general liability insurance and commercial property protection. It saves you money to buy one policy rather than two. Or, as in the case of multiple employees, you need worker’s compensation insurance, disability, and unemployment insurance; when you bundle them together in contractor insurance, your cost can decrease.
- Don’t Overestimate Your Business Costs. There are two professionals you should be utterly honest with: your lawyer and your insurance broker. You must give a very accurate appraisal of your business while applying for insurance, so you don’t end up overpaying for your contractor insurance by quoting an inflated value.
- Pay Your Premium in Full. There are certain payment options that can decrease your overall cost. Like they say; a penny not spent is a penny saved. You’ll be offered discounts at paying yearly or by setting up automatic bank transfers. Your broker can give you detailed information on such offers for your insurance.
- Manage Risks. It is a fact that the riskier your business is, the more your contractor insurance will cost. You can take steps, though, to prevent it from blowing out of proportion. It may mean, at some point, you are just proving to your company that you are compliant with the safety guidelines and SOPs and even have invested in teaching employees about emergencies and safety protocols. Things like this will lower your premium considerably.
- When Cheaper Isn’t Better? Being a business owner, you realize well how there has to be a balance between cost and quality. Here are a few reasons why cheaper isn’t always necessarily better.
- A small or cheap contractor coverage might not be what your business requires and may not completely cover you, leaving room for error and eventually, loss on your part.
- If it is too good to be true, it probably is. There might be exclusions, so read the fine print for your contractor insurance!
- With the policy comes the expertise of the insurance agent who will help you through a lawsuit, if your business gets involved. Agencies who have a helpful track record must be considered for this. Not cheap ones.
- General liability has cost $20,000 per lawsuit on average in 2015, according to the Insurance Journal. If you can’t afford that, a policy at $400 per year should be essential.
Determining Your Insurance Needs
How Much Contractor Coverage Do You Need?
In case of a claim, your insurance can cover the claim’s cost up to your coverage limits. However, you’ll need to pay a deductible first. A deductible is an amount you need to pay towards the claim before the insurance company starts paying. You get to select a deductible amount when you purchase general liability insurance.
The cost of insurance coverage varies based on the size of the business, your industry, your location and the amount of coverage that you need, as discussed above.
You can handle contractor insurance costs by choosing insurance limits that best meet your needs. Your contractor insurance limit is the amount the insurance company will pay for a single claim or for all claims during the policy period. Choosing these limits wisely will help to lower your contractor insurance costs.
It is imperative to consider the extent and limits of insurance coverage that your business might need so that your specific needs are met. Limits are what will protect your assets. You should discuss your contractor insurance in detail with your designated advisors since your company has its own needs.
Consideration must be given to the extent and limits of coverage a business might need to meet the comprehensive need of the organization. Realistic limits protect the assets of the insured and keep them from overpaying for a general liability insurance policy. How much contractor insurance you need should be discussed with your advisor, as every company is different. How broad or comprehensive the coverage needs to be can be judged in the analysis of how to protect your business.
We at PBIBINS specialize in contractor insurance as our CEO was a former contractor himself. This means that we understand what your contractor insurance needs as a contractor are. Feel free to call and speak to our specialists in insurance and get a free, no-obligation quote for your consideration.