How HVAC Liability Insurance Can Protect Your Business

HVAC liability insurance protects professionals who install or repair heating, ventilation or air conditioning units from claims related to injuries or damage they cause on the job to their client or their property. Some policies may also cover liability claims related to the quality of their handiwork.

HVAC contractors can usually buy liability insurance in a single convenient package, although customizing the policy to include additional protections is also possible. Learn how much HVAC insurance costs as well as how to get covered.

Key Takeaways HVAC contractors should purchase general liability insurance to protect them from bodily injury and property damage claims. Commercial property insurance protects the HVAC contractor’s equipment and tools in case it is damaged or destroyed. HVAC contractor insurance can be purchased as a package, providing several commercial insurance types in a single policy. HVAC insurance can cost as low as $50 a month.

What Is HVAC Contractors Insurance?

HVAC contractor insurance is a package of commercial coverage designed to safeguard against the specific risks that HVAC contractors face. It will often include coverage for liability claims such as when the business can be held for damages inside their client’s home or business. 

HVAC contractors can also protect against risks other than liability. For example, coverage is available for the contractor’s tools and equipment if they are damaged or stolen.

Do HVAC Contractors Need Insurance?

HVAC contractors and subcontractors may need to purchase insurance to meet their state’s licensing requirements. California, for example, requires contractors with LLC businesses to have general liability insurance, workers’ compensation (if applicable) and be bonded before applying for licensure.^[1]

Note that many of your clients will likely feel more comfortable working with an individual or business they know is state licensed. 

California, again, allows consumers to look up license information at the Contractors State License Board website. If a customer wants to feel confident in hiring somebody for an HVAC job, they will likely choose a professional who is licensed.

What Types of Insurance Are in an HVAC Contractors Policy?

HVAC contractors policy offers several commercial insurance types in one convenient package that you may be able to customize so you can add even more coverage. Below is a list of some of the basic insurance types you may find in an HVAC insurance package.

General Liability Insurance

General liability insurance protects businesses from various third-party claims related to bodily injury, property damage and advertising injuries. 

For example, imagine that an HVAC contractor is hired to install a new heating system in a commercial building. During the installation process, the contractor accidentally damages a valuable piece of artwork on the wall. If a lawsuit ensues, the contractor’s liability policy will pay for the damages.

Workers' Compensation Insurance

Workers' compensation insurance provides benefits to employees who suffer work-related injuries or illnesses by providing financial assistance for medical expenses, lost wages and other related costs.

For instance, if an employee of an HVAC business injures themself after falling from a ladder, workers’ compensation would cover the HVAC technician's hospital bills, medications, surgeries and rehabilitation costs. It would also provide wage replacement benefits, ensuring that the injured technician receives a portion of their lost wages during the time they are unable to work due to the injury.

Remember that workers' compensation may be required depending on where you live and how many employees you have.

Contractors Tools and Equipment Insurance

Contractors tools and equipment insurance is designed to protect the contractor’s tools and equipment. This type of coverage usually includes inland marine insurance, which pays to repair or replace your tools and other cargo inside your vehicle if they’re damaged or stolen while you’re traveling to project sites. It should also cover any tools that you leave at your client’s location overnight.

In addition, items entrusted to your business by your clients will be covered. For example, your insurance carrier will reimburse you if HVAC parts that belong to your client were stolen while stored in your warehouse.

Commercial Property Insurance

Commercial property insurance protects businesses against financial losses to their physical assets resulting from fire, theft, vandalism, natural disasters and certain types of water damage. Assets covered by this policy include buildings, equipment, inventory and furniture.

So, if during a storm, a tree to hit falls through a window in your warehouse that allows water to enter, the policy would cover the cost of repairing or rebuilding the damaged structure. This includes the cost of structural repairs, electrical systems, plumbing and other necessary renovations.

What Other Types of Insurance Do HVAC Contractors Need?

If the base HVAC policy doesn't have everything you're looking for, you could add one of if not all of the following insurance types to your policy.

Commercial Auto Insurance

If you drive a commercial van for work, you will need to buy commercial auto insurance because your personal auto policy will not cover losses sustained during business-related drives. For example, if an HVAC technician accidentally rear-ends another vehicle at a stoplight, they would need a commercial insurance policy to cover the other driver’s medical and repair bills.

Similar to a personal auto policy, businesses can buy additional coverages like collision and comprehensive insurance to cover damages to their own vehicles.

Business Interruption Insurance

HVAC contractors can buy business interruption insurance to recover lost income and cover ongoing expenses in the event of a disruption to their normal operations due to covered perils, such as fire, natural disasters or other unforeseen events.

An example would be if an HVAC business’s warehouse burns down in a fire along with all the inventory, tools and equipment inside. As a result, the HVAC contractor cannot continue their operations, leading to a halt in providing services to clients.

Business interruption insurance would provide financial compensation to the HVAC contractor for the income they lose during the period of interruption. This includes the revenue the contractor would have earned if it had been able to continue its operations as usual. Ongoing expenses such as employee wages, rent, utilities and other fixed costs may be covered, too.

Professional Liability Insurance

Professional liability insurance protects HVAC contractors from claims of negligence or inadequate work in their services. It covers legal defense costs, settlements and judgments arising from such claims.

For instance, say a past customer sues their HVAC contractor because their HVAC system started leaking coolant, causing damage to the building. Professional liability insurance would cover the costs of defending against the lawsuit plus any financial settlements or judgments awarded to the client up to the policy limits.

Commercial Umbrella Insurance

Commercial umbrella insurance provides additional coverage above and beyond the limits of the underlying commercial liability policies. It acts as an extra layer of protection for businesses in the event of a catastrophic or high-cost liability claim.

For example, say an HVAC contractor works on a large commercial project in a high-rise building. During the installation, an accident occurs causing the air conditioning unit to fall on someone's foot just before rolling to its side and breaking through a wall. Unfortunately, the losses in injuries and property damages total $1.2 million and the contractor’s liability policy covers only up to $1 million.

In this case, the liability policy would cover the first $1 million and the umbrella policy would cover the remaining $200,000.

How Much Does HVAC Contractors Insurance Cost?

The cost of insurance for HVAC contractors can be as low as $50 monthly.^[2] Keep in mind, however, the type of coverage you have as well as the limits and the insurance company you choose will factor into your HVAC insurance cost.

How To Get Business Insurance as an HVAC Contractor

You can get an HVAC insurance policy by following these simple steps:

1. Understand your needs: Take some time and research the possible liabilities that are inherent to being an HVAC contractor so you know what coverage to look for.
2. Get quotes: The easiest thing you can do is plug in some information and let SmartFinancial do the rest. You'll get multiple quotes from carriers in your area.
3. Research the insurance companies: A good price doesn't necessarily mean a good customer service experience. This is where looking up customer reviews can be helpful. You may very well end up going with a provider that costs more but has better customer relations.
4. Review the policy and pay: If you need to add anything or drop some coverage, let your agent know.
5. Reevaluate your insurance needs every year: There is no reason for you to pay for coverage you don't need. You will also want to look up pricing from other carriers to get the best deal.