What Types of Insurance Does an HVAC Business Need?

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HVAC Business Insurance Quotes

Costs for business insurance can vary greatly, and getting insurance quotes from multiple companies is recommended in order to get the best pricing.

Embroker, Hiscox, and CoverWallet all offer easy business insurance quotes at affordable prices.

Quick Reference

A heating, ventilation, and air conditioning (HVAC) business has plenty of work opportunities as most homes and businesses circulate inside air, one way or another. A successful HVAC company will often have repeat customers by building rapport and offering wide-ranging services. For example, an HVAC business may offer installations, repairs, maintenance, replacements, and more.

Commercial insurance is essential as the business works valuable equipment and uses expensive and powerful tools. It protects the business’s financial assets from costly liability and property damage claims.

Additionally, an HVAC contractor license from the city is required in some areas before performing any work. Business licenses typically require a Certificate of Insurance before the license is issued.

Related: Guide to starting an HVAC business

What Are Some Risks for an HVAC Business?

An HVAC business is exposed to risks including:

  • Incorrect installations
  • Causing injury to people or property
  • Employee injuries
  • Equipment damage and loss
  • Automobile accidents

Without insurance coverage, the business pays the legal fees, settlements, medical bills, and repairs. The above list of risks reveals the significance of carrying insurance to protect the business from encountering financial hardships.

Incorrect Installations

Heating, ventilation, and air conditioning work on the homeowner’s property. Incorrectly installed systems cause a myriad of issues. For example, unsealed lines may leak toxic gasses and water. Also, incorrectly installed systems can start a fire or an explosion, potentially causing personal property damage and injuries.

Causing Injury to People or Property

There is a risk of injury to spectators, clients, or passersby while the HVAC technicians and employees are working at the job site. Work on roofs can increase the risk of injuries or property damage from dropped items or falling ladders. Additionally, piles of equipment, tools, and trash are a potential trip hazard.

Employee Injuries

Training and safety precautions reduce the risk of employee injuries, but even so, accidents at work occur—especially during overtime and on emergency calls. Job-related injuries, such as falls, trips, burns, and cuts, are common. Other more serious injuries include:

  • Falls from ladders and roofs
  • Severe burns from welding
  • Respiratory injury from breathing toxic fumes or loose insulation
  • Back or knee injuries from maneuvering heavy equipment

Equipment Damage and Loss

The HVAC business drives between job sites meaning expensive tools, equipment, and supplies are constantly moved and used. As a result, these items have an increased risk of damage while in transport or at the various job sites. For instance, car accidents, equipment breakage, and theft are common reasons equipment becomes damaged or lost.

Automobile Accidents

As technicians and employees drive between job sites, the company has increased exposure to automobile accidents. In addition, emergency service calls increase the risk of accidents because employees may be driving during icy, dark, or stormy conditions. Also, any transport of refrigerants used in air conditioning units increases the risk of a chemical spill which can cause an environmental hazard.

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What Types of Insurance Should an HVAC Business Consider?

Although numerous risk exposures exist, insurance coverage protects the business against a financial fallout. An HVAC business should consider the following policies:

  • General liability – products and completed operations
  • General liability – premises and operations
  • Workers’ compensation
  • Inland marine
  • Commercial automobile insurance

General Liability Insurance – Products and Completed Operations

General liability insurance for products and completed operations covers bodily injury or property damage claims resulting from defective products and incorrect work or installation. For example, HVAC systems installed incorrectly sometimes cause fires, water damage, explosions, and leakage of toxic chemicals, which can harm an individual and their property.

Due to these risks, a liability insurance policy is essential. It provides comprehensive coverage for the business, including payments for the following:

  • Legal defense costs
  • Settlements
  • Medical bills
  • Property damage or repairs

Equally important is providing suitable training and having safety measures in place, but unfortunately, an accident can still occur. You can counteract the potential harm an accident can cause by bolstering your business with professional liability insurance.

General Liability Insurance – Premises and Operations

General liability for premises and operations functions differently than liability coverage for products but is normally covered in the same policy. Liability for premises and operations will cover bodily injury and property damage claims on the business’s property or because of work done at a client’s location.

Not all HVAC companies have a building that clients would come to, but if they did, this policy protects the business from injury claims resulting from slips, falls, or other onsite injuries.

At the client’s location, injuries or damage caused by the business are also covered. For example, a client who is injured by hazards such as a falling object or trips over a pile of strewn tools is covered. This policy also provides payment of legal fees, settlements, medical expenses, and property damage repairs like the previously listed liability insurance.

Workers’ Compensation Insurance

Given that an HVAC company has an increased risk of job-related employee injury claims, they can protect both their employees and themselves with a workers’ compensation policy. For instance, the company’s workers often climb ladders, crawl underneath homes, lift heavy equipment, and work with welding and power tools. These scenarios have an inherent risk of injury or death.

This policy provides the following coverages for employees:

  • Medical expenses
  • Ongoing care
  • Lost wages
  • Disability costs
  • Funeral expenses

A workers’ compensation policy covers injured employees and protects the business from liability exposure, making this policy an essential asset to your insurance portfolio.

Inland Marine Insurance

An inland marine insurance policy protects equipment, tools, and materials while in transport or at a client’s location. The specific coverage is called an Equipment Floater, indicating that the policy floats or follows the equipment wherever it goes.

An HVAC company regularly transports equipment between jobs sites and may rent equipment for bigger projects, such as lifts or cranes. This policy protects equipment against losses from theft, vandalism, breakage or damage, and fires.

As tools are valuable and often targets of theft, insurance is vital to protect the business’s mobile equipment and prevent extra spending on replacement items. Some tips to further assist in replacing lost equipment are keeping a detailed record of equipment and tools, etching serial numbers, and registering tools.

Commercial Auto Insurance

A commercial automobile policy insures all the business’s vehicles, including specialty vehicles and fleets. Employees who drive company vehicles need this coverage to insure against damage and liability claims.

Automobile insurance is particularly important for HVAC businesses that offer 24/7 emergency services because employees and technicians could be driving in poor conditions. For example, storms, nights, ice, snow, and high winds lead to emergency service calls and make for hazardous driving conditions, thereby increasing the chances of a car accident.

Commercial automobile insurance protects your business from accidents that happen with a company vehicle and will cover the following claims:

  • At-fault bodily injuries
  • At-fault property damage
  • Collision damage to company vehicles
  • Non-collision damage to company vehicles (i.e., wind damage, vandalism, and theft)
  • Not-at-fault uninsured motorist coverage
  • Medical payments
  • Rental car reimbursement

Surety Bond

While not officially insurance, many states or commercial clients require a surety bond before starting any work. This type of bond helps to guarantee the completion of a project.

How Much Does HVAC Business Insurance Cost?

The cost of insurance is determined by the amount of coverage needed. Greater coverage is required for large businesses with many employees, vehicles, and services. In contrast, a sole proprietor who services a few clients and doesn’t have additional vehicles or employees needs less coverage, and the insurance will be less expensive.

Some key factors in determining the cost of HVAC insurance include:

  • The number of employees on payroll
  • The number of clients that the business will typically service
  • The type, value, and number of company vehicles
  • The type, value, and number of company tools
  • Any current or past lawsuits or insurance claim

While each business has its unique requirements, the best way to determine the costs is to call an insurance company for a Business Owner’s Policy quote. The insurance company will provide detailed information on adequate coverages and a yearly premium. As a rule, it’s worthwhile to call multiple insurance companies to confirm you get the best coverage for a fair price.

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