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HVAC Contractor Insurance: What You Need To Know

By Charles Munyi


HVAC contractors keep our homes and businesses cool during the summer heat and warm in the freezing winter temperatures. 

Unknown to many, this profession is physically demanding and comes with numerous risks. An air conditioner leak could damage your client’s property or you could injure your back lifting HVAC equipment.

HVAC contractor insurance can protect your business against common perils that could result in bodily injuries, property damage, medical bills, and legal fees. Without adequate coverage, these mishaps could lead you to close your business. 

In this article, we’ll highlight the importance of HVAC contractor insurance, what it covers, and the potential costs. 

What is HVAC Contractor Insurance?

HVAC contractor insurance is liability coverage that individuals operating heating, ventilation, and air conditioning businesses should buy to protect against claims of property damage and third-party injuries.

HVAC contractor insurance helps protect your business against the liability exposure resulting from operations. It can cover repair costs, medical bills, and legal fees arising from your business’s operations. The insurance also includes protection for your business employees and assets. HVAC contractor insurance may also be proof that you’re in compliance with your state insurance laws. 

Why Do HVAC Contractors Need Insurance?

No matter how careful you are, activities involving the installation, repair, and maintenance of heating, ventilation, and air conditioning systems are inherently risky to your business. Accidents may happen and carrying the right type of coverage gives you peace of mind knowing that you’re protected from losses. ‍

HVAC business owners seek protection against these risks: 

  • Business property damage: HVAC contractor insurance helps protect against damage to your business if inventory, tools, equipment, and documents are damaged, destroyed, or stolen. 
  • Third-party property damage: If you damage your client’s property during your business operations, insurance may cover the cost to repair the damage. 
  • Third-party bodily injuries: If an operational accident or completed work inflicts injuries on other people, HVAC contractor insurance may cover the cost of medical care. 
  • Defense costs: Insurance helps cover defense costs if you’re sued for a contract breach, personal injuries like libel and slander, and other damages caused by your business services. 

What Types of Insurance Do HVAC Contractors Need?

There is a wide range of insurance coverages available for HVAC contractors, so business owners can tailor insurance protection to address specific business risks. 

Here are some types of HVAC contractor insurance.

General Liability Insurance

General liability insurance provides coverage against liability claims made against your business by other people. These claims include bodily injury, property damage, and advertising injury. Liability insurance may also pay for medical expenses and defense costs if you’re sued. 

For instance, if you damage your client’s property when installing an HVAC system, general liability insurance may cover the cost to repair the property.

Commercial Property Insurance 

Commercial property insurance protects your business’s physical assets from perils like fire, storms, explosions, theft, and vandalism. Physical assets protected include business property you rent or own, inventory, fixtures, office equipment, furniture, and other items you use in your operations. Commercial property insurance may pay the cost to repair or replace damaged, lost, or stolen business property.

Workers’ Compensation Insurance

Most state licensing boards require that HVAC businesses with employees carry workers’ compensation insurance. It helps protect your business against liability for injuries to your employees while they are working. Coverage may pay for medical expenses related to the injuries and wages lost if they are unable to work. 

Professional Liability Insurance

Professional liability insurance covers costs related to claims that your contracting business made errors or omissions while providing its services. You could be sued for claims of inaccurate advice, negligence, and misrepresentation. For example, if a customer who owns a restaurant is incorrectly advised on the cooling capacity needed for a walk-in fridge and that customer experiences financial loss, professional liability insurance may cover the cost of the claim.

Cyber Liability Insurance

Your HVAC business may store sensitive information about your clients and employees. If this information is compromised or stolen, your business could face financial consequences. Cyber liability insurance can help pay the costs of recovering the data, notifying affected individuals, and managing the damaged reputation. 

What HVAC Contractor Insurance Doesn’t Cover

HVAC contractor insurance may not cover all losses to your business. For instance, a standard commercial property insurance policy may not cover losses from some types of natural disasters and weather events. Customer personal property stored in your business premise may also not be covered. Insurance may not cover intentional and fraudulent acts by your business, say theft by one of your employees.‍

How Much Does HVAC Contractor Insurance Cost?

The cost of HVAC contractor insurance depends on multiple factors related to your business. Some of the factors an insurance company considers when calculating your premium include: ‍

  • Size of your business: The more property to be covered, the higher the cost of property coverage.
  • Size of your payroll: The number of employees in your company will affect your insurance costs. You can expect higher premiums if you have a larger workforce. 
  • Cost of sub-contracted work: Increased costs of subcontracted work can increase the premium of a General Liability policy. 
  • Location: You’ll pay more for insurance if your business is located in an area prone to natural disasters or crime. 
  • Claims history: An insurer will assess your claims history when calculating your premium. You’ll pay more for coverage if you’ve experienced more claims in the past. 
  • Coverage limits: You’ll pay a higher premium if higher coverage limits are needed.

Annual General Liability premiums can be found for as low as $500. Most HVAC contractor insurance policy limits range from $1 million to $2 million. You may need higher limits as your business grows or may be required based on contracts with clients. 

How Quickly Can I Get a Certificate of Insurance?

A Certificate of Insurance (COI) is issued by an insurance carrier or broker to verify that your business is insured. It also summarizes the important aspects and conditions of your policy, such as the policyholder, type of coverage, Additional Insured status, and policy limits. 

A Certificate of Insurance is typically sent to you after signing your insurance agreement. You can also receive it at any time from your insurance agent upon request.

A COI is commonly required where there’s a potential for major liability or loss. Clients and vendors may need it to confirm that you have active and valid insurance coverage. 

HVAC Insurance Requirements for Licensed Contractors

Being a licensed contractor shows your customers you have the professional skills and training necessary for their project. Many local and state laws even require contractors to be licensed to perform services. To obtain your license, you might also have to show proof of business insurance.

The type of insurance and coverage amount varies depending on the location. Many state licensing boards require coverage for worker’s compensation and general liability. 

For example, HVAC contractors in California must carry worker’s compensation insurance, even if they only have one employee. Washington state and Texas both require licensed contractors to have general liability insurance with a minimum coverage amount.

Contact your state’s licensing board to learn more about your state or local municipalities' laws. You should also check insurance requirements for contractors outside of your home state if you plan to do business in another state.

How Does HVAC Business Insurance Differ From HVAC Homeowner Insurance?

HVAC business insurance and HVAC homeowners insurance provide different types of coverage for different needs.

The main difference is that HVAC business insurance policies are commercial policies. An HVAC contractor purchases the policy to protect their business. HVAC homeowners insurance is coverage from a personal homeowners policy. Homeowners buy homeowners insurance to protect their homes from covered accidents.

A commercial HVAC insurance policy, like general liability, protects the HVAC contractor from financial loss if their negligence causes an accident. For example, a contractor works at a client’s house to install a new HVAC unit. They leave their tools on the floor and the homeowner accidentally trips, breaking their wrist. The contractor’s commercial insurance should help cover costs associated with the accident, such as medical bills or legal fees.‍

On the other hand, HVAC coverage in a homeowners policy helps a homeowner recover costs if their HVAC unit is damaged due to a covered accident. For example, a storm rips through a neighborhood and a tree limb falls on the A/C unit. Homeowner’s insurance could cover the cost for the homeowner to replace the unit.

Why Do Insurance Agents Use Pathpoint for HVAC Contractors

Insurance agents trust Pathpoint to find instant, bindable E&S quotes for their clients. Small commercial E&S is our specialty, and Pathpoint helps reduce quoting from days or weeks to just minutes. 

You can jumpstart your submission with your ACORD forms. You’ll also receive a fully pre-filled supplemental application, so no additional questions after you get your quote. Plus, you can save time by e-signing binding paperwork within our platform.

Get HVAC Contractor Insurance

HVAC contractor insurance protects your business against risks associated with your operations. Contact a licensed insurance agent and ask them to get you a Pathpoint quote today.