Repairing and installing heating, ventilation, and air conditioning systems opens your company up to a number of risks, including injury to members of the public or employees, property damage caused by your work, auto accidents, and disasters like fires. Purchasing sufficient business insurance is crucial to providing your business financial protection from these risks.

What insurance coverage do I need as an HVAC contractor?

There are many types of insurance coverage to consider, but these policies are particularly relevant to HVAC contractors:

General Liability Insurance

General liability insurance can protect your company from claims of third-party bodily injury or property damage. Since HVAC technicians work at a variety of locations where unintentional injuries or damage to third-party property could occur, this is a key coverage that many clients will require you to have before hiring you. 

Although you can greatly reduce the likelihood of incidents by enforcing safety precautions, there’s still a possibility for accidents, including welding operations that could start a fire, boiler work that could cause an explosion, or electrical work that could cause burns or electrocution. Power cords or tools left out could cause people to trip and fall, while work on ladders or scaffolds brings a risk that items could be dropped and cause injury or damage. If one of your employees unintentionally damages someone else’s property or causes an injury, you could be sued for damages. In these cases, general liability insurance can cover legal fees, judgments, and settlements, as well as any medical payments.

General liability insurance also provides coverage for your completed work. Mistakes in HVAC installation can cause fires, carbon monoxide exposure, or other damage or injury. General liability protects you from claims of property damage or injuries that take place away from your business’s premises and are caused by your work after it has been completed. 

Examples:

• Property damage: While installing an air conditioning condenser unit on a client’s roof, your employee accidentally damages a skylight. Your general liability insurance would pay for repairs. 
• Bodily injury: You’re repairing the air conditioning system at an office building when one of the building’s employees trips over your drill’s power cord and falls, breaking her wrist. Your insurer would cover her medical fees and legal expenses if she sues.
• Products and completed operations: After you install a heating system for a local business, a fire breaks out because of a mistake in installation. Your general liability insurance would cover the damages. 

Commercial Auto Insurance

It’s common for HVAC companies to own a fleet of vehicles for visiting client sites, transporting equipment, and providing services. If one of your vehicles is involved in an accident, the cost of paying for repairs and potential damages could be high. This is why commercial auto insurance is a critical coverage.

Commercial auto insurance covers third-party bodily injury, property damage, or pollution cleanup that results from an at-fault accident involving company vehicles. Commercial auto insurance also covers the value of the vehicle itself if it’s damaged by a collision or another peril, like a falling object or theft.

Example:

• While driving a company truck to a job site, your employee hydroplanes on a wet road and collides with a car in the next lane. Your commercial auto insurance would pay for the damage to both vehicles and medical costs for injured occupants of the other vehicle.

Workers’ Compensation Insurance

No matter how careful your employees are, HVAC work can present dangers. Workers may suffer strains or sprains from lifting heavy objects, cuts from working with hand tools and sheet metal, or electrical burns or electrocution from high-voltage lines. Since employees often work above ground, falls or injuries from falling objects are also common. 

If your employees are injured or fall ill as a result of their work, workers’ compensation insurance will provide funds for their medical expenses and a portion of lost income if they are unable to earn their usual wages. Workers’ comp also provides financial benefits to surviving dependents if an employee dies in a work-related accident. This coverage is legally required in almost all states, and it’s crucial to make sure you comply with your states’ regulations, as failing to do so can result in major fines. 

Example:

• Your employee suffers an electrical shock while repairing an air conditioning system. The employee’s hands are injured. Workers’ comp would pay for her medical bills and a portion of lost income while she recovers and is unable to work.

Commercial Property Insurance

Commercial property insurance protects the value of your business’s property. If an unexpected disaster damages or destroys rented or owned space, tools, supplies, equipment, or other property, commercial property insurance will cover the loss. Commercial property insurance covers many common perils including storms, hail, fire, vandalism, and water damage.

Commercial property insurance covers the following:

• Buildings belonging to or leased by your company
• Contents of the building, including tools, equipment, and inventory
• Property of others while it is under your care, custody, or control

Example:

• A fire breaks out in your HVAC company’s offices and damages computers, furniture, and stored equipment. Your commercial property insurance would reimburse you for the lost items.

Inland Marine Insurance

Inland marine insurance provides financial protection for your business property that does not remain at a fixed location and is not covered by a standard commercial property insurance policy. HVAC technicians typically use portable equipment such as welders, scaffolding, hoists, and other items that could be damaged in transit or at a job site; inland marine insurance would cover these items. 

In addition, heating and cooling units are high-value items that could be damaged in transit or during installation. Installation floaters are a common type of inland marine insurance used to cover materials and equipment for installation projects. These policies are specifically designed to cover your business while building or renovations are in progress. Installation floaters cover materials, supplies, and equipment while in transit, waiting to be installed, and during the installation process. Coverage plans can cover a specific project or projects over a period of time.

Example:

• The new air conditioning system you were planning to install for a client is damaged in transit and you must order a new one. Inland marine insurance would cover the loss.

Pollution Liability Insurance

Pollution liability insurance covers bodily injury, property damage, and cleanup costs caused by pollutants that are released in the course of your company’s work. HVAC contractors may work with refrigerants and fuel for heating systems, which could contaminate the area if spilled or improperly disposed of. If you are held liable for causing pollution-related damage, you may be required to pay for costly cleanup costs and fines. Pollution liability insurance will provide funds to cover claims if your company causes environmental damage.

Example:

• While removing an old HVAC system, refrigerants are accidentally spilled, contaminating the area. Pollution liability insurance would cover cleanup costs and legal fees.

Equipment Breakdown Insurance

HVAC technicians may rely on key equipment like hoists or welders that may not be easy to replace or repair. If equipment breaks down, it can cause delays to your work and reduce your income. Although some business owners may believe that commercial property insurance would cover these situations, equipment breakdowns are typically excluded from commercial property coverage. If a piece of equipment breaks down due to something internal, like a mechanical failure, equipment breakdown insurance can step in, providing funds to repair or replace damaged equipment and covering lost business income while the equipment is out of commission.

Example:

• Your air conditioning repair project is delayed when a vacuum pump stops functioning. Your equipment breakdown insurance would pay for a replacement and reimburse you for lost income.

Commercial Crime Insurance

Commercial crime insurance provides financial protection from losses caused by theft, robbery, fraud, forgery, burglary, and other crimes. This coverage applies both to crimes committed by outside parties and crimes committed by your own employees. Since they work at many worksites and often use valuable equipment and tools, HVAC contractors can be a target for theft, and there’s a risk that employees could commit fraud or other crimes. Commercial crime insurance can reimburse you for crime-related losses.

Example:

• You discover that one of your employees, who handles company accounting, has been fraudulently increasing his own paychecks, embezzling over $40,000. Your commercial crime insurance would cover the loss. 

Additional Coverages

• A business owner’s policy combines general liability, property, business income, and extra expense coverage into a single package. For qualifying small and midsize businesses, this type of insurance can help save money on premiums while obtaining a wide range of coverage.
• Business income coverage will reimburse you for lost income and operating expenses if your business is unable to operate due to a covered reason, such as fire, storm damage, or other property damage.
• Employment practices liability insurance protects your business against lawsuits by prospective, current, or former employees accusing your business of wrongful treatment such as discrimination, harassment, or other employment-related issues.

Pricing and Quotes

Pricing for HVAC contractors insurance will vary based on the type of insurance coverage and the risk profile of your business. Insurers consider factors such as:

• Business size
• Industry
• Location
• Number of employees
• Claims history

Businesses with higher risks will have higher premiums than those deemed lower risk. For example, an HVAC installation business with a history of frequent claims will face higher premiums. Premiums also rise as you increase the limits of insurance. Different insurance companies have different models for rating risks, so it is worth comparing pricing across different insurers.

In order to get an accurate estimate on pricing, it’s best to get a quote from a reputable insurance company. Below we’ve highlighted a few of our trusted partners who offer coverage for HVAC contractors:

Provider	General Liability	Professional Liability	Business Owner's Policy
Embroker	??	??	??
CoverageSmith	??	??	??
CoverWallet	??	??	??
Hiscox	??	??	??
Thimble	??	??	??

Final Word

Obtaining a broad range of business insurance is crucial for HVAC companies. Insurance can provide financial protection from the many risks that could arise, from property damage or physical injury to auto accidents, and it can also legitimize your business in the eyes of your customers. With the right coverage, you and your clients will feel confident in the knowledge that your company will be able to cope even if a major incident arises.