Whether you’ve been in the HVAC business for years or just starting out your HVAC contractor business, you need to have contractor insurance to protect your business. And in California, it’s the law. Of course, not all insurance is created equal.
Contractor License Bond
In California, in order to become a contractor you must take the steps to become bonded. What is a surety bond? The simple answer is that a surety bond protects the client, whereas insurance protects the company. A surety bond is basically an insurance policy to ensure that the customer is protected against your business. That’s why a surety bond is required to become licensed.
HVAC Business Owner Policy
The most popular insurance package for business owners, not just HVAC contractors, is a Business Owner Policy (BOP). A BOP combines the most common business insurance policies: General Liability and Property Insurance. By bundling these together, the contractor gets a better deal than if they were to purchase them separately.
General Liability
General liability is what most people consider standard business insurance. These policies protect the assets of the company and protect the company if the company is sued. Even the most experienced contractors can get a disgruntled client or have a trusted employee involved in some sort of accident.
However, be aware that there are some additional riders that might be necessary for your HVAC business, such as a mold rider. Most contractor general liability policies exclude damages from mold. If you happen to have a client that finds mold soon after repairs are done (even if the mold is not your responsibility), they could hold you liable and take you to court. You would need an additional rider to protect your company against the lawsuit.
Property Insurance
While general liability protects your company against lawsuits, property insurance protect your business interests due to loss of property. As an HVAC specialist, you are undoubtedly aware of how easily property can get damaged from fire, vandalism, theft, or other various causes. As with homeowners property insurance policies, loss from earthquakes and floods are not usually covered. So if your business is located in an area prone to earthquakes or floods, you will want to get additional riders.
Commercial Auto
Chances are your company has one or more vehicles used to perform HVAC contractor duties. Commercial auto insurance policies protect your company from the skyrocketing costs of car accidents, repairs, and any legal expenses.
Worker’s Compensation Insurance
Accidents happen when they are least expected, hence why they are called accidents. Even with the most robust safety policies in force, your business should, and is required to, protect your employees in case something goes wrong. A HVAC contractor is especially susceptible to on-the-job injuries and thus, lawsuits and settlements.
Umbrella
Umbrella insurance policies offer additional insurance to cover costs if they exceed your main policies. Usually, umbrella policies will support the contractor liability insurance policies, such as general liability, commercial auto, and employer’s liability. These policies are relatively inexpensive and can provide coverage without exorbitant premiums.
Additional Riders and Policies
Depending on your business, you may need additional riders and policies. Some of the most common additional insurance riders and policies for HVAC insurance include the following:
Subcontractor Bonds
If you frequently outsource your work to subcontractors, then you might want to consider getting subcontractor bonds. Subcontractor payment bonds and subcontractor performance bonds can protect your company if your subcontractor fails to do its duties.
Inland Marine
Many HVAC contractors need inland marine insurance to insure that property is covered while in transit. Sometimes, this is included in the property insurance policy, but at other times, a separate rider is required.
Employee Benefits
If you have more than one employee, then you are probably offering employee benefits.
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