As a plumbing professional who's about to start your own business, you need to understand the different types of plumber insurance you need, including general liability (GL) and workers' compensation (WC). Without these policies, your business could be at risk of facing lawsuits that could lead to financial ruin, bankruptcy, and closure.
Getting the appropriate plumbing business insurance policies is of particular importance in a country like the U.S., where litigation is so common.
As The Pew Charitable Trusts points out, U.S. state courts handle around 66 million cases a year. Nearly one in five (19.9%) involve community and business lawsuits, which typically have to do with property and money.
With adequate insurance coverage for plumbers, you can worry less about the financial implications of legal claims that your business may face down the line.
What Insurance Covers Plumbing Businesses?
Several types of insurance policies cover plumbers and their small business insurance needs, with general liability and workers' compensation being two of the core ones. Other policies include:
- Commercial vehicle insurance
- Commercial property insurance
- Business income insurance
What Insurance Do I Need for a Plumbing Contractor Firm?
At the very least, you need a general liability plumbing insurance policy and workers' compensation.
General liability insurance for plumbers is the most basic insurance coverage that you should get, as it can defend against financial setbacks and legal claims filed by customers and third parties. With this policy, you can protect your business from lawsuits involving bodily injury or property damage.
Workers' compensation, on the other hand, helps cover the medical bills and some of the potential income losses that your employees may incur if they get sick or hurt while on the job. According to the U.S. Bureau of Labor Statistics, some of the most common job injuries that afflict plumbers are:
- Cuts (caused by sharp tools)
- Burns (which can result from soldering equipment and hot pipes)
- Falls (such as from ladders)
When Do Plumbers Need Commercial Auto Insurance?
If you wish to operate a vehicle (whether private or commercial), you need auto insurance, which is a legal requirement in most states. If your plumbing business needs a work van, which it likely does for all your tools and equipment, then you need commercial auto insurance for plumbers.
Note that this type of insurance policy differs from your personal car insurance coverage, as it's specifically for plumbers and provides specialized coverage for vehicles used in plumbing businesses. With this coverage, you can protect your company vehicles from:
- Accidents
- Liability
- Theft
- Other vehicle-related damages that could arise as part of the job
Commercial auto insurance for plumbers provides higher coverage limits than personal car insurance coverage, as it accounts for the increased financial and liability risks associated with plumbing business operations.
What Is Commercial Property Insurance for Plumbers?
As a prospective owner of a plumbing business, you'll soon own many physical assets, such as:
- The physical location of your establishment (e.g., brick-and-mortar office)
- All the tools and equipment you need to conduct your business
- Your inventory
- Your business's other "personal" property, such as office computers and furniture
All those items are at risk of damage or loss due to incidents like fires, thefts, or vandalism. However, if you have commercial property insurance, you can worry less about the devastation such events can cause. If they occur, your policy should kick in to help pay for the repairs or replacements of your covered assets.
Are Plumbers Required to Have Business Income Insurance?
No, plumbers aren't usually or legally required to carry business income insurance, but it's still a type of coverage you should consider getting. It can provide you with financial security should your business face a covered incident that causes it to lose income.
An example is during an unexpected event like a storm or fire. In these situations, you may have to temporarily cease business operations, meaning your business won't generate revenue. However, if you have business income insurance, it should replace the income you lose during these days.
How Much Does Plumber Insurance Cost?
From the size of your business to its annual revenue and geographic location, these are some of the factors that can influence your plumber's insurance cost. Because so many variables play a role, you must compare as many quotes as possible from multiple providers.
According to data from Contractor Nerd, a plumbing business worth $500,000 has a total annual insurance cost ranging between $16,210 and $38,420. It also notes that through strategic shopping, particularly by acquiring multiple quotes, plumbing contractors like yourself can discover massive savings.
Frequently Asked Questions
Are There Other Types of Insurance Plumbers Need?
Aside from the ones discussed above, your plumbing business may also benefit from professional liability insurance, also known as "errors and omissions (E&O)." With E&O, you'll get coverage for legal claims that may arise due to professional mistakes or negligence that clients allege caused them financial losses.
An example is if a customer pursues you in court, saying that your advice, which they followed, led to their plumbing problem worsening. Whether or not there is truth in this allegation, as long as you have E&O, your policy should kick in to help pay for your legal defense and related costs.
Will Making an Insurance Claim Lead to Higher Premiums?
Yes. In most cases, filing a claim against one or more of your plumber's insurance policies can increase your premiums. One reason is that each time you file a valid claim, your insurer will have to pay out, which is a "financial loss" to them.
Since they lose profits whenever they settle claims, they'll regard you as a high-risk policyholder. The more often you file claims, therefore, the more likely your insurer will charge higher premiums.
Don't Risk Your Plumbing Business by Going Uninsured
The financial security, stability, and future of your business as a plumber hinge on your and your team's expertise, but it's just as crucial to have risk mitigation strategies, including maintaining adequate plumber insurance coverage.
By having GL, WC, auto insurance, and other applicable coverages, you can protect your firm from devastating financial losses and lawsuits.
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