It takes a lot of work and oversight to run a plumbing business. Whether you’re starting a company from the ground up or expanding your plumbing services and looking for additional coverage, it’s important to find the right plumbing insurance to mitigate risk and financially protect your company.
Plumber insurance offers benefits in other ways, too, as it gives customers the peace of mind that your company is financially backed in potential unforeseen events, such as an accident, property damage, or injuries related to the job.
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How much plumbers insurance your company needs depends on many factors, but plumbing insurance policies typically cover:
Accidental injuries
Property damage
Employee wages after a work-related injury
Vehicles and equipment
Unintentional faulty workmanship
Legal fees
Whether you’re just starting your business or shopping for additional coverage or add-ons, finding the right plumbing business insurance is an important step as you plan for your plumbing company’s growth. We’ll define the most common plumbing insurance policies to help you choose what types of insurance to consider to protect your investment.
Disclaimer: ServiceTitan doesn’t claim to be insurance specialists or financial advisors, and is presenting this information for educational and informational purposes only. Consult experts for your insurance and financial planning needs.
What is Plumbing Insurance?
Plumbing insurance is a type of protection businesses invest in to mitigate risks from lawsuits, theft, and property damage. This includes the following policy types:
Commercial auto insurance and general liability
Workers’ compensation
Business owner’s policy
Surety bonds
Umbrella insurance policy
Equipment coverage
Plumbing insurance is an important part of any plumbing business's risk-management plan. Taking out the right insurance policies protects your business from financial losses that could put you out of business.
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Who Needs Plumbing Insurance?
Plumbing insurance benefits any professional who works in the plumbing industry, including plumbing contractors, plumbing business owners, and home builders and remodelers. Many states and cities require certain types of insurance to own a business or become a licensed plumber.
The specific coverage one needs depends on a number of factors, including whether they’re self-employed or covered under a company’s existing policies. For business owners, it could depend on the size of their company, location, and types of plumbing services offered. It’s best to talk to the licensing board or an insurance professional in your area to ensure policy limits and adequate protection.
What Types of Insurance do Plumbers Need?
To determine which types of coverage suit your plumbing company’s needs, it’s important to understand the different types of business insurance for plumbers.
Let’s get a detailed look at some of the most popular plumbing business insurance policies.
Commercial General Liability Insurance
Many mishaps can occur in plumbing system work, from water heater repair resulting in water damage to faulty sump pump installation. Plumbers’ liability insurance covers accidental injuries and property damage related to plumbing issues.
In many places, proof of general liability insurance is required to obtain a plumbing contractor license, or when signing a commercial lease or a client contract.
Plumbing liability coverage protects your business if your company’s work causes property damage or bodily injury to customers.
What does plumbing insurance cover? Examples of plumbing liability insurance coverage include:
Repair costs for property damage to a customer’s home
Physical injury to a customer leading to a lawsuit
Plumbing installation problems
Workers’ Compensation Insurance
A workers’ compensation insurance policy pays the medical bills and payroll costs of employees injured while working for your plumbing company. Many states require workers’ compensation insurance for plumbing businesses with employees.
Workers’ compensation insurance ensures your injured employees get medical care and compensation for lost wages if they are injured on the job, and usually protects employers from lawsuits.
More than 37,000 nonfatal work injuries and illnesses were reported for U.S. plumbing and HVAC contractors in 2021, according to the most recent figures from the U.S. Bureau of Labor Statistics.
Overall, the construction industry experienced 1,008 fatal work injuries in 2021, the second most of any industry sector, according to recent data from the agency.
>> Follow these 8 plumbing safety tips to keep technicians safe.
Each state differs on workers’ compensation requirements for employees or for those who hire subcontractors. To find out your state’s requirements, visit your state’s workers’ compensation commission website.
Commercial Auto Insurance
Plumbing service technicians usually drive from one job to the next in company vehicles. If your employee causes a collision, it could result in costly property damage and medical costs if it involves injury to another motorist.
Most states require registered vehicles to carry liability insurance. Just as you protect your personal vehicles with insurance, it’s necessary to have commercial auto insurance to protect your company’s vehicles and provide protection for you and your employees.
Commercial auto insurance can protect your company-owned vehicles from:
Collision damage to another driver’s vehicle
Property damage in an accident
Medical bills arising from a third-party injury
Theft or vandalism
Commercial Property Insurance
Similar to a homeowners’ insurance policy, business personal property insurance protects your business property investment, including office space and any tools or equipment stored on the company’s owned or leased property.
A commercial property insurance policy typically covers the cost of the building, if owned by the business, and contents owned by the company, in the event of disasters such as fire or vandalism.
Other Plumbing Business Insurance Policies for Companies to Consider
In addition to the main insurance policies described above, plumbing business owners should also consider these additional types of commercial insurance for plumbing contractors:
Business Owner’s Policy (BOP)
One option for small- to medium-sized companies is a Business Owner’s Policy, or BOP. This policy typically bundles commercial general liability insurance to cover personal injury or damage caused while on the job, and commercial property insurance, which covers repairs and equipment losses at the company’s office and other property used for the plumbing business.
To be eligible for most business owner’s policies, your plumbing company must:
Employ fewer than 100 people.
Make less than $1 million in annual revenue.
Since a BOP is generally a cheaper option than individual policies, it can offer an affordable and more flexible option for plumbing companies to grow their businesses.
Some BOPs also include business interruption coverage to provide plumbing business owners with financial assistance if forced to close or relocate for repairs after a covered disaster.
BOPs do not cover professional liability, auto insurance, workers’ compensation, or other employee insurance. You will need to purchase separate insurance policies to cover your plumbing company’s professional services, employees, and company vehicles.
A business owner’s insurance policy can be tailored to meet your company’s needs. Depending on your insurance provider, you can add coverage to a BOP for:
Data breaches
Equipment breakdown
Employment practices liability
Loss of income
Cover Additional Liability Risks with these Plumbing Insurance Policies
Just as it’s crucial to protect your company’s physical investment, it’s critical to protect the quality of your company’s work.
While your company’s commercial general liability insurance protects against damages involving other people’s property, business owners should consider adding professional liability insurance or an errors and omissions policy to cover any unintentional mistakes or mishaps related to a job.
Professional plumbers’ liability insurance can cover legal fees and judgments related to:
Work errors or mistakes
Negligence, whether actual or alleged
Incomplete work
Inaccurate advice
Misrepresentation of services or skills
Mistakes occur, even by experienced professionals. You don’t want one mistake to financially drain your company. Professional plumbers liability insurance covers legal fees and judgments awarded against your company in the event your company faces a lawsuit claiming the work performed was unsatisfactory.
Policy coverage remains limited to the company’s owners and employees, and usually does not cover work performed by subcontractors. Professional plumber liability insurance coverage also does not cover nonfinancial losses or losses caused by intentional or dishonest acts, such as purposely using subpar materials.
If your company is found liable for mistakes that cause damage after a job is completed, an errors and omissions insurance policy covers the cost to repair or redo the faulty work, as well as any legal defense against those claims.
E&O policies primarily cover larger general contractors or big businesses, but with consumers demanding more from home service companies and a rise in civil lawsuits, insurance providers started introducing more affordable E&O policies to protect plumbing contractors.
Umbrella Liability Insurance
If a civil suit judgment or other incidents exceed your plumbers’ liability insurance or business owner policies’ limits, an umbrella liability insurance policy gives you assurance your plumbing company can cover the additional costs.
In essence, umbrella liability is a backup policy to provide extra coverage and protection for your company. An umbrella liability policy typically provides extra coverage for general liability insurance, commercial auto liability insurance, and employers’ liability insurance, a component that’s often included in workers’ compensation.
Umbrella liability policies do not cover claims related to commercial property insurance or professional liability insurance.
Equipment and Inland Marine Insurance
Plumbing tools and equipment are necessities in the plumbing industry. Insurance provides protection in the event of stolen tools or damaged equipment in an accident.
Equipment insurance can be added to your plumber liability insurance or business owner’s policy. It generally offers coverage for small tools, mobile equipment, and equipment less than five years old, but does not cover damage from general use and wear.
More expensive equipment might require inland marine insurance, especially if your company ships high-value products or equipment. An installation floater is a type of inland marine insurance that covers materials in transit until it is installed or put to use.
>> Related: Plumbing Van Organization: Maintenance Tips & Best Practices
Surety Bonds
Not technically insurance for your plumbing company, a surety bond ensures your company’s plumbing work meets professional construction standards.
Many municipalities and states require a minimal surety bond for plumbing contractors seeking a contractor license or permit.
A surety bond involves three parties: the obligee, the entity requiring the bond; the surety, the bonding company that issues the bond and guarantees the work; and the principal, or the plumbing contractor. It’s different from insurance for plumbers because you repay the surety company for successful customer claims.
Bonds guarantee your work, so homeowners and business owners have the confidence you’ll do the job right. If not, they know they could get reimbursed if they prove they paid for illegal or incomplete work.
Plumbing Insurance Requirements for Licensed Contractors
Do plumbers need insurance? Plumbing licensing requirements vary by state and municipality. In many places, to obtain a plumbing contractor license requires proof of general liability insurance or bodily injury insurance, and some require additional insurance policies.
Florida, for example, requires $100,000 liability insurance and $25,000 property damage insurance to obtain a certified plumbing contractor license. In Illinois, plumbing contractors must prove they have $100,000 general liability, $300,000 bodily injury, and $50,000 property damage.
It’s important to check in the area where you are performing service to make sure you have all the necessary licenses, permits, and insurance requirements in place, so you won’t face any legal problems along the way.
How Much Does Plumbing Insurance Cost?
The average cost of small-business insurance varies because certain risk factors and specific coverage limits determine business policy rates.
Your plumber insurance cost depends on:
Location and size of service area
Company revenue
Number of employees
Technical and business experience
Type of plumbing insurance
Because you work on a customer’s property in a high-risk profession, your plumbing liability insurance needs and average cost of small-business insurance will be higher than other industries.
A standard plumbing liability insurance policy for small businesses provides up to $1 million perto cover a claim and up to $2 million total during the policy lifetime and costs between $27 and $49 per month, according to General Liability Insure.
A typical premium range for a business owner’s policy with the same amount of claim coverage is $750 to $2,400 per year, with a maximum deductible of $1,000.
Commercial auto insurance premiums cost $2,704 annually on average, while contractor tools and equipment coverage costs about $224 annually, according to Insureon.
Your plumbing company may be able to save by bundling some of your plumbing contractor’s insurance into one plan.
Workers’ compensation rates are based on every $100 of your business payroll but vary depending on the state your business resides in, risk factors of the industry, and your company’s claims history, according to insurance companies.
How Plumbing Software Gives You Added Protection
In addition to having plumbing contractor insurance, it’s essential to keep track of every aspect of your company, from call tracking to inventory of materials and tools.
ServiceTitan plumbing software connects your office with the field and allows for real-time updates, wherever your team works. Track jobs and revenue, sort transactions, and compile stats with field reporting software that streamlines your company’s efficiency and provides the data you need to know and grow.
And with inventory software, you can manage all of your company’s inventory with a centralized workflow to track purchases, vendor returns, transfers, and adjustments in one place—ensuring your trucks are always ready to go.
How to Find the Right Plumbers Insurance Policy and Insurance Provider
Whether you’re just starting out and need basic, minimum coverage, or you’re following your company’s growth plan and need additional levels of protection, you‘ll want to find the right policy and insurance agent.
As with any financial commitment, it’s important to do your research and compare insurance quotes, extent of coverage, and exclusions. Before you choose an insurance provider, get referrals and check reviews or complaints.
To determine if an insurance provider is right for you:
Find out if they’re familiar with insurance for plumbers.
Check the financial strength of the provider’s insurance companies.
Shop and compare prices and benefits.
A qualified insurance professional will conduct an analysis to help you determine what plumbing insurance policies you need and the amount of coverage to protect your company.
Once you know your needs and invest in financial protection, you’ll be ready to take the next step in your company’s growth.
ServiceTitan Plumbing Software
ServiceTitan is a comprehensive plumbing business software solution built specifically to help service companies streamline their operations, boost revenue, and achieve growth. Our award-winning, cloud-based platform is trusted by more than 100,000+ contractors across the country.
