Mechanical Contractors Insurance Policy Information
Mechanical Contractors Insurance. Mechanical contractors install, repair, and maintain pipe-based systems, including related ducts and vents. Some offer design services. While many are exclusively industrial, some are branching into residential applications in order to supply radiant/hydronic heat or installing residential fire protection systems.
While the installation of heating, refrigeration, plumbing, and fire protection systems are common, mechanical contractors may install the process piping used by manufacturers, health care facilities, and utilities.
While ductwork may be fabricated on site, measurements are generally taken and the ductwork is fabricated at the shop or by a third party, then returned for installation.
As a mechanical contractor, you are in charge of some of the most crucial components of a property.
Depending on your specific business, your line of work may include handling Mechanical Contractors systems, plumbing, piping, and refrigeration, and more; the very foundations of convenience for any home or commercial property. However, while your job is extremely important, it certainly is not without risks.
In the event that something goes awry, it's important that you have the right type of mechanical contractors insurance protections in place to protect your business, your clients, your employees, and yourself.
Mechanical contractors insurance protects your business from lawsuits with rates as low as $47/mo. Get a fast quote and your certificate of insurance now.
Below are some answers to commonly asked mechanical contracting insurance questions:
- What Is Mechanical Contractors Insurance?
- How Much Does Mechanical Contractors Insurance Cost?
- Why Do Mechanical Contractors Need Insurance?
- What Type Of Insurance Do Mechanical Contractors Need?
- What Does Mechanical Contractors Insurance Cover & Pay For?
What Is Mechanical Contractors Insurance?
Mechanical contractors insurance is a type of insurance designed specifically for businesses that perform mechanical work such as HVAC installation, plumbing, and electrical services.
This insurance provides coverage for a variety of risks associated with mechanical contracting, including liability for property damage or injury to others, damage to tools and equipment, and loss of business income due to job site closures. This insurance typically includes general liability insurance, workers' compensation insurance, commercial auto insurance, and property insurance.
The coverage limits and types of coverage can vary depending on the specific needs and risks of the mechanical contracting business.
How Much Does Mechanical Contractors Insurance Cost?
The average price of a standard $1,000,000/$2,000,000 General Liability Insurance policy for small mechanical contractors ranges from $47 to $59 per month based on location, size, payroll, sales and experience.
Why Do Mechanical Contractors Need Insurance?
There are several inherent risks associated with owning an operating a mechanical contracting business. working with heavy machinery, electricity, plumbing, piping; climbing structures; tunneling underground; these are just some of the risks that you are exposed to.
Add in the fact that you are working on someone else's property, and the fact that accidents can happen at any time, and it's easy to understand why commercial insurance is crucial for mechanical contractors in.
For instance, if a client claimed you failed to deliver a service that you stated you would provide and files a lawsuit against you or if an employee is injured on the job, you could be looking at hefty legal fees and medical expenses.
Without insurance, you would be responsible for paying the costs of these expenses out of your own pocket, and those expenses can be financially crippling.
By carrying mechanical contractors insurance, instead of paying for the costs that are associated with any liabilities yourself, your insurance provider will help to cover the expense.
In other words, commercial insurance can help to prevent you from going bankrupt; hence the reason why it is one of the most important investments you can make for your mechanical contracting business.
What Type Of Insurance Do Mechanical Contractors Need?
As with any business, the type of mechanical contractors insurance you for your should carry for your business depends on the specific needs of your business; but the following policies are the most highly recommended:
- Commercial General Liability - Every business owner - including mechanical contractors - need to carry commercial general liability insurance. This type of coverage protects your business against third-party injuries and damages. It also covers third-party legal claims. For instance, if a vendor slips and falls while visiting your business, commercial general liability insurance will help to cover the cost of any related medical care; or, if you damage a client's property while installing an Mechanical Contractors system and that client files a lawsuit, your policy will cover the cost of any damages and defense fees.
- Errors and Omissions - Also known as professional liability insurance, or simply E&O insurance, this coverage protects you against any errors or omissions that a client claims you made in the services you provided. For example, if you stated that you would provide a specific service but you failed to deliver that service and a client takes legal action, E&O insurance will help to cover legal defense fees, as well as any damages that may be awarded to the client. In other words, this type of policy protects you from financial losses that are associated with mistakes that you or your employees may have made.
- Business Auto - Your personal auto insurance policy probably won't cover any vehicles that are used for business; therefore, if you or your employees use vans, trucks, or any other vehicles to get to job sites, for example, you'll need to carry a commercial auto insurance policy. This type of policy provides insurance for any damaged vehicles or other property damages that are caused by your business vehicles; for instance, if you rear-end another driver in your work van, your commercial auto insurance policy will cover the cost of any damages to the other driver's vehicle.
These are just some of the mechanical contractors insurance policies that should be part of the commercial package. Other policies that are highly recommended include workers' compensation and completed operations; just to name a few.
Mechanical Contracting's Risks & Exposures
Premises liability exposures at the contractor's premises are usually limited due to lack of public access. At the job site, the electrical voltage must be turned off during installation in order to reduce the risk of electrical burns or electrocution to others entering the area and turned back on after work stops, all while minimizing any disruption of electrical service to other homes or businesses in the vicinity. Unprotected welding presents the potential for burns or setting the property of others on fire.
The contractor's employees can cause damage to the client's other property or bodily injury to members of the public, or employees of other contractors. Tools, power cords, and scrap all pose trip hazards even when not in use. If there is work at heights, falling tools, or supplies may cause damage and injury if dropped from ladders, scaffolding, cranes, or helicopters. Pressure-testing boilers, other pressure vessels, and piping can result in explosions or fire. The job site and the equipment (such as cranes) may create an attractive nuisance hazard to children who enjoy climbing.
Pedestrians and vehicles must be protected from falling objects through barricades and netting. Work with sterile environments will require an extra degree of care as the introduction of contaminants into the area may result in a severe loss. Mistakes made by employees engaged in service, repair and maintenance operations at a working utility or manufacturing operation could cause the facility to shut down.
Completed operations liability exposures can be severe due to improper wiring or grounding. System malfunctions may result in a wide range of damage, from a simple water leak to a major gas explosion, depending on the nature and extent of the work done by the mechanical contractor. If a system malfunctions, it may be difficult to quickly determine the cause. Specialists may be required to determine whether it arose from improper operation and maintenance, faulty system design, faulty manufacture, or faulty installation.
The absence of an aggressive quality control program that documents full compliance with all construction, material, and design specifications may indicate a morale hazard and make it impossible to defend against serious claims. Hazards may increase in the absence of proper record keeping of work orders and change orders, as well as inspection and signed approval of finished work by the customer.
Environmental impairment liability exposures may arise if the contractor is responsible for the disposal of replaced equipment and the use, transportation and disposal of fuels and related pollutants due to the potential for contaminating air, ground, or water. Old air conditioning equipment may contain PCBs. Proper written procedures and documentation of the transportation, disposal, and spill control processes are important.
Workers compensation exposures vary based on the size and nature of the job. Both residential and commercial work involves lifting, working with hand tools, wiring, and work with sheet metal and piping materials. Cuts and puncture wounds from the fabrication and installation of sheet metal for ducts and vents, back injuries from lifting, such as hernias, strains, and sprains, electrical burns, slips and falls, foreign objects in the eye, and inhalation of fumes are common.
Electrocution can occur from the use of high-voltage lines. Any work performed at heights may result in injury or death due to falls or being struck by falling objects.
Complications arising from the use, misuse, maintenance, or transportation of large, heavy machinery must be identified and evaluated. Welding can cause eye damage and burns. If welding must be done in confined spaces, proper ventilation and fire protection are essential to prevent or reduce injury to workers.
In repair and reinstallation operations, workers encounter lead dust or old insulation to be removed, some of which may include "friable" (easily crumbled) asbestos. Procedures must be in place to identify and handle this exposure safely. Work on pressurized vessels and process piping presents unique hazards with potentially severe consequences.
Property exposures at the contractor's own location usually consist of an office, a shop, and storage for materials, equipment, and vehicles. Ignition sources include electrical wiring, heating, and air conditioning systems. If repair operations involving welding or brazing take place on premises, the exposure increases. Welding involves the use of tanks or gases that must be stored and handled properly to avoid loss.
The absence of basic controls such as chained storage in a cool area and the separation of welding from other operations may indicate a morale problem. Air conditioning and heating systems and their components may be targets for theft. Appropriate security controls should be taken including physical barriers to prevent entrance to the premises after hours and an alarm system that reports directly to a central station or the police department.
Crime exposure is from employee dishonesty. Background checks should be conducted prior to hiring any employee. All orders, billing, and disbursements must be handled as separate duties and annual external audits conducted. All items should be physically inventoried on a regular basis to prevent theft. Copper cable may be targeted by thieves.
Inland marine exposures include accounts receivable if the contractor bills customers for services, computers (which can include design and project management software), contractors' tools, and equipment, including hoists and scaffolds, goods in transit, installation floater, and valuable papers and records for clients' and suppliers' information. If large items are lifted by crane to rooftops for installation or retrofit, or dropped into place by helicopters, drops or falls from heights could damage the units.
Because an accident may trigger both equipment and installation coverages, many contractors prefer to hire cranes or helicopters with licensed operators. The mechanical contractor may rent, lease, or borrow equipment from others, or rent, lease or loan equipment to others, which presents additional risk as the operator may be unfamiliar with the operation of the leased or borrowed item. Goods in transit consist of tools and equipment as well as product required to complete the installation at the job site.
Heating and refrigeration units can be of high value and susceptible to damage in transit, frequently requiring expertise in loading and unloading to prevent shifting or overturn. If the units to be installed are delivered to the job site in advance, the contractor will need an installation floater. Machinery, tools, and building materials left at the installation site are exposed to loss by theft, vandalism, damage from wind and weather, and damage by employees of other contractors.
Commercial auto exposures are generally limited to transporting workers, equipment, and supplies to and from job sites. If vehicles are used to deliver heating, and air conditioning units or oversized piping, special modifications or built-in equipment such as lifts and hoists may be required. Large air conditioners may be awkward and require special handling and tie-down procedures.
Drivers should be properly trained to prevent overturn and to navigate through high traffic areas. Serious property damage or injury to employees of other contractors, passing pedestrians, or motorists can arise during loading and unloading equipment and materials. All drivers must have appropriate licenses and acceptable MVRs. Vehicles must be maintained and the records kept in a central location.
What Does Mechanical Contractors Insurance Cover & Pay For?
Mechanical contractors may be sued for a variety of reasons, including:
Construction defects: If the mechanical contractor is responsible for defective work that leads to property damage or personal injury, they may be sued by the property owner or injured party. If the mechanical contractor has a general liability insurance policy, it can cover the cost of damages and legal fees in case of a lawsuit related to property damage or personal injury caused by their work.
Breach of contract: If the mechanical contractor fails to meet the terms of their contract with a client, they may be sued for breach of contract. A professional liability insurance policy (also known as errors and omissions insurance) can cover the cost of legal defense and damages if the mechanical contractor is sued for breach of contract.
Workplace injuries: If an employee of the mechanical contractor is injured on the job, they may sue the contractor for negligence or unsafe working conditions. Workers' compensation insurance can cover the cost of medical expenses and lost wages for an injured employee, as well as provide legal defense if the employee sues the contractor.
Property damage: If the mechanical contractor causes damage to a client's property during the course of their work, they may be sued for the cost of repairs. General liability insurance can cover the cost of property damage caused by the contractor's work.
Failure to complete work: If the mechanical contractor fails to complete work on time or at all, they may be sued for breach of contract or non-performance. A surety bond can provide financial protection to clients in case the contractor fails to complete work or meet contractual obligations.
Mechanical contractors can protect themselves against lawsuits by carrying the right insurance coverage.
Commercial Insurance And Business Industry Classification
- SIC CODE: 1711 Plumbing, Heating and Air Conditioning
- NAICS CODE: 238220 Plumbing, Heating and Air-Conditioning Contractors
- Suggested Workers Compensation Code(s): 5183 Plumbing NOC & Drivers, 5188 Sprinkler Installation & Drivers, 5537 Heating, Ventilation, Air-Conditioning and Refrigeration Systems - Installation, Service and Repair, Shop, Yard & Drivers
Description for 1711: Plumbing, Heating and Air-Conditioning
Division C: Construction | Major Group 17: Construction Special Trade Contractors| Industry Group 171: Plumbing, Heating And Air-conditioning
1711 Plumbing, Heating and Air-Conditioning: Special trade contractors primarily engaged in plumbing, heating, air-conditioning, and similar work. Sheet metal work performed by plumbing, heating, and air-conditioning contractors in conjunction with the installation of plumbing, heating, and air-conditioning equipment is included here, but roofing and sheet metal work contractors are classified in Industry 1761. Special trade contractors primarily engaged in electrical work are classified in Industry 1731.
- Air system balancing and testing-contractors
- Air-conditioning, with or without sheet metal work-contractors
- Boiler erection and installation-contractors
- Drainage system installation, cesspool and septic tank-contractors
- Dry well construction, cesspool-contractors
- Fuel oil burner installation and servicing-contractors
- Furnace repair-contractors
- Gas line hookup-contractors
- Heating equipment installation-contractors
- Heating, with or without sheet metal work-contractors
- Lawn sprinkler system installation-contractors
- Mechanical contractors
- Piping, plumbing-contractors
- Plumbing and heating-contractors
- Plumbing repair-contractors>
- Plumbing, with or without sheet metal work-contractors
- Refrigeration and freezer work-contractors
- Sewer hookups and connections for buildings-contractors
- Sheet metal work combined with heating
- Solar heating apparatus-contractors
- Sprinkler system installation-contractors
- Steam fitting-contractors
- Sump pump installation and servicing-contractors
- Ventilating work, with or without sheet metal work-contractors
- Water pump installation and servicing-contractors
- Water system balancing and testing-contractors
Mechanical Contractors Insurance - The Bottom Line
To find out exactly what type of mechanical contractors insurance coverage you need, and how much it costs, speak to an skilled insurance broker.
Additional Resources For Construction Contractors Insurance
Learn about construction contractors insurance, including how much the premium costs and what is covered - and how business insurance can help protect your construction business from lawsuits.
- Blasting & Drilling Contractors
- Bridge Contractors
- Building Contractors
- Cable Layers
- Demolition Contractors
- Dock & Pier Contractors
- Dredging Contractors
- Foundation Layers
- General Contractors
- Road Contractors
- Sewer Contractors
- Steel Erection Contractors
- Surety Bonds
The construction industry is a high-risk industry that requires business insurance to protect against potential losses. There are several reasons why the construction industry needs business insurance:
Liability risks: Construction projects often involve working on other people's property, which can lead to potential liability risks if any damages or accidents occur. Liability insurance helps to protect against these risks by providing coverage for any legal fees or damages that may arise.
Property damage: Construction projects can also be at risk for property damage, whether it's the company's own equipment or tools, or the property being worked on. Commercial property insurance including inland marine helps to cover the cost of repairs or replacement of any damaged property.
Worker injuries: Construction is a physically demanding industry, and accidents and injuries are a common occurrence. Wrokers comp helps to cover the cost of medical treatment and lost wages for injured workers.
Financial losses: Construction projects can be disrupted by a variety of factors, such as weather, delays, or changes in scope. Business insurance helps to protect against financial losses that may occur as a result of these disruptions.
Overall, insurance is an essential component of the construction industry as it helps to protect against a range of potential risks and losses. Without it, companies in the construction industry would be vulnerable to financial ruin and may not be able to continue operating.
Minimum recommended small business insurance coverage: Business Personal Property, Employee Dishonesty, Surety Bonds, Accounts Receivable, Builders' Risk, Computers, Valuable Papers and Records, General Liability, Employee Benefits Liability, Umbrella Liability, Business Automobile Liability and Physical Damage, Hired and Nonowned Auto Liability & Workers Compensation.
Other commercial insurance policies to consider: Building, Business Income with Extra Expense, Earthquake, Flood, Leasehold Interest, Real Property Legal Liability, Contractors' Equipment, Goods in Transit, Installation Floater, Cyber Liability, Employment-related Practices Liability, Environmental Impairment Liability, Stop Gap Liability, Unmanned Aerial Vehicles (UAV) (Drones).