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What is HVAC insurance?

HVAC insurance is a type of business insurance designed specifically for heating, ventilation, and air conditioning (HVAC) technicians and companies who provide HVAC services. It helps protect your business from risks associated with installation, maintenance and the repair of different ventilation systems. HVAC insurance is an umbrella term for policies that most often cover bodily injury, property damage, pollution and tool theft.

Who needs HVAC insurance?

Any professional working with HVAC systems should have HVAC insurance. Some common industry examples include:

HVAC technicians: These professionals install, maintain and repair heating, ventilation, and air conditioning systems in residential and commercial buildings.

Duct installers: These technicians focus on installing and maintaining ductwork that distributes air throughout buildings.

Boiler technicians: Those who work with boiler systems that provide heating and hot water in large buildings should have HVAC insurance.

Having the right insurance not only protects you and your business from potential risks, it also enhances credibility with clients. Some clients may even demand proof of insurance before hiring an HVAC contractor.

What does HVAC insurance cover?

HVAC insurance generally covers four key areas:

Professional liability insurance: Also known as errors and omissions (E&O) insurance, this covers claims related to professional mistakes or negligence. For example, an HVAC technician may face a claim if they incorrectly install a heating system, leading to property damage or safety issues.

Commercial general liability insurance: CGL for short, this coverage is essential for every HVAC contractor. It offers financial protection against lawsuits related to third-party property damage or bodily injury. For instance, if the faulty installation of an air conditioning unit causes water leakage that damages a client's ceiling, and they file a property damage lawsuit, CGL can help cover your legal fees and repair costs.

Important note: when choosing your coverage limit, you can decide between applying the coverage to all employees collectively or per each individual. The latter will lead to higher premiums.

Tools and equipment insurance: This is also known as HVAC equipment insurance and offers additional protection for tools and equipment that you or your employees use. It covers the repair or replacement costs if your tools or equipment are lost, stolen or damaged. The insurance term for tools refers to items that are valued under $1,500, while those over that value are considered equipment.

Pollution liability insurance: When working with ventilation systems, pollution liability insurance can protect against legal expenses related to pollution incidents that cause third-party injury or property damage. For example, if an HVAC technician improperly installs a system in an apartment building that leads to mold growth from excessive humidity, it could result in health problems for the occupants. In situations like this, pollution liability insurance can help cover legal costs from claims by affected individuals and any cleanup work that may be required.

What insurance add-ons are recommended for HVAC contractors?

While these optional coverages are not always necessary, many HVAC contractors will find them useful:

Commercial property insurance: This protects business owners from financial losses due to damage to their physical assets, such as buildings and equipment. As an HVAC technician or business owner, this type of insurance will also protect your heating and cooling units, which are often expensive and essential for your operations. For example, if your company warehouse experiences a fire that damages your workshop and the machinery inside, commercial property insurance would cover the repair and replacement costs, helping you continue operations.

Commercial auto insurance: As an HVAC business owner, commercial auto insurance will protect the vehicles that transport you, your employees and your equipment to job sites. Commercial auto insurance is legally required if you use one or more vehicles for business use.

Business interruption insurance: This will help protect your HVAC company from lost income due to unexpected disruptions, such as natural disasters, fires or other incidents that prevent you from continuing operations. If you have business interruption insurance you will be protected if a fire damages your workshop and prevents you from servicing clients or completing installations. It can also help cover fixed expenses, like employee salaries and rent, ensuring that the business can recover and continue to run smoothly after the interruption.

How much does HVAC insurance cost in Canada?

The cost of HVAC insurance in Canada will depend on several factors, but on average you can expect to pay anywhere from $500 to $3,500 per year for a comprehensive policy.

Commercial general liability insurance for HVAC technicians: Typically starts at around $600 to $700 per year for a $2 million coverage limit.

Monthly costs: Can be approximately $60 per month for basic coverage.

Small HVAC business: Premiums can start from as low as $750 per year for businesses without a physical office or company vehicles.

It's important to note, however, that these estimates are not relevant to all HVAC businesses. There are a number of factors that will impact the cost of an HVAC insurance policy.

What factors determine HVAC insurance rates?

There are several factors that will either increase or decrease your HVAC insurance rates, including:

Type and size of your business: If you run a large HVAC company with 50 employees, you will pay significantly more for insurance when compared to a small, independent business with just a few employees.

Your location: Working in a high-claims area, like a city prone to natural disasters or weather damage, can result in higher premiums for your HVAC business than if you were in a low-risk rural area.

Your claims history: If you've made multiple claims over the past few years, expect your premiums to rise sharply as a result. Filing multiple claims means insurance providers will consider your business to be high-risk, which will be reflected in the cost they charge to cover you.

Coverage limits and deductibles*: Choosing a policy with higher coverage and lower deductibles will increase your rate. For example, a $2 million coverage limit and a $1,000 deductible will lead to higher premiums than choosing a $1 million limit with a $5,000 deductible.

*Remember, a deductible is how much you must pay out of pocket before your insurance covers the rest. This is why a higher deductible will lead to lower premiums but may cost you more in the long run. The loss that you suffer must be greater than your deductible for you to be able to claim insurance. 

Your experience and training: If you are an experienced HVAC technician with several years of experience, you may qualify for discounted rates.

How does HVAC insurance work?

HVAC insurance works on a simple principle: you pay premiums to receive coverage against events that are part of your policy. If you need to make a claim, your insurance provider will evaluate the situation and decide your compensation based on your policy's terms. To ensure a hassle-free claims process, it's important for you to keep an accurate record of your work and any incidents.

How to get the cheapest HVAC insurance quote?

To find the cheapest HVAC insurance quote, follow these steps:

Limited coverage: Purchase only the coverage you need. Some add-ons may be appropriate for your business, but others will cover things you don't need covered. The key is finding the balance where you have the right protection but nothing you'll never have to use.

Shop around: Always compare quotes from multiple insurance providers. This is the best way to get the lowest price on HVAC insurance.

Bundle policies: Think about combining services, like adding HVAC insurance to your general liability policy. This could lead to a discount, potentially saving you 10-15% overall.

Increase deductibles: Choosing a higher deductible, like $2,500 instead of $1,000, can significantly reduce your monthly premium. Just make sure you can comfortably cover that deductible if you need to file a claim in case of emergencies.

Maintain a good claims record: Keeping a clean claims history helps keep premiums down. Generally speaking, insurance providers will look at your history for the past three to five years when assessing your risk.

Get certified: In Canada, having the Red Seal Certification will likely lower your rates.