Mechanical contractors are primarily engaged in installing and servicing pipe-based systems, including heating and air conditioning and plumbing systems. Contractors in this industry may provide both parts and labor when performing new work, additions, alterations, maintenance, and repairs.
Some mechanical contractors also offer design services. While most work on commercial projects, some perform residential work. No matter what type of project you’re working on as a mechanical contractor, your work is crucial to the success of a building project and the long-term functionality of a building or home.
If something goes wrong, it's important that you have the right type of mechanical contractor insurance that protects your business, your clients, your employees, and your business assets.
Why Do You Need Mechanical Contractor Insurance?
Mechanical contractors face a wide range of unique business risks. Your employees work with heavy machinery, electricity, plumbing, and piping. They climb structures and may even tunnel underground. These are inherently dangerous activities, and are coupled with working on customer job sites where you can be at fault for causing injuries and property damage.
If you’re sued for some type of negligence, you’ll have to pay for your legal fees and damages to the injured party on your own, which can be devastating for a business of any size. And if you suffer property losses of your own due to theft, vandalism, or some type of unexpected event, you’ll also be faced with the costs of repairing and replacing whatever’s been lost.
But business insurance helps you cover the costs of lawsuits and property losses, instead of you paying for everything out of your own pocket. In severe cases, your mechanical contractor insurance can literally help you avoid bankruptcy.
Mechanical Contractors Need Liability Insurance
Most businesses need some kind of liability protection, and mechanical contractors are no different. You’ll probably need several types of liability insurance policies and coverage endorsements to ensure that you’re fully protected from all of your risks.
- Commercial general liability (CGL) insurance protects your business against third-party negligence claims, in other words, claims that you’ve caused injuries and or property damage. It covers damage to the injured party (property repairs, medical bills), and it also covers your legal fees and financial payouts if you’re sued. If a customer or vendor slips and falls while on your premises, your CGL policy will respond. Likewise, if you damage a client's property or cause some type of damage while installing a heating or cooling system, your CGL policy will cover the cost of any damage and your lawsuit-related expenses.
- If you own trucks or other vehicles, commercial auto insurance covers your owned vehicles and drivers in the event of an accident or other vehicle damage that occurs. Commercial auto insurance provides coverage for property damage and bodily injury liability claims, vehicle damage, and medical bills, as well as any costs related to lawsuits due to auto accidents involving your vehicles.
- Commercial umbrella insurance provides an extra layer of liability protection to any of several other liability policies you might have. Commercial umbrella insurance kicks in when the limits of your other applicable insurance policies have been exhausted, protecting you in the event that a claim exceeds the amount of coverage available from any other applicable policy.
- Environmental liability insurance protects companies from the costs associated with liability claims stemming from damage caused by hazardous waste materials. You may have environmental liability exposures if you transport or dispose of old equipment, fuels, or pollutants.
Property Insurance for Mechanical Contractors
Mechanical contractors need to protect their valuable property and equipment. Your property exposures might include all of your commercial property at your office, warehouse, or workshop, including materials, equipment, vehicles, tools, and machinery.
- Commercial property insurance covers your office space, warehouse, workshop, or other buildings and their contents for losses due to fire, theft, vandalism, weather events, and more.
- Property insurance also typically includes loss of income coverage, or business interruption insurance. It reimburses you for lost income and helps pay for certain ongoing expenses if you are temporarily unable to operate due to a covered loss (fire, storm, etc.).
- Inland marine insurance is another form of property insurance that protects your equipment, tools, hoists, ladders, scaffolding, portable computer equipment, and other supplies from theft, loss, or damage while they are in transit to and from worksites.
Why Do You Need Workers’ Compensation Insurance?
Keeping your employees safe from work-related injuries and illnesses is important for their long-term health and satisfaction, as well as your company’s financial viability. Excessive employee injuries and illnesses can be financially devastating for your business.
You need workers’ compensation insurance to help employees who are injured on the job. Your workers may be exposed to work that involves lifting, working with hand tools, wiring, welding, exposure to asbestos and insulation, and working with sheet metal and piping. At any time they can suffer cuts, puncture wounds, back injuries, slips and falls, electrical burns, eye injuries, and even inhalation of toxic fumes. They could also fall from heights, be struck by falling objects, or be injured after misusing heavy machinery or equipment.
Workers’ compensation insurance provides coverage for medical expenses and lost wages for injured workers. Business owners are required to carry workers’ compensation insurance to protect their employees. Specific coverage requirements vary by state.
Do Mechanical Contractors Need Professional Liability Insurance?
Professional liability insurance, or errors and omissions insurance, has traditionally been for professional services firms like attorneys and accountants. But the need for this type of coverage has been expanding in recent years, because all kinds of businesses have been sued because of some type of mistake or error in the advice or services they provide.
If you are a mechanical contractor who takes part in the design process for your clients, you should at least explore with your agent whether you need professional liability coverage.
If something goes wrong because of a flawed design or professional advice that you give, (e.g., a design is structurally unsound), or even if you fail to deliver on a service that you agreed to provide, you could be sued. You could even be sued for omitting a key piece of information, or somehow failing to fully explain an option and all of the potential risks.
An independent agent who has experience working with mechanical contractors can help you assess your needs and help you determine if you need this type of coverage.
What Are Contractor Bonds and Do You Need them?
You might need a variety of contractor bonds, or surety bonds, depending on the size and scope of the projects that you work on. Bonds are very important for contractors who work on commercial building sites, but you may still need certain types of bonds even for residential work.
Contractor bonds can be essential for finding, securing, and performing work. They are typically used to guarantee some aspect of the bidding process or building project and show the project owner that you are fully licensed, insured, and prepared to complete the project as promised.
Every type of bond is unique and tailored to a specific project. While you may not need them for every residential job, you should know what they are and be prepared to obtain them if required.
How Much Does Mechanical Contractor Insurance Cost?
In general, insurance costs for mechanical contractors will vary depending on the size of your business, the number of employees you have, the amount and value of your tools, equipment, and inventory, the location of your business, and a variety of other variables.
An independent insurance agent can guide you though your options so you get coverage that meets your needs and budget.
Benefits of an Independent Agent
Independent insurance agents simplify the search process for finding the right mechanical contractor insurance. They’ll walk you through some handpicked policy options and explain the details.
Most importantly, they’ll be there for you when claim time comes. They know the ins and outs of the process and will make sure your claim is handled appropriately.
The Lowdown on Online Quotes
Online quotes can be tempting. They are fast and easy to get—but are they accurate? And are you getting quotes for the right coverage? For business owners, choosing speed over accuracy can cost you.
Online quotes can’t and don’t see the whole picture. They can leave out important coverage that will leave you devastated if something unexpected happens. And they can leave out cost-saving opportunities that an agent can help you take advantage of.
Instead of getting an online quote, find an independent insurance agent now, and get one-on-one consultation and affordable options for the best coverage for your unique needs.