Canadians love to talk about the weather, and with good reason—it's often unpredictable and occasionally extreme. But as much as the weather changes, one thing always stays the same: a properly functioning HVAC system is essential to make it through the year comfortably. As an HVAC contractor, you provide a vital service that we can't (and don't want to) go without. Still, your work also leaves you vulnerable to specific risk exposures that can lead to significant financial setbacks without the protection of the right business insurance for HVAC contractors.
It's typical for professionals of all types, including HVAC contractors, to underestimate their level of risk exposure in their industry. As long as they have commercial vehicle insurance and some property coverage in case of an unavoidable natural disaster, they assume they're covered—but that's not the case. No matter how cautious you are at work or how carefully you follow every rule and regulation, there's the potential for something to go wrong and cause severe financial losses.
The experienced brokers at Morison Insurance can put together a comprehensive HVAC contractors insurance policy that will give you the financial protection you need, along with the peace of mind that comes with knowing you're safe from loss for the perils you are most likely to encounter. But what are those perils, exactly? Here are some of the most common risk exposures for HVAC contractors and the insurance solutions that provide coverage for them.
One of the most severe risk exposures for HVAC contractors is the possibility that you could accidentally cause third-party bodily injury or third-party property damage. This risk applies to most, if not all, types of professionals and businesses because there's always the potential for mistakes and mishaps that could cause harm. For example, you're working away on a job site and leave an extension cord stretched across the room at ankle height. The client trips over it, breaking their wrist. They could sue you for the cost of their medical expenses and for additional compensation for their loss of income if they can't work while they're recovering. A commercial general liability insurance policy would provide you with the funds to cover legal costs and settlement expenses for medical bills, repair or replacement of damaged property and more, up to the liability coverage limit on your policy.
HVAC contractors must work with substances like air conditioning, refrigerant and heating oil that can cause environmental destruction if they're not handled properly or if there is accidental spillage. If you installed an oil tank, for example, and failed to notice that it was leaking, the oil leak could contaminate soil and groundwater around the tank and necessitate a costly clean-up. The property owner could choose to bring legal action against you for the cost of a thorough environmental clean-up process, along with other damages. Pollution liability insurance protects you from paying out of pocket for those types of expenses, including your legal defence fees.
You likely work with some expensive equipment and tools that are necessary to do your job correctly, not to mention raw materials and HVAC equipment that still need to be installed at your client's property. It would be a massive problem if they were stolen or maliciously destroyed because you could only work again once they were replaced. Suppose your equipment, materials or tools are stolen or vandalized at your commercial property. In that case, your business property insurance carrier will compensate you for replacements of equal value up to your policy limits.
But what if your valuable equipment or materials are stolen while in transit from one job site to another? Your commercial property insurance will not necessarily cover that, so it's crucial to have inland marine insurance. HVAC equipment at a client's property but not yet installed must be protected against theft and vandalism by installation floater insurance.
Inland marine insurance may seem like something an HVAC contractor wouldn't need—after all, how often do you need to transport equipment or materials across the water? Don't let the word "marine" fool you. Inland marine insurance applies to loss that occurs during transit across the land, such as by truck or train. We mentioned above that it applies to replacement costs for items that are stolen or vandalized during transit but also to accidental loss or destruction. Specific components of HVAC systems can be pretty delicate, for example, and it's possible that they could become damaged while you're moving them from the supplier to the job site. If that occurs, your inland marine insurance coverage will allow you to recoup the cost of a replacement unit.
Most types of business insurance aren't legally mandatory, but commercial auto insurance is a clear exception to that rule. We all know you can't drive an uninsured vehicle in Canada, but there needs to be more clarity about when or why commercial auto insurance is necessary. If you have a specialized vehicle that you only drive for work purposes, you already know it must be covered by commercial vehicle insurance. But if you have a truck covered by personal auto insurance and use it for everything—including work purposes—you may assume commercial coverage isn't necessary. That's not the case. Suppose you are involved in a vehicular accident while using your truck for work purposes, such as transporting tools and materials to a job site. In that case, your personal auto insurance will not cover it. You must have commercial auto insurance for any vehicle that is used for commercial purposes to be protected against this particular HVAC contractor risk exposure.
Of course, this isn't just a risk exposure for HVAC contractors—an unavoidable disaster like a fire or severe natural disaster can strike anyone. The cost of repairing or rebuilding a damaged or destroyed commercial building is covered by business property insurance. In contrast, the contents insurance portion of your commercial property insurance policy covers the cost of replacing damaged or destroyed items inside the building. It's essential to thoroughly inventory your building contents so you have adequate coverage limits and can get everything replaced with the help of insurance compensation.
If your equipment is damaged by an insured peril at your commercial property, it will be covered by your contents insurance. But what if it breaks down due to a reason such as mechanical failure or even operator error? In that case, your contents insurance doesn't apply—but you still need financial assistance to get it working again so you can get back to your regular work routines. Equipment breakdown insurance provides precisely that, offering you the necessary insurance compensation to repair or replace your broken-down equipment and fulfill your business contracts without interruption. This can also apply to components of your commercial property.
Speaking of interruption, if you suffer an unfortunate circumstance and no longer have access to your equipment, or business property, it's good to know that you can get financial help from your insurance provider for repair and replacement. Still, the process of repairing or replacing what was lost is going to take time. In the meantime, you're losing money every day that you can't work, which creates a significant financial setback that could make it very difficult to pay employees (and yourself), pay rent on your commercial space, and other expenses that don't stop rolling in just because you're not able to work for some time. Business interruption insurance is the answer to that problem. It gives you the necessary funds to take care of ongoing expenses, including your personal expenses that are covered by the money you bring in while working, for a reasonable period until you can get back on your feet and get back to work.
This may seem like an unusual risk exposure for HVAC contractors, who aren't known to spend their workdays typing away on a computer, but it actually makes plenty of sense in this modern day and age. Everyone conducts at least some business online these days and stores or transmits sensitive information using computers. That means you could be targeted by cybercriminals looking for practical or lucrative information such as your client's banking details, your employees' identity information and other details. You can be liable for loss if that information is taken from you. Cyber crime insurance gives you financial support for legal defence costs, restitution payments, and in some cases, other expenses such as ransom payments to recover stolen information.
No one ever wants to think about the possibility that they could face allegations of negligence or poorly-done workmanship. Still, it can happen, and it's best to be prepared with the right professional liability insurance coverage, which is also known as errors and omissions insurance. For example, if you were working on installing a central air conditioning system in an office building and there was a design flaw in how you chose to put in the ductwork, it could lower the indoor air quality and cause respiratory distress for office workers. Or, a faulty installation could cause the system to grind to a halt shortly after it's installed, necessitating a costly replacement. In those types of situations, you need professional liability coverage to get insurance compensation for legal defence costs and settlement expenses.
Professional liability insurance doesn't just apply to allegations of negligence and workmanship errors. It's also essential coverage for HVAC contractors because it protects you from paying out of pocket for costs related to a breach of contract, failure to deliver promised services or products and failure to meet deadlines. If you signed a business contract with a client to have an HVAC installation complete by a specific date so they could proceed with other components of the building construction, for example, but you experienced delays for some reason and failed to meet that deadline, the client could sue you for breach of contract to recoup their financial losses caused by the unexpected delay.
Now that you know more about the most common risk exposures for HVAC contractors, you may be wondering which types of insurance coverage you need to ensure that you are protected from financial loss. HVAC contractors insurance is a business insurance package that is designed to address the particular needs of the individual policyholder, so your insurance needs may differ somewhat based on factors such as where your business is located, how many employees you have, how you choose to operate your business, and more. That being said, certain types of coverage are almost certainly going to be needed to protect you against common risk exposures for HVAC contractors, including:
When you contact the knowledgeable commercial insurance brokers at Morison Insurance, we'll start by consulting with you about the particulars of your business. Hence, we know which types of perils you will most likely encounter. Then, we'll search insurance companies to find the right insurance coverage to fit your needs so you can rest assured you have the necessary protection against financial loss. That gives you the freedom to run your HVAC contracting business as you see fit without having to spend your time worrying about how you would afford to recover if something went wrong.
This content is written by our Morison Insurance team. All information posted is merely for educational and informational purposes. It is not intended as a substitute for professional advice. Should you decide to act upon any information in this article, you do so at your own risk. While the information on this website has been verified to the best of our abilities, we cannot guarantee that there are no mistakes or errors.
