How Much Does Plumbing Insurance Cost?

Highlights

• Plumbing insurance with general liability coverage costs, on average, $68 per month.
• The total cost of a plumbing insurance policy will depend on the type and amount of coverage purchased, the business owner’s claims history, and the number of employees on staff, among other factors.
• Plumbing businesses with employees are often required by state law to carry workers’ compensation insurance to protect employees, and if they have work vehicles, they may be required to carry commercial auto insurance coverage to insure their fleet.
• Plumbers may be able to lower their insurance costs by adjusting their deductible, bundling insurance policies, and shopping around for the best rate available.

Plumbers cram themselves into spaces that most people prefer not to—under cabinets, in crawl spaces, and into the darkest corners of basements, hunting for shut-off valves and working on pipes. They deal with sharp pipe ends, torches, gushing water, and grime, and are frequently working in tight spaces where electrical and plumbing systems sit close together. These working conditions increase the risk of injuries—either to themselves, their employees, or their clients—as well as damage to the client’s property. That is why it’s important for plumbers to carry insurance.

A plumber’s liability insurance policy will run about $68 per month, on average, but several factors will impact the total price of insurance—and there are also many other types of coverage that plumbing professionals may want to purchase to protect their finances. In addition to liability protection, plumbers may want to insure their equipment, their work vehicle, and any commercial property they own or rent. They may also be legally required to buy workers’ compensation insurance to provide coverage in the event an apprentice or employee is injured on the job.

When weighing the additional cost of plumbing insurance against the potential benefits, plumbers will want to keep in mind that adequate insurance coverage is key to being able to work confidently, knowing that insurance will help take care of the unexpected. Understanding plumbing insurance costs can help business owners make economical choices to protect themselves, their employees, and their business.

Factors in Calculating Plumbing Insurance Costs

Plumbing businesses differ in size, focus, and scope, and as such, plumbing insurance policies do not come with one-size-fits-all coverage. A commercial plumbing business that has dozens of employees and takes on large installation projects will have vastly different coverage needs compared with a self-employed plumber who handles small-scale maintenance and repair jobs for residential clients.

The cost of insurance will vary based on a number of factors, some of which are within the control of the business owner—how many employees they have on staff, for instance—and some of which are not, such as state-specific requirements regarding workers’ compensation insurance. Assessing each of these factors will help business owners determine how much plumbing contractor insurance is likely to cost so they can set a reasonable budget for their coverage needs.

Coverage Type

Several different types of plumbing insurance coverage are available for purchase, and each one may benefit industry professionals depending on the scope and size of their business. Policies with more extensive coverage will cost more than those that only include general liability or workers’ compensation protection. For instance, plumbers who have their own office space or store tools and equipment at a business-owned property may need commercial property insurance in case the building is damaged by a covered peril or items are stolen or damaged while on the premises. Commercial auto insurance and workers’ compensation insurance are often two of the most expensive types of coverage, but like handyman insurance costs, exact plumbing insurance costs can vary from one insurance provider to another.

Coverage Amount

The coverage amount on an insurance policy determines how much money policyholders might receive if they file a claim. Policyholders typically can select from a range of coverage options, but higher coverage limits will increase the price of their insurance. Coverage limits on insurance for plumbers can vary depending on the type of insurance—limits for general liability insurance are often much higher than limits for tools and equipment coverage, for instance. Finding the right amount of coverage to protect a business owner’s finances without breaking the bank is key.

Geographic Location

Location can alter the cost of a plumbing insurance policy in several ways. First, the physical space that the business occupies will have a bearing on insurance costs for plumbing professionals who own or rent commercial property. It typically costs more to insure larger offices and buildings than those with less square footage. In addition, businesses located in areas with higher crime rates may pay more for plumbing insurance because there is a greater risk for business-owned tools and vehicles to be stolen.

States that experience more extreme weather may have higher plumbing insurance rates than others as well. For instance, policyholders with commercial auto coverage may have higher premiums if they operate out of areas that are more prone to heavy snowfall, which could increase the risk of a traffic accident. When calculating rates, insurance companies also take into account the distance that policyholders need to travel while on the job. With that in mind, plumbers in rural areas who routinely need to travel significant distances to reach their customers may pay more for coverage due to increased mileage.

Claims History

Insurance companies will review a policyholder’s claims history when assessing risk factors and calculating plumbing insurance rates. Business owners who have filed one or more claims in recent years will likely see their premiums go up since they are considered riskier to insure. For instance, an insurance company may view a plumber who files a commercial auto claim after getting into a car accident as an unsafe driver, raising their rates as a result. Alternatively, policyholders who have never filed a claim on their plumbing company insurance will likely receive the most favorable rates because they present less financial risk to their insurance provider.

Number of Employees

State governments often require businesses with one or more employees to purchase workers’ compensation insurance. The cost of this type of coverage is directly related to the number of employees on staff, so small businesses will see their insurance rates go up as their headcount increases. On the other hand, self-employed plumbers working as sole proprietors won’t need to purchase workers’ compensation insurance at all, so their overall insurance costs will be lower.

In addition, a larger number of employees could present more risk for liability or property claims to be filed. With more employees traveling to and working on jobsites, there could be a greater risk of an employee injuring themselves, getting into a car accident in a business-owned vehicle, or causing damage to a client’s property. As such, larger operations may cost more to insure than smaller plumbing businesses with just a few employees.

Actual Cash Value vs. Replacement Cost Coverage

Plumbers who insure their tools and equipment will typically have the option to choose from either actual cash value or replacement cost coverage. A policy with replacement cost coverage is the more expensive of the two options, as it will pay out claims based on the amount it would cost plumbers to replace an item with a similar—if not the same—model. Actual cash value coverage, on the other hand, accounts for depreciation when the company is determining the value of a covered item and how much money to pay out to the policyholder. As a result, claim payouts on policies with actual cash value coverage may be lower, but policyholders will pay less for their coverage as well. While replacement cost coverage will increase the price of an insurance policy, plumbers may decide that extra expense is worth it to adequately insure the tools and equipment they rely on to do their job.

Types of Plumbing Insurance

Plumbing insurance policies can include different types of coverage to protect business owners, their property, and their employees. Coverage needs will vary from one business to another, so understanding the different types of insurance is important to building the best policy for a particular plumbing operation.

General Liability Insurance

General liability insurance is the most basic form of small-business insurance a plumber can purchase. Regardless of the scope of their business, it’s recommended that plumbers buy general liability coverage at a minimum. This goes for any professional who provides some form of plumbing services—contractors who only offer minimal plumbing services will need this type of insurance, for example. General liability insurance helps cover the costs of damages to a third party that the business may be responsible for, whether that be damage to a client’s home caused by the plumber or injuries to the client due to employee negligence.

For instance, a client could trip on a cord left out in the open by an employee, breaking their arm as a result of the fall. The business owner’s liability insurance would then pay for the client’s medical bills and, if the client chose to sue, any damages assessed or legal fees incurred up to the policy limit. If a poorly welded pipe leads to flooding in the client’s basement, then the plumber’s general liability insurance would cover the cost of making repairs and cleaning up the damage, up to the policy limits.

Liability coverage does not include injuries to employees of the business—those are handled by workers’ compensation insurance. Because everyone occasionally makes mistakes, general liability insurance is critical coverage to carry, even for a sole proprietorship. Rates can vary from one company to another, so it’s worth getting several plumber liability insurance quotes from the best small-business insurance providers (such as NEXT Insurance, Thimble Insurance, and Progressive Commercial) before settling on a policy.

Workers’ Compensation Insurance

Most states require businesses to carry workers’ compensation insurance if they have at least one employee on staff. If a plumbing apprentice or other employee is injured on the job, workers’ compensation insurance will cover the cost of their medical bills and reimburse a percentage of their lost wages.

In addition to those benefits, workers’ compensation can also pay for job retraining if a plumber can’t continue working because of a job-related illness or injury. As plumbers may do high-risk work where injuries are possible, workers’ compensation insurance is a key element in the insurance package for any plumbing business with employees. It can cost a bit more than general liability insurance but is usually mandated by the state and well worth the extra expense.

Commercial Property

This type of insurance is important if the plumbing business maintains a physical office or warehouse space. Commercial property insurance covers repair costs if the building structure is damaged by a covered peril, such as fire, wind, or hail. In addition, this type of insurance will protect business-owned items stored on the premises, including tools and equipment. If a fire breaks out and damages the building and the plumbing tools, then the policyholder’s commercial property coverage will help pay to repair any fire and smoke damage to the building as well as replace the destroyed equipment. This type of insurance also covers theft and vandalism, so if burglars break into a business’ storage space and steal thousands of dollars worth of tools, then the policyholder’s commercial property insurance would help pay to replace those items.

Business Owner’s Policy (BOP)

A business owner’s policy (BOP) is a popular form of small-business insurance as it packages together general liability and commercial property coverage. By bundling these two types of insurance, policyholders can enjoy more extensive coverage at a lower cost. Some companies also include business income insurance as part of a BOP, but that won’t always be the case. Business income insurance can reimburse policyholders for lost income and help them pay expenses such as rent and payroll after a covered loss.

A BOP may not be necessary for all plumbers—those who don’t own or rent commercial space won’t need commercial property insurance, for instance—but business owners who want both general liability and commercial property insurance will likely get a better deal with a BOP rather than buying that coverage separately.

Tools and Equipment Insurance

Although often less expensive than other types of small-business insurance, tools and equipment insurance can be extremely valuable for plumbers. Business owners or employees may leave plumbing equipment unattended in parked cars or on jobsites, increasing the risk of theft or vandalism. Tools and equipment insurance will pay to replace items that are stolen or damaged while in transit or at a jobsite. This form of coverage may even protect employee-owned tools or equipment borrowed from another plumber. For plumbers who have little or no room in their operating budget to replace several expensive tools at once, tools and equipment coverage could offer tremendous peace of mind.

Commercial Auto

Personal auto insurance will not cover damage to vehicles used for business purposes—even if the company owner has the only vehicle. Many plumbing companies use vans or trucks to transport employees and equipment to and from jobsites, so commercial auto insurance is a must in those situations. In fact, most states require plumbers who use vehicles for their business to carry commercial auto insurance. This type of insurance includes liability protection in the event the business owner or an employee causes an accident en route to a jobsite, helping to pay for any damages such as medical bills for a third party who is injured in the crash or repairs to other damaged vehicles.

Commercial auto insurance also covers theft and damage to vehicles as a result of vandalism or caused by weather-related perils such as hail. The cost will depend on a variety of factors, including how many vehicles the company owns, how many drivers are covered by the policy, how often the vehicles are used, and the insured drivers’ individual driving records.

Professional Liability

Sometimes called errors and omissions, or E&O insurance, professional liability insurance protects plumbers against lawsuits filed by clients due to alleged mistakes made on the job or project delays that result in a financial loss for clients. If a client feels that work wasn’t completed in the time frame in which it was promised, or that the work wasn’t completed to an acceptable standard, they may sue the plumber and the business. For instance, a commercial client may allege that a plumbing business installed the wrong fixtures, which resulted in delays opening a new store location and lost revenue. A plumber’s professional liability insurance will help cover any damages paid out if the plumber is found responsible as well as any legal costs they need to pay. Damages can be awarded in startlingly high amounts, so this type of insurance may be worth the expense.

Do I need plumbing insurance?

Margins can be tight for small-business owners, and with so many financial obligations to account for, they may wonder if they can get away with skimping on plumbing insurance. Most plumbers need some form of insurance, though, whether because they are required to by the government or their clients—or simply to protect their business’s interests. A robust insurance policy can be just as—if not more—necessary as other key business expenses such as tools, equipment, and the best plumbing software like Jobber.

State Requirements

Many states require plumbers to carry basic liability insurance as part of their registration process. Registering with the state is typically necessary for individuals to run a plumbing business, so getting general liability insurance is a bare minimum for plumbers. Also, most states require businesses with at least one employee to carry workers’ compensation insurance to protect their staff. Finally, plumbers who drive vehicles for their business will need to purchase commercial auto insurance to insure business-owned vehicles and drivers.

Client Requirements

Diligent customers will often ask plumbers if they have liability insurance before hiring them for a job. Commercial clients can be even more demanding, refusing to work with any contractor or vendor that does not carry extensive insurance to protect against accidents that may result in property damage or injuries. In competitive markets especially, plumbers may find that getting insurance is a prerequisite to attracting new clients.

In fact, according to Matt Kunz, president of Mr. Rooter Plumbing, carrying robust insurance can give plumbers a competitive edge. “Having insurance plays a pivotal role in shaping the professional image of a plumbing business,” he says. “Clients are more likely to trust and hire a plumbing service that carries insurance, as it demonstrates a commitment to quality service and a willingness to be held accountable … [Insurance] is a critical component of responsible and ethical business operations, ensuring that the business can weather unexpected challenges while offering clients peace of mind regarding their investment in plumbing services.”

Business Property Protection

Plumbing business owners with a warehouse filled with plumbing parts, sample sinks and bathtubs, trucks, and costly equipment may worry about recouping their losses if a fire were to destroy their entire inventory or if burglars were to steal thousands of dollars worth of equipment. Some businesses may not be able to survive such a devastating blow, which is why insuring business-owned property is a good idea. When weighing the cost of small-business insurance against the significant financial risk that comes with running an uninsured business, owners may decide that plumbing protection plans are worth the price.

Business Liability Protection

Many small businesses lack the resources to absorb costly damages that courts may award to clients or third parties who file lawsuits against them. Both general liability and professional liability insurance can help insulate plumbers from damages that may arise if they damage a client’s property, cause an injury due to negligence, or make a costly mistake while finishing a job, among other liability concerns. With that in mind, liability insurance can protect the continued operation of a plumbing business.

How to Save Money on Plumbing Insurance

Although plumbing insurance costs can vary significantly from one business to another, there are several ways for all plumbing businesses to save money on their coverage no matter what type of insurance they need or how much insurance they buy. Before purchasing an insurance policy, it’s a good idea to take some time to check for opportunities to lower the cost of plumbing insurance.

• Ask the insurance company if there’s a discount for bundled policies.
• Review existing policies for any unnecessary coverage that can be removed.
• Choose a higher deductible, which will result in a lower premium.
• Seek out insurance quotes from several reputable companies, comparing rates and coverage options to get the best deal.
• Reduce risks in the workplace: Make sure all employees are well trained in safety procedures and protocols and that risk-reducing policies are followed.
• Work to improve the business’s credit score, as insurance companies may take this into account when setting rates.

Questions to Ask About Plumbing Insurance

New business owners who have just completed one of the best online plumbing courses, registered with the state, and received their plumbing license may be eager to get insured and start working with clients, but they may not know where to begin in their quest to buy adequate insurance. Finding an insurance agent who can answer any questions business owners have about plumbing insurance can be key, especially for those who feel overwhelmed by their coverage options. To get the right insurance for their business’s needs, plumbers should feel free to ask agents whatever questions they have about costs, coverage, claims, and other aspects of a business owner’s insurance policy. These questions can provide a good deal of insight into plumbing insurance and help plumbers feel confident that they’re getting the right policy for their needs.

• What kind of business insurance coverage makes the most sense for my plumbing business?
• What coverage limits are available for each type of insurance? Are they aggregate or per occurrence?
• What is the process for filing a claim?
• Can I bundle different insurance policies together to reduce my costs?
• Do you offer flexible payment options?
• What can I do to reduce risks in my workplace to lower costs?

FAQs

With so many coverage options to explore and nuances to consider, selecting a plumbing insurance policy can seem daunting. The answers to some of the most common questions business owners have about this type of insurance can clear up any confusion and help them make a more informed decision.

Q. What is a surety bond for plumbers?

Although not included as part of standard business insurance, a surety bond can also provide financial protection for plumbers—and may be required by the state or certain clients. The bond is a financial instrument the plumber uses to protect their clients and the licensing agency in case they violate state or local regulations or break a contract with a client. There are three parties in a surety bond: the principal (in this case, the plumber), the obligee (the licensing board that requires the plumber to be bonded), and the surety (the company backing the bond). The plumber pays a premium to the surety company, and the obligee grants permission to the principal to work or be licensed. The requirements for surety bonds for plumbers vary widely from state to state, so it’s important to check with the local or state licensing board before pursuing one.

Q. Do plumbers need employment practices liability insurance?

They might, if they have employees on staff. Employment practices liability insurance (EPLI) is insurance protecting the business itself from claims filed by employees alleging that their legal rights have been violated by the company or its agents. Examples of claims that would be covered by EPLI include sexual harassment, wrongful termination, breach of contract, negligent evaluation, mismanagement of employee benefits, and others. Plumbers looking to protect themselves against the widest range of potential liability issues may want to consider getting EPLI as a complement to their workers’ compensation insurance.