Plumbers Professional liability Insurance and More – Cost and Types of Policies

If you own a small plumbing business, there’s no doubt that as a good manager, you have decided that one of the most important things you need to protect your business and your assets is Plumbers Insurance.

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However, that’s easy to say, but many things go into making a good, complete, and affordable plumber’s insurance package.

We are here to try and help you understand all the different aspects, appreciate just how important it is, and finally, find the right combinations of all the options out there waiting for your choice.

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As a business, what plumber’s insurance do you need?

In general terms, businesses need insurance as protection from unexpected events. A well-run business has budgets, forecasts, and projections.

As long as everything is going according to these carefully laid plans, then nothing can happen to prevent you from reaching your targets for sales, costs, growth, and profit.

But – there’s always some “but”. Accidents happen, to you, to your workers, to your customers, on-site, on the way to work, or on the way home.

Something entirely outside your control can take over, like a natural disaster, an earthquake, or a massive fire in the buildings around you.

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And these are things that you could really foresee, even if the chance of them happening is minute, and you decided that your risk is not high enough to justify taking out insurance.

However, there are some events that, even with the most extraordinary planning, you cannot foresee. In your plumber’s business, you deal with people – customers, suppliers, even just casual passers-by that you encounter in your daily business.

People are unpredictable, and if something goes wrong, like a customer tripping over your toolbox and breaking an arm, you could be facing costs for reparations so massive that they could run you right out of business if you’re not protected with the right plumber’s insurance.

No two plumbing businesses are exactly the same, so we are not trying to tell a story of a single solution – a ‘one-size-fits-all’ package that will insure your unique business.

Your plumbing insurance must adapt to a wide variety of factors, including the size, the state you work in, whether you employ other workers directly, use subcontractors, or actually offer your services as a subcontractor to other building and construction operators.

A plumber specializing in high-rise office complexes will have completely different requirements from one who works in domestic construction and again to one who is building complex and sophisticated piping for modern sustainable agriculture vertical farms.

Each of these kinds of operations needs particular tools, special knowledge, and a package of plumber’s insurance that matches the risks and the needs.

However, one sure thing is that finding the correct insurance is an essential part of the management of your business risks. And it would be best if you faced the fact that all business activity involves a degree of risk on a daily basis, irrespective of your size, your area of operation, or your locality.

It’s also important to remember that some kinds of plumber’s insurance are compulsory for your kind of business. It may be because it’s a legislative requirement, or maybe a necessity for joining an industry grouping or union.

Most important is the positive side of insurance, in that it conveys to your customers two essential features. It tells them that you are a serious player in the plumbing field, with good business practices.

It also assures them that if some unforeseen and unfortunate accident does happen, their own interests will be protected to the extent of your plumber’s insurance, with the backing of state-monitored insurance companies. The alternative is that they could win a case, but lose a battle if all they have left is to try and recover their claim from you personally.  

What kind of insurance does a plumber need?

Assess what could be needed in your plumber business insurance. Remember – anything can happen, from accidents to natural disasters, or lawsuits.

All businesses need three basic kinds of insurance. The first is meant to protect you from the consequences of occurrences that can cause injury or loss to people, for which you may be held liable. It is usually called General Liability Insurance or sometimes Public Liability Insurance. The second covers you for the damages that some aspect of your work as a plumber did, either in commission or in omission.

It is usually called Errors & Omissions Insurance (E&O), but sometimes is called either Public Liability insurance or Public Indemnity insurance. Essentially, they are exactly the same thing. Finally, if you have any employees, whether full-time, part-time, or contractors, you may need Workers Compensation insurance.

We say “may need,” but in fact, in more than half of the states, Workers Comp insurance is mandatory. You can be fined or even imprisoned if you run a plumbing business without worker’s compensation insurance.

Public Liability Insurance/ General Liability Insurance

General liability insurance is a must-have type of insurance coverage for anyone involved in business operations that provide specialized labor and material services to their customers, such as handymen, roofing contractors, solar panel installers, general contractors, fencing contractors, etc.

Why does any business need Public Liability Insurance?

The law says that you as a business owner have a primary responsibility to exercise a ‘duty of care’ to prevent any injury or damage to a third party. Let us explain what ‘duty of care’ means with a real-life example.

Suppose you are running a plumbing workshop that is open to the public to visit to inspect your bathroom fixtures before engaging your services… One morning, a delivery of new stock arrives. The delivery man accidentally drops a heavy parcel that smashes a step at the entrance to your shop.

Before you’ve seen this or had a chance to call a repairman to fix it, a customer steps into your shop, trips on the broken step, and falls, breaking his or her ankle. If the customer sues you, you cannot plead in defense that you didn’t break the step.

This is what the public liability component of plumber’s insurance will protect you from. It gives you liability insurance cover specifically designed to cater to the sort of accidental injuries and damages that can happen while you are engaged in your everyday business activity.

Bodily injury and property damage liability are probably the two most essential parts of the insurance. Suppose you have business visitors in the course of running your business. In that case, it will cover injuries to anyone, and to their property while it is in your care.

Why you need public liability insurance

You need public liability insurance if you own a business that operates out of premises that members of the public, customers, or clients visit, or conduct your business activity in areas where other people may have access.

Public liability insurance covers you against being sued by anyone, apart from your employees, with whom you interact as part of your business operations,  such as:

  • people visiting your business
  • customers
  • messengers and carriers performing some business-related activity
  • people in their own homes or business premises where you work.

Public liability insurance helps protect you and your business from claims if there’s some accidental bodily injury or property damage to some third party. ‘Third party’ means someone who is not directly associated with you (such as a family member) or your business (such as an employee). In the case of property, it means something that does not belong to you but is temporarily under your control. 

Basically, the need for public liability is quite straightforward. If there is any chance a customer, visitor or passer-by could be injured or have their property damaged and could then claim that this happened due to your work, you need public liability insurance.

Professional Indemnity Insurance/ E&O Insurance

The plumbing world today has become a highly litigious environment. This makes it essential for plumbing service providers to get protection if customers allege acts involving negligence, errors, or omissions. If the matter turns into a lawsuit, even if it was found to be without merit, the cost of defense can be substantial, and the impact on your reputation can be damaging.

You should consider purchasing Error & Omission insurance if your business offers the following:

  • A professional service
  • Professional advice to clients
  • Contractual services.

If you or your business provides these professional services, you need professional E&O coverage because these services come with risks.

You could be held liable for:

  • breach of contract
  • providing incomplete work
  • providing substandard work
  • work errors or oversights
  • missing deadlines

If your customer claims that any of these resulted in financial losses or reputational damage for them, then they could sue to recover from you all damages.

If the matter becomes a legal case, you need coverage for the associated attorney fees and court costs along with the actual settlements or judgments.

And this could be for both your own associated costs, but for the other party’s as well if the decision goes against you.

Sometimes, an unsatisfied or difficult customer could sue your business over a perceived problem, even though you are confident that you work was completely professional.

In that case, you might win the lawsuit but still have to pay attorney fees and court costs out of pocket. Without professional liability / E&O insurance, a lawsuit could present a significant financial difficulty for your business.

Errors & Omissions insurance is an insurance policy for businesses that protect themselves against claims from their clients. Professional liability insurance often covers negligence, copyright infringement, personal injury, etc. This may include damage from things you did and/or had to do.

Common coverage includes:

  • client damages arising from services provided by your company or by your company’s failure to provide such services when contracted to do so
  • copyright law oversights or mistakes or misunderstandings resulting in copyright infringement
  • reputational injury arising from libel or slander whether or not it was true

While this can help many types of businesses, let’s look at some real-life examples. Suppose you are the plumbing contractor for a building project and accidentally forgot to get your client’s approval and signature on some required municipal documentation.

This may result in the project being temporarily paused, or even permanently shut down, costing thousands or even hundreds of thousands of dollars.

Or, on a more personal level, if you are installing some bathroom fittings for a temporarily disabled customer in a wheelchair. Say by mistake you install fittings that they cannot access without standing – which they shouldn’t do. Suppose your customer suffers some muscle damage reaching for a faucet.

In that case, they can claim that your work was substandard. You may be liable both for the cost of re-doing the whole installation, as well as for any medical treatments the customer has to undergo, plus damages for “pain and suffering” or even “emotional distress.” There are many such situations in which professional liability insurance can help.

Professional Indemnity Insurance applies to many occupations engaged like you in the building sector, such as consultants, engineers, architects, real estate agents, and surveyors, to name a few. In many of these, it is a legal requirement to hold a Professional Indemnity policy in order to render your services.

Business Insurance for Plumbers

Running any business involves many different risks, some of which are unique to the kind of activity and others all businesses have to cope with. There are comprehensive insurance packages for business owners, that in addition to public liability insurance give you coverage for the commercial activity side of your plumbing business.

Business interruption insurance

This is also sometimes called business income coverage, and it provides coverage for the outcomes of events beyond your control, such as fire, wind, hail, vandalism that cause direct physical loss or damage to your premises, inventory, or equipment.

The following are typically covered under a business interruption insurance policy:

  • Profits that would have been earned, based on recent history
  • Expenses and costs being incurred by the business
  • Extra expenses for moving to and operating from a temporary location
  • The cost of training operators on new machinery
  • Expenses needed to continue operation while the property is being repaired.

Management Liability Insurance

This protects you and the company’s owners and directors from consequences of some mismanagement, misconduct, or breach of legislative or regulatory decrees. It also protects against dishonest acts such as fraud or theft by staff.

Cyber Liability Insurance

Suppose you have a website for your business or you store sensitive customer information on your computers or laptops. In that case, the costs of repairing the damage and the legal costs of a data breach can  impact significantly on your business, plus damage your reputation.

Commercial vehicle insurance

Apart from tools, you will also need a vehicle to get to and from job sites. You can use your personal vehicle initially, but must beware of the possibility that your car insurance doesn’t cover the loss of contents and damage if the vehicle is used for business purposes.

Here’s the way to ensure that your vehicle is insured for both its own value, and the valuable contents, by a proper commercial vehicle insurance package.

Beware – most car insurance companies do not cover the theft and damage to vehicles used for business purposes, which is another big reason you absolutely need plumber’s insurance.

Property Insurance

The property insurance portion of a plumber’s insurance package usually includes buildings owned or rented by the business, as well as additions and outdoor fixtures. The policy will also cover any business-owned items and also any items owned by a third party but kept temporarily in the control of the business or business owner. 

This coverage helps protect buildings; equipment; tools; inventory; furniture and personal property for damage caused by uncontrolled events, typically fire, explosion, wind damage, vandalism, smoke damage, etc. 

Product liability insurance

Suppose your plumber’s operations manufacture, acts as a wholesale distributor, or retails products to the public. In that case, you need to be protected against financial loss due to a defective product that causes injury or bodily harm.

Workers Compensation

Subject to state law, the requirements for and provisions of workers comp insurance for plumbers vary, but it is required in almost every state

Without workers comp for plumbers, your business is at a considerable money risk. Not only can you be fined for breaking the law, but you could also face a lawsuit for workplace injuries and have to carry both the legal and the compensation costs.

Commercial property insurance

For larger businesses with a significant amount of property and physical assets, this coverage protects you against damage and loss of assets caused by events such as fire, smoke, wind and hail storms, or riots and vandalism.

Where can I buy insurance for my plumbing business?

You can find the right cover by enquiring from qualified sources on which companies offer the best terms and conditions that suit your specific circumstances. There are hundreds of insurance companies, agents, and brokers who are keen to get your business.

While it’s easy to get offers, make sure you are not just jumping at the first, or the cheapest, offer. Talk to your business advisors, your bank, colleagues, or any professional associations in your community. We are sure you’ll find the right plumber’s insurance package at the best possible price.

How much does plumber’s insurance cost?

The cost of plumber’s insurance varies across states, and depends on the level of coverage you opt for, as well as the components of the package. For starters, the basics of public liability and E&O should cost around $90 – $150 per month for a small business.

The other parts of your policies depend heavily on how much cover you need. So for example, if you’ve got a lot of money invested in stock and equipment, then property and equipment cover will be more than if you’ve just got a modest toolkit.

Consult with a reputable broker or agent that can find you the best policies that match your needs. Brokers don’t cost you anything – they receive commissions from insurance companies when they sell policies, so make use of their expertise and time to find what’s best for you.

Shop around on the internet, where prices and benefits can vary significantly. Compare benefits, rates, and terms between the companies as well as from agents.

Every year your business changes and grows. It means your assets and your liabilities aren’t always the same.

Maybe you have purchased or replaced equipment. Hopefully, your business is growing and you have expanded operations. Make sure to evaluate all of this when you will see how they affect your coverage.

It is essential to pay attention to the aggregate limit plumber’s insurance provides, as this number indicates the payout limit for any and all claims for the entire term of the policy.

On that note, you should also make note of the deductibles for the plumber’s insurance policy, which is the amount you will have to pay out of pocket, before the insurance company picks up the rest of the tab.

Final thoughts

Plumber’s insurance protects both you and your customer against unforeseen damages and costs. It fills in any gaps to ensure that both your business and personal assets are fully protected from unexpected events.

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