Business owners need separate insurance to cover their businesses. This is true even if you are self-employed and own a business that you run out of your home because your homeowners insurance will not usually cover any claims related to a commercial enterprise.
Specialized work requires specialized insurance coverage, to address the different types of risks each business faces. Contractors, whether focused specifically on plumbing issues or more general remodeling that includes plumbing, should have insurance coverage designed to protect the work they do.
What does general liability insurance cover for plumbers?
General liability is a core type of business insurance. It protects a business from legal claims resulting from a covered event, typically to be considered a problem or damage that you have caused while performing work.
For example, if you are addressing a plumbing problem in a client’s kitchen and while making the repairs, you drop a heavy wrench into a porcelain farmhouse sink, seriously damaging it. Your general liability insurance will cover the property damage you’ve caused.
Another example of what general liability insurance covers for plumbers is medical payments. If someone other than you (or one of your employees) is hurt—say, by slipping on some water that was splashed on a tile floor during the course of repair work—your general liability coverage will help to cover the medical payments associated with that injury.
General liability coverage can even help you with legal fees. In the event that a client sues you, arguing that your negligence was the cause of an injury that led to a loss of their earnings, defending yourself will likely require hiring legal counsel. With general liability coverage, you can get the legal help you need.
Why do plumbers need general liability insurance?
Plumbers need general liability insurance to protect their businesses from the unexpected. Accidents and other risks that are associated with work can expose plumbers to legal claims, which can be financially devastating if there is a need to pay out of pocket.
Two specific concerns are property damage and customer injuries. These are areas of risk, as plumbers work in client homes, doing work on essential systems.
Water can both cause a lot of expensive damage, and increase the risk of injuries, such as customers slipping and falling on wet floors. Liability coverage also protects you from claims that faulty work led to damage or injuries.
How much general liability insurance do plumbers need?
Because insurance coverage depends in large part to what types of risks a business may encounter, the amount of general liability insurance coverage that plumbers need will vary.
The size of your plumbing business, how many employees you have, and your prior claims history are all factors that will impact your risk level.
When talking to your insurance agent, you will likely hear about two coverage limits for your general liability insurance: a per-occurrence limit and a general aggregate limit.
The per-occurrence limit is a limit placed on each individual claim, and the general aggregate limit is the maximum amount your insurer will pay out for all claims total during your policy period.
For example, let’s say you have a per-occurrence limit of $200,000 on your policy, with an aggregate limit of $1,000,000. If a customer files a claim alleging damages of $210,000, your insurance would pay $200,000—which is the per-occurrence limit—and your business would be expected to cover the remaining $10,000.
This claim would also count against your aggregate limit, since that represents a total limit during the policy period. It would drop by the $200,000 paid on the claim—so, the remaining limit for the policy period would now be $800,000. Basically, every claim paid out during a policy period will reduce the amount available for your aggregate limit.
What else should a plumber consider when purchasing general liability insurance?
Some states require plumbers to carry general liability insurance as part of their licensing requirements. So, it is important to talk to an insurance professional about the types of insurance coverage you may need before you begin working with clients.
It is fairly common for customers to ask contractors for proof of insurance coverage before starting on a project. Making sure that you have the correct coverages and a sufficient amount may mean the difference between securing a job with a potential client—or being passed over for your competition.
What doesn’t general liability insurance cover?
There are many other facets of a plumbing business that need separate, additional forms of insurance because general liability does not cover them. These include things like commercial auto insurance, worker’s compensation insurance, mistakes made on the job, and coverage for equipment and tools used on the job.
Each of these areas has insurance offerings tailored to the specific risks, and are not covered under your general liability insurance.
If you have questions about securing general liability insurance for your plumbing business, reach out to the experts at Rate Insurance. With a range of insurance options available, they can help you find the right coverage to protect your plumbing business.
Disclaimer:
All information provided in this publication is for informational and educational purposes only, and in no way is any of the content contained herein to be construed as financial, investment, or legal advice or instruction. Rate Insurance does not guarantee the quality, accuracy, completeness or timelines of the information in this publication. While efforts are made to verify the information provided, the information should not be assumed to be error free. Some information in the publication may have been provided by third parties and has not necessarily been verified by Rate Insurance. Rate Insurance, its affiliates and subsidiaries do not assume any liability for the information contained herein, be it direct, indirect, consequential, special, or exemplary, or other damages whatsoever and howsoever caused, arising out of or in connection with the use of this publication or in reliance on the information, including any personal or pecuniary loss, whether the action is in contract, tort (including negligence) or other tortious action.
