For plumbing professionals, it is imperative to have appropriate insurance coverage to safeguard your business against common industry risks. Plumbing work can include potential accidents with significant financial implications. Scenarios such as property damage during repairs, injuries from tool usage, and project delays due to equipment malfunction necessitate a robust insurance plan.
This guide on Plumber Insurance addresses the critical insurance policies relevant to plumbers, with insights into cost expectations and strategies for managing insurance expenses effectively. Our analysis is grounded in a comprehensive review of 770 insurance quotes for plumbers from leading providers across the United States.
We also offer specialized resources aimed at the main coverages plumber need to understand — General Liability Insurance for Plumbers and Workers Compensation Insurance for Plumbers. To share more localized insights, we’ve also written state-specific guides for all 50 states, encompassing local rate information and requirements. These resources are designed to equip plumbers with an in-depth understanding of the insurance market, aiding in informed decision-making to protect your plumbing business.
Be sure to review the different types of plumbers who should have insurance.
What Insurance Do Plumbers Need?
For plumbers, from independent contractors to those overseeing larger enterprises, choosing appropriate insurance coverage is essential for protecting your business. Below is a tailored breakdown for plumbers at various stages of their business development:
- Sole Proprietors / Self-employed Plumbers: At the very least, you should consider General Liability Insurance. While there are no nationwide minimum requirements for General Liability Insurance for plumbers, policy limits of $1,000,000 per claim and $2,000,000 aggregate will generally cover 95% of cases. Typically, sole proprietors with no employees are not obligated to purchase Workers’ Compensation Insurance and thus, many do not. However, it’s important to note that if you were to get injured on the job, a Workers’ Comp Insurance policy can assist with medical expenses and replace lost wages during your recovery.
- Small Plumbing Businesses (less than 5 employees): In addition to the above, you should consider Workers’ Compensation Insurance, Inland Marine Insurance for tools and equipment, Commercial Auto Insurance if you utilize a vehicle for work, and Property Insurance if you own or lease a building.
- Medium to Large Plumbing Businesses (5+ employees): Alongside the aforementioned insurance types, medium to large businesses should also contemplate getting Umbrella Insurance, Employment Practices Liability Insurance, Cyber Insurance, and potentially Professional Liability Insurance (Errors & Omissions) if you’re involved in the design of plumbing systems. As your plumbing business expands and you begin to offer more intricate or higher-risk services, your clients may require higher insurance limits or additional policies such as Professional Liability Insurance.
The specific insurance and bond requirements vary by state. However, a general guideline is to have at least $1,000,000 in General Liability coverage. For Workers’ Compensation, each state has specific requirements, so it’s crucial to adhere to your state’s guidelines. Commercial Auto policies usually start at a minimum of $300,000 per accident.
Remember, while insurance might seem like just another business expense, it’s a crucial part of your business’s risk management strategy.
Let’s dive in to the primary types of insurance plumbers should consider:
General Liability Insurance for Plumbers
General Liability Insurance, crucial for plumbers, protects against claims related to injuries or property damage incurred by others. This insurance covers bodily injury, property damage, personal and advertising injury, products and completed operations, damage to rented premises, and medical payments. It includes legal defense costs against covered claims. Note that it only covers third-party injuries or damages; for employee coverage, Workers’ Compensation insurance is necessary.
Typical Liability Limits for Plumbers: Experts typically recommend $1 million per occurrence; $2 million aggregate. Elevating your coverage from $500,000 to $1 million increases your protection significantly while only slightly affecting your premiums.
Typical Liability Premium for Plumbers: For plumbers, this insurance typically costs between 2.75% and 6% of annual sales for coverage limits of $1 million per occurrence and $2 million aggregate. It’s generally advised to have at least $1 million in coverage, as the cost increase for this limit is usually minor compared to the benefits of higher coverage. Premiums vary by state and revenue. For instance, premiums for $1 million revenue can range from $14,800 in Ohio to $36,400 in New York.
Key factors influencing these premiums include:
- Sales/Revenue: Higher revenue indicates more work, thus a greater risk, leading to higher premiums.
- Policy Limits: Higher limits may be required for certain jobs or contracts, raising premiums. However, these costs should be factored into client charges.
- Claims History: A history of claims can increase premiums. A clean record helps in keeping insurance costs lower.
- Business Location: Geographic location impacts premiums, especially in states with stringent regulations and higher risks.
Here are average General Liability premiums for plumbers by state and revenues:
| State | $150K Revenue | $500K Revenue | $1M Revenue |
| California | $4,500 | $9,900 | $20,100 |
| Texas | $4,100 | $8,800 | $18,900 |
| Florida | $4,400 | $11,500 | $25,700 |
| New York | $5,600 | $16,700 | $36,400 |
| Pennsylvania | $4,100 | $11,400 | $26,200 |
| Illinois | $4,700 | $12,600 | $26,900 |
| Ohio | $2,500 | $6,900 | $14,800 |
| Georgia | $2,800 | $7,600 | $16,300 |
| North Carolina | $2,300 | $6,200 | $13,500 |
| Michigan | $2,800 | $7,800 | $16,400 |
Here are favorable General Liability premiums for plumbers as well as potential savings calculated off the average premiums above:
| State | $150K Revenue | $500K Revenue | $1M Revenue | |||
| Favorable Rate | Implied Savings | Favorable Rate | Implied Savings | Favorable Rate | Implied Savings | |
| California | $2,500 | 44% | $8,100 | 18% | $16,300 | 19% |
| Texas | $1,800 | 56% | $4,900 | 74% | $10,600 | 44% |
| Florida | $2,400 | 45% | $6,500 | 75% | $14,300 | 44% |
| New York | $4,800 | 14% | $14,300 | 61% | $32,800 | 10% |
| Pennsylvania | $2,800 | 32% | $9,600 | 63% | $21,100 | 19% |
| Illinois | $2,400 | 49% | $7,900 | 71% | $14,300 | 47% |
| Ohio | $1,600 | 36% | $5,000 | 66% | $10,500 | 29% |
| Georgia | $1,800 | 36% | $4,900 | 70% | $10,800 | 34% |
| North Carolina | $1,100 | 52% | $2,700 | 80% | $5,900 | 56% |
| Michigan | $1,900 | 32% | $6,000 | 63% | $10,900 | 34% |
Workers’ Compensation Insurance for Plumbers
Workers’ Compensation Insurance is vital for plumbers, providing coverage for employee injuries on the job, including medical expenses and lost wages. Premiums are determined based on job classifications set by the National Council on Compensation Insurance (NCCI). Plumbers fall under code 5183, with rates typically ranging from $1.75 to $4.50 per $100 of payroll annually. Workers’ Compensation Insurance is often mandatory for businesses with employees. It covers work-related injuries and illnesses, including medical and rehabilitation costs, lost wages, and in severe cases, death benefits. For employers, this insurance also covers legal expenses and settlements if an employee sues for work-related injuries or illnesses.
WC Policy Limits for Plumbers: Generally, there’s no maximum payout limit for employee benefits in workers’ compensation policies, but this can vary based on state regulations.
WC Premium for Plumbers: $1.75 to $4.50 per $100 of payroll. Premium rates differ significantly across states. For instance, in New York, the premium is approximately $6,550 per $100K of payroll, while in Oregon, it’s around $1,160.
Key Factors affecting Workers’ Compensation premiums for plumbers include:
- Class Code (5183 for Plumbers): Determines rates based on the risk level of the job. Plumbers generally have higher rates compared to office jobs.
- State Regulations: Each state has different workers’ compensation laws and cost-of-living factors, affecting premium rates.
- Experience Modification: Reflects your safety record. A higher number of accidents increases the rate, while a good safety record reduces it.
- Total Payroll: The overall payroll impacts the premium, calculated as (payroll / $100) * rate * experience modification.
Most and least expensive states for Plumber’s Workers Compensation Insurance:
| State | Premium per $100K Payroll |
| New York | $8,920 |
| New Jersey | $6,020 |
| Vermont | $4,930 |
| Maine | $4,840 |
| Hawaii | $4,510 |
| State | Premium per $100K Payroll |
| West Virginia | $1,170 |
| Oregon | $1,190 |
| Indiana | $1,370 |
| North Dakota | $1,410 |
| Arkansas | $1,450 |
Commercial Auto Insurance for Plumbers
Should your business own vehicles, this insurance protects against damages caused by or to your business vehicles. Commercial Auto Insurance is designed to cover vehicles that are used for your business. If you or your employees use personal vehicles for work-related tasks, it’s crucial to note that personal auto policies will not cover accidents, damage, or injuries occurring due to income-generating activities. Therefore, having commercial auto insurance for business-related use is essential.
Commercial auto insurance covers your business-owned vehicles in the event of an accident. For plumbers, this could range from $1,500 to $3,500 per vehicle each year.
Typical Policy Limits: $100K per person / $300K total people / $100K total property [or more]. Each state defines the minimum insurance requirements. Higher coverage limits are often recommended. Additionally, plumbers may also need coverage for tools and equipment transported in their vehicles, which isn’t included in these basic liability coverages. It’s recommended that you consult with an insurance advisor to determine the best coverage for your specific needs.
Typical Premium: $1,500 to $3,500 per auto
Key factors that determine your Commercial Auto premium include:
- Number of vehicles: The more vehicles you have, the higher chance of one of them being involved in an accident. More vehicles mean higher premiums.
- Vehicle type: Larger vehicles like trucks could potentially cause more damage in an accident, leading to higher costs.
- Driving records: If your drivers have a history of accidents or traffic violations, it could increase your premiums.
Plumber Bonds
Bonds, although not insurance, are often required to maintain licensure. Bonds ensure protection against issues like defective workmanship, design, or materials for a certain period post-completion of a project. The main distinction between Surety Bonds and insurance is in the claims process. With insurance, you’re liable only for your deductible, while the insurer covers the rest within policy limits. However, with Surety Bonds, if a claim is made and the Surety company compensates, they will seek reimbursement from you for any paid amounts.
Surety bonds are essentially a guarantee of fulfilling your contractual duties. State requirements for these bonds can vary, with plumbers in some regions needing a surety bond for licensure. The cost is a percentage (typically 1%-5%+) of the bond amount, which generally ranges between $5,000 to $25,000. This means you pay only a fraction of the total bond amount, not the full value upfront.
Bond Amount: Varies by State. Each state sets its own bond requirements for plumbers, managed by state licensing authorities. For example, California mandates a $25,000 bond, whereas Texas has no statewide bond requirement. However, many local areas within Texas, including cities and counties, do impose specific bonding requirements for plumbers. It’s crucial to consult your local licensing authority to confirm the most current bond obligations.
Typical Premium: Amount & Credit Dependent
Key factors that determine your bond premium include:
- Bond amount: The higher the bond amount, the higher the cost.
- Your credit score: A lower score might indicate a higher risk of default, leading to an increase in your premium.
Illustration of bond premium by amount and credit score:
| Bond Amount | Excellent Credit | Good Credit | Bad Credit |
| $5,000 | $100 – $150 | $150 – $200 | $200 – $400 |
| $10,000 | $100 – $300 | $300 – $500 | $500 – $1,000 |
| $15,000 | $150 – $400 | $400 – $750 | $750 – $1,500 |
| $20,000 | $180 – $500 | $500 – $1,000 | $1,000 – $2,000 |
| $25,000 | $200 – $500 | $500 – $1,200 | $1,200 – $2,500 |
Additional Insurance to Consider
Beyond the foundational coverage above, plumbers should consider these following coverage options for further protection:
Tools and Equipment Insurance (Inland Marine)
and Marine Insurance is a crucial safeguard for your movable property, such as tools and equipment, when you’re operating off-site. This coverage, which extends to the property of others, offers robust protection beyond a standard commercial owners’ policy.
The policy is invaluable in an industry like plumbing, where theft or loss of materials and tools from job sites is common. If your vital resources, like copper piping or your tools, are stolen or damaged, Inland Marine Insurance can save you from substantial financial burden. In essence, it protects your ability to work and generate income by ensuring you won’t have to cover the cost of replacements out of pocket.
Typical Policy Limits: $5K total limit [or more for significant materials and equipment].
Policies often have a per-item and per-occurrence limit, in addition to the overall policy limit. For example, a policy might have a $5,000 total limit and a $500 per-item limit. The typical limit for plumber tools and equipment policies is $5,000. You should ensure your coverage limit aligns with the worth of the items you’re covering to avoid over-insuring and paying too high premiums or under-insuring and paying for damages yourself. Items valued over $10,000 will necessitate inland marine insurance coverage.
Typical Premium: $250 to $750 per year [or more for significant materials and equipment].
Key factors that determine your Tools & Equipment Insurance premium include:
- Equipment value: The more expensive your tools and equipment are, the higher the potential payout from the insurance company. Hence, higher equipment values equal higher premiums.
- Risk environment: If your tools and equipment are used in high-risk environments or areas with high crime rates, you could face higher premiums.
Commercial Property Insurance
If you own your office building or hold substantial property, this insurance protects your tangible business assets. Commercial Property Insurance protects your business against hazards such as natural disasters, fire, and theft. Not only does it protect your commercial property against these threats, but it also safeguards the items within, like crucial documents, inventory, furniture, and equipment. Generally, damages from earthquakes and floods aren’t covered under this insurance, unless these specific risks are included in your policy. For plumbers, this can range from $500 to $2,000+ per year.
Typical Policy Limits: Property Dependent
Typical Premium: $500 to $2,000+ per year
Key factors that determine your Commercial Property Insurance premium include:
- Property location: If your property is in an area prone to natural disasters or high crime rates, your premiums might be higher.
- Property value: Higher property values equate to higher potential insurance payouts, leading to higher premiums.
- Construction type: If your property is built with fire-resistant materials, you may be able to negotiate lower premiums.
Errors & Omissions (E&O)
Errors and Omissions (E&O) insurance, also known as professional liability insurance, safeguards contractors from financial losses due to mistakes, negligence, or claims of error. While general liability insurance addresses claims related to physical injuries or property damage, E&O insurance defends against lawsuits pertaining to financial losses. For instance, a plumber who incorrectly installs pipes, resulting in significant repair costs for the general contractor, could be protected by E&O insurance. This coverage typically covers legal fees, settlements, and judgments. Even though E&O insurance isn’t typically a legal necessity, many construction professionals secure such policies as a precaution against significant financial losses that could arise from allegations of negligence. This could cost around $500 to $1,000 annually for plumbers.
Typical Policy Limits: $250K to $1M total limit
Typical Premium: $500 to $1,000 per year
Key factors that determine your E&O Insurance premium include:
- Type of work: If you perform high-risk work such as high-pressure installations or commercial work, expect to pay more.
- Past claims: A history of claims might increase your premiums.
Employment Practices Liability Insurance (EPLI)
This insurance shields you against lawsuits over employment practices, such as wrongful termination or discrimination. EPLI policy limits typically have a range of $500,000 to $1,000,000. Consult with an insurance adviser or broker to identify the optimal coverage limits for your company. In terms of cost, most small to medium-sized plumbing businesses can anticipate an annual EPLI coverage cost between $1,000 and $2,200+.
Typical Policy Limits: $500K to $1M total limit
Typical Premium: $1,000 to $2,200+ per year
Key factors that determine your EPLI premium include:
- Employee Characteristics: business characteristics like number of employees, revenue, and employee turnover matter a lot; more employees means more premium.
- Claims History: history of claims and employment disputes will likely have a significant impact on your premium; more claims means more premium.
- Employment Practices: you can expect to see pricing change based on the employment practices your company maintains, ie employee handbook and procedures.
Cyber Insurance
Cyber liability insurance protects businesses from data breaches and loss of sensitive client information. Its necessity for contractors depends on their use of technology. If your plumbing business uses digital devices for business, takes credit card payments, stores client information digitally, or works for large commercial clients, you may benefit from this insurance. Small to medium-sized businesses are at greater risk of data breaches due to limited resources for protection. This typically costs plumbers around $750 to $1,500+ per year.
Typical Policy Limits: $250K to $1M limit
Typical Premium: $750 to $1500+ per year
Key factors that determine your Cyber Insurance premium include:
- Company Data: The amount and sensitivity of data influence insurance costs. Smaller plumber businesses with limited data pay less than other industries that store sensitive personal data.
- Revenue: Annual revenue impacts insurance costs. Higher revenue businesses are seen as more attractive targets for cybercriminals, leading to higher premiums.
- Security Measures: Strength of security measures can lower premiums. Businesses investing in cybercrime prevention and education are rewarded.
Umbrella Insurance
Umbrella insurance provides extra liability coverage beyond the limits of your other policies. This insurance could range from $400 to $1,200+ annually for each additional $1 million in coverage. Businesses deemed high-risk or with high existing policy limits may face higher premiums.
Typical Policy Limits: $1M [or more for larger businesses]
Typical Premium: $400 to $1,200+ per year
Key factors that determine your Umbrella Insurance premium include:
- Business Size: Larger businesses typically pay more due to higher risks and potential for larger claims.
- Type of Plumbing Work: The nature of plumbing work can involve high-risk tasks, impacting costs. Specialized or high-risk plumbing tasks can lead to higher premiums.
- Location: Costs vary based on local regulations, potential hazards, and cost of living.
- Coverage Limits: The coverage and conditions of primary policies and their corresponding limits influence umbrella insurance cost.
- Claim History: Frequent past claims can increase the cost of umbrella insurance
Total Cost of Plumber Insurance Programs
The cost of plumber insurance is influenced by factors like the size of your business and your experience as a business owner. As your business grows in size and complexity, your insurance policies, limits, and premiums will likely change significantly. Below we’ve explained several factors that may impact your insurance premiums:
- Business Size: Larger businesses, with more revenue and employees, usually face higher insurance costs. This is due to the increased exposure to risks as more work implies a greater chance of claims. Gross revenues is a key determinant of Liability premiums and employee payroll is a key determinant of Workers Compensation premiums.
- Employee Job Classification: The National Council on Compensation Insurance (NCCI) assigns Class Codes based on employees’ job descriptions. Roles with higher risks such as plumbing jobs command a higher worker’s compensation rate compared to office-based roles.
- Policy Limits: There may be circumstances that necessitate higher liability limits. The need for higher limits to meet contractual terms results in a higher premium. It’s crucial to remember that such costs should ideally be passed on to the customer.
- Type of Plumbing Work: More risky operations, such as major pipe installation or sewer work, can lead to higher insurance premiums.
- Professional Experience: Businesses with an established track record and professional experience often enjoy lower insurance costs.
- Business Location: Costs can differ by state due to variations in laws, market conditions, and levels of risk. The location of your business can greatly impact premiums, with states having more regulations often leading to higher premiums.
- Claims History: A history of multiple claims can result in higher premiums. Similar to auto insurance, the more claims you have, the more you’ll pay for your General Liability Insurance. For Workers Compensation Insurance, an ‘experience modification’ factor assigns a numerical value to your safety record. A base number is 1, with more accidents leading to a higher number and a better safety record resulting in a lower number. For Commercial Auto Insurance, the driving records of all employees operating vehicles will need to be provided. As with personal auto insurance, more tickets and accidents mean a higher premium.
To give you a general idea of what to expect, we’ve provided a summary of illustrative businesses along with typical insurance coverage and premiums. However, it’s essential to note that each business is unique, and it’s best to consult with an insurance broker who understands the specific risks you face. Remember that there are numerous insurance carriers that specialize in working with plumbers. Some carriers focus on specific types of insurance, so partnering with a specialized broker will allow you to tap into the carriers who are most suitable for your needs. This way, you can build a comprehensive insurance program that is specifically tailored to protect your plumbing business. We strongly recommend you work with an insurance expert who has access to the right insurance markets and can tailor a program that suits your plumbing business.
| Busineess Type: | Coverages Included: | Total Cost of Insurance: |
| Plumbing Contractor Owner/Operator $150K Revenue | General Liability (GL) || $1M per occurrence / $2M total Commercial Auto || $100K/$300K/$100K Surety Bond || $25K Tools & Equipment || $5K | $9,500 |
| Plumbing Business 2 Employees $500K Revenue | General Liability (GL) || $1M per occurrence / $2M total Workers’ Compensation || *Required Commercial Auto || $100K/$300K/$100K Surety Bond || $25K Tools & Equipment || $10K Commercial Property || *Varies Umbrella || $1M | $35,000 |
| Plumbing Business 5 Employees $1M Revenue | General Liability (GL) || $1M per occurrence / $2M total Workers’ Compensation || *Required Commercial Auto || $100K/$300K/$100K Surety Bond || $25K Inland Marine || $25K Commercial Property || *Varies Umbrella || $1M | $80,000 |
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