Operating a plumbing business in Arizona comes with substantial risks, from pipe bursts and sewer backups to floods, fires, injuries and more. Having proper insurance is essential to secure your business in the event of unforeseen liability claims, property damage, lawsuits and other costly problems.

This comprehensive guide provides plumbers across Arizona with a detailed overview of typical insurance costs based on business size, additional coverages to consider, how insurance carriers calculate premiums, and most importantly, tips on partnering with the right agent or broker to secure tailored coverage at a competitive price. Read on to gain invaluable insights into protecting your plumbing business and avoiding financially devastating gaps in your insurance program.

Plumbers working in Arizona need to have the right plumber insurance policies in place. This typically includes general liability insurance for plumbers to protect against third-party claims and workers’ compensation for plumbing businesses to cover employee injuries on the job.

Key Factors that Influence Insurance Costs for Plumbers in Arizona

While insurance rates are dependent on individual risk characteristics, there are several overarching factors that impact plumber insurance costs in Arizona:

Location – Insurance rates can vary dramatically by state and even by zip code within states. Arizona’s insurance rates tend to be moderately high compared to national averages due to the prevalence of risks like extreme summer heat, flash flooding, heavy wind and hail storms and more. Higher risk equals higher premiums.

Claims History – One of the biggest determinants of insurance costs is a plumbing company’s history of prior claims and losses. Plumbers with frequent past liability claims or large losses may face exponentially higher premiums or difficulty securing coverage at all. Maintaining a clean loss run history is crucial.

Services Offered – Plumbers who take on more inherently hazardous work involving gas lines, sewer snake drain cleaning, industrial projects or large commercial jobs often pay higher premiums than residential plumbers doing straightforward repairs and replacements. The services you provide indicate risk.

Revenue Size – As a general rule, larger plumbing businesses with higher revenues have greater insurance costs. More revenue means you likely take on bigger jobs with bigger liability risks if something goes wrong. Revenue is a proxy for overall risk exposure.

Number of Employees – The more W-2 employees you have, the higher your premiums for workers’ compensation, EPLI, etc. Workforce size is a key rating factor.

Business Structure – Sole proprietors may have lower costs than incorporated entities like LLCs and corporations. However, proper entity structuring is about more than just insurance.

Economic Conditions – Insurance rates rise during strong economic periods when construction activity increases. More plumbing work means more claims. Rates soften during down markets as claim frequency drops.

There are always exceptions to trends, but understanding the key variables that impact plumber insurance rates in Arizona provides helpful context when evaluating your costs. Let’s now look at typical premium ranges based on your business size.

Small Plumbing Business Insurance Costs

For purposes of insurance, a “small” plumbing business in Arizona is generally defined as having $500,000 or less in annual revenue and between 1-2 employees on payroll beyond just the owner. Here are typical annual insurance premium ranges for major coverages that a small plumbing operation would likely carry:

General Liability Insurance – $3,200 – $12,600

Commercial Auto Insurance – $1,500 – $3,500 per vehicle

Workers’ Compensation – $1,600 – $2,800

Surety Bonds – $100 – $500

Inland Marine (Tools & Equipment) – $250 – $750

Total Insurance Premiums – $7,000 – $20,000

The wide premium range demonstrates how individual risk characteristics impact costs even within a defined business size segment. One plumber may pay $7,000 total for insurance while another pays $20,000, based on unique variables like location, clientele, past claims, services offered and more. Work closely with your insurance agent or broker to understand the specific factors that drive your rates up or down compared to peers.

Medium Sized Plumbing Business Insurance Costs

For our purposes, a “medium” plumbing business generates approximately $500,000 to $1 million in annual revenue and has between 3 to 5 employees in addition to the business owner. Here are the typical insurance premium ranges for a medium plumbing operation:

General Liability – $16,000 – $26,000

Commercial Auto – $4,500 – $10,500

Workers’ Compensation – $5,000 – $8,500

Surety Bonds – $100 – $500

Inland Marine – $1,500 – $2,500

Total Premiums – $27,000 – $54,000

As this illustrates, a medium revenue plumbing business faces significantly higher premiums across all major types of insurance coverage compared to a small business. The risks and liability exposures grow exponentially as the business expands. Proper insurance protection becomes even more essential and expensive.

Large Plumbing Business Insurance Costs

What defines a “large” plumbing contractor? For our discussion, let’s define it as a company generating over $1 million in annual revenue and having 5 or more employees beyond the owner. Here are the typical annual insurance premium ranges for a large plumbing operation:

General Liability – $37,000 – $60,000+

Commercial Auto – $10,000+

Workers’ Compensation – $10,000 – $25,000+

Surety Bonds – $500 – $1,500+

Inland Marine – $2,500 – $5,000+

Total Premiums – $75,000+

As you scale to a large, complex plumbing business model with multiple job sites, vehicles, employees and more, your risks and insurance needs compound. While insurance costs are far higher, the peace of mind and financial protection provided by adequate coverage is an essential business investment to defend your company from potentially catastrophic losses.

Additional Insurance Coverages to Consider

Beyond the major types of core insurance policies that most plumbers carry (general liability, commercial auto, workers’ comp, etc.), there are additional coverages that may be beneficial depending on your unique business structure and exposures:

Commercial Property Insurance – Protects your physical business premises and equipment from perils like theft, fire, weather damage, vandalism and more.

Cyber Liability Coverage – Provides protection against data breaches, hacking and electronic theft which are increasing threats.

Employment Practices Liability – Defends against employee lawsuits alleging discrimination, harassment, wrongful termination and other labor issues. Especially pertinent for larger plumbing companies with bigger workforces.

Errors & Omissions Coverage – Provides protection against financial loss from alleged professional errors or negligence in delivering your plumbing services.

Umbrella Liability – Provides additional liability limits above your primary insurance, essentially bolstering your total coverage.

Carefully discuss your specific business situation with an insurance expert to determine which, if any, of these added coverages may be beneficial for your plumbing operation.

How Insurance Carriers Calculate Plumbing Premiums

In order to set appropriate rates, insurance carriers weigh multiple factors about your plumbing business. Some key considerations include:

Claims History – The frequency and severity of past insurance claims filed will be a major rating factor. Too many claims is a red flag.

Services Provided – Plumbers providing inherently more hazardous services like sewer line cleaning or industrial work often pay higher premiums.

Materials Handled – Usage of combustible or toxic chemicals may increase your general liability risk profile. Proper handling and storage is key.

Licensing & Training – Proper licensing, bonding and training credentials for you and your employees signals lower risk to underwriters.

Safety Protocols – Rigorous safety programs, proper equipment maintenance, job site precautions all contribute to lower insurance costs over time. Demonstrating a culture of safety is impactful.

Credit History – Surprisingly, personal credit history can be a contributing factor to premiums. Fair or poor business credit may lead to higher rates.

Revenue Size – Insurers associate higher revenue with greater risk exposure. More income means you likely take on bigger plumbing jobs.

Experience Mod – Your workers’ comp experience mod adjusts premium based on past history of employee claims and losses. Higher mods mean higher premiums.

In Arizona, insurance carriers must file and justify their rating formulas with the state Department of Insurance. Understanding how carriers assess risk is extremely helpful when shopping for coverage and comparing options.

Getting the Right Insurance for Your Plumbing Business

Working with a plumbing specialist insurance agent or broker who has deep access to top insurance markets is crucial to securing tailored coverage at the best price. True insurance professionals will take the time to understand your unique business and risk profile in order to match your particular exposures with insurance carriers that specialize in underwriting plumbers. Avoid agents that dabble in too many industries and lack plumbing expertise. Ask prospective agents about the plumbing insurance carriers they represent, industry associations, client specializations and length of time working with contractors like you. By partnering with the right insurance advisor, plumbers can often access specialized coverage forms, preferred pricing and enhanced services not available to the general public buying insurance. The right agent or broker acts as your trusted risk advisor to demystify the complex process of business insurance.

Ask These Questions When Choosing an Insurance Agent:

  • How many years have you specialized in plumber insurance specifically?
  • What insurance carriers do you represent that focus on plumbing contractors?
  • Do you have access to exclusive coverage options and pricing for plumbers?
  • Are you involved with any plumbing industry associations or groups?
  • What percentage of your clients are plumbers or contractors?
  • Will you provide ongoing policy reviews and risk management advice as my business evolves?

Taking time to find a plumbing specialist will pay dividends over the long haul through tailored coverage and claims support.


The insurance costs and coverages outlined in this guide provide Arizona plumbers with a starting point for understanding typical insurance rates based on revenue size and other factors. However, every plumbing business is truly unique when it comes to risk characteristics. By accounting for your particular services, safety protocols, licenses, location, clientele, and other variables, an experienced plumbing insurance specialist can tailor coverage specific to your operations at a competitive price. Protect your business, your employees, your assets and your livelihood by proactively addressing this crucial aspect of owning a plumbing company. The time invested upfront to implement proper insurance will provide peace of mind and financial security for years to come.