Insurance Cost Guide for Plumbers: 2025 Benchmarking Data

Plumbing contractors need two essential insurance policies: General liability (GL) protects against third-party property damage and bodily injury claims, while workers’ compensation (WC) covers employee injuries and is mandatory in most states with employees.

Plumber insurance costs vary dramatically across states, with our analysis of 900+ quotes revealing differences that can impact your bottom line by thousands annually. General liability premiums range from 0.8% of revenue in Kansas to 9.8% in South Carolina, while workers’ compensation rates show an even starker 7.6x variation – from $1.17 per $100 payroll in West Virginia to $8.92 in New York.

For a typical $500K plumbing business, total insurance costs range from $16,210 to $38,420 annually depending on location. Our data covers three business profiles: solo operations ($150K revenue), mid-size firms ($500K revenue with 3 employees), and larger contractors ($1M revenue with 5 employees) – all with 5+ years claims-free history and 10% subcontractor usage.

The findings reveal massive savings opportunities through strategic shopping. Kansas contractors can reduce GL premiums by 69.4%, while even expensive states like Louisiana offer 56.5% potential savings. These variations – representing $6,710 in possible GL savings for a mid-size plumber – underscore why obtaining multiple quotes is critical.

This guide examines both essential coverages plus the full spectrum of available policies to help you optimize your total insurance investment.

After exploring the costs in detail, it’s crucial to understand the full range of plumber insurance coverage available– from general liability and workers’ compensation to professional liability, tools coverage, and commercial auto – as your total insurance investment depends on which policies your business truly needs.

General Liability Premium Ranges:

• National Average: 3.5% to 6.8% of annual revenue (at $150K revenue level)
• Favorable Markets: 2.7% to 5.7% of annual revenue
• Potential Savings: 33% to 39% of current GL premium possible when moving from average to favorable market rates

Workers’ Compensation Rates:

• Class 5183 (Plumbing): $1.17 to $8.92 per $100 payroll

Six Major Cost Drivers

1. Classification Codes – Different GL and WC classifications based on type of plumbing work performed

2. Years in Business – Primarily affects GL rates; newer businesses typically pay higher premiums

3. Subcontractor Usage – Impacts both GL (uninsured sub exposure) and WC (payroll audits)

4. Business Size – GL based on revenue projections; WC based on actual payroll

5. Claims History – GL claims affect rates for 3-5 years; WC claims impact experience modification factor

6. Geographic Location – GL varies by local court costs and competition; WC set by state rating bureaus

Specialization Rate Analysis – General Liability

Blended Residential and Commercial Plumbing

Most plumbing contractors operate across both residential service and commercial construction markets. The data below reflects a typical blend of these operations, with rates varying based on the specific mix of work performed.

Revenue Level	GL National Average	GL Favorable Rate	Potential Savings*	GL Premium Range
$150,000	$7,450	$4,550	39%	3.5% – 6.8%
$500,000	$20,580	$13,870	33%	2.7% – 5.7%
$1,000,000	$40,790	$26,210	36%	2.7% – 5.8%

*Potential savings represent the possible reduction when moving from average to favorable market rates

GL Risk Advantages for Residential Work:

• Predictable work scope reduces unexpected claims
• Direct customer relationships improve communication
• Limited public exposure during off-hours work
• Lower average claim severity than new construction

GL Risk Challenges for Residential Work:

• Water damage claims from fixture failures
• Mold allegations from undetected leaks
• Property access disputes with homeowners
• Tool theft from service vehicles

GL Risk Advantages for Commercial Work:

• Controlled jobsite access reduces public exposure
• General contractor oversight of safety protocols
• Clear project specifications minimize scope disputes
• Newer building materials reduce corrosion claims

GL Risk Challenges for Commercial Work:

• Coordination delays creating liquidated damages
• Underground utility strikes during excavation
• Crane and equipment operation exposures
• Multi-story water damage from pipe failures
• Contractual liability from indemnification clauses

Workers’ Compensation Note: Plumbers typically classify under 5183 with rates varying dramatically by state from $1.17 to $8.92 per $100 payroll. Those performing significant HVAC or sheet metal work may have split classifications.

Geographic Cost Variations

50-State Interactive Heat Maps – General Liability & Workers Comp Analysis

The four heat maps above provide instant visual insight into plumbing contractor insurance costs across all 50 states:

1. GL Premium Ranges - Visualize how general liability costs as a percentage of revenue vary nationwide, from as low as 0.8% in Kansas's competitive markets to over 9.8% in South Carolina's high-cost environment. Darker shades indicate higher premium ranges, helping you benchmark your current costs against regional averages.
   
2. GL Savings Opportunities - Discover potential premium reductions available through strategic shopping, ranging from 12.2% in New York's saturated market to over 69.4% in Kansas where significant carrier competition exists. This map reveals where shopping efforts yield the greatest returns.
   
3. Carrier Competition Levels - Understand market dynamics affecting your negotiating power. States with higher competition percentiles offer more carrier options and aggressive pricing, while lower percentiles indicate limited options requiring specialized broker relationships.
   
4. WC Rates per $100 Payroll - Compare workers' compensation costs for plumbing Code 5183 across all states, from West Virginia's nation-leading $1.17 to New York's $8.92. This dramatic 7.6x variation significantly impacts total labor costs and competitive positioning.
   

Workers' Compensation Rate Analysis

Workers' compensation rates vary dramatically based on state-specific rating bureaus and loss experience. The primary plumbing classification (5183) shows extreme variation across states.

Five Lowest WC Rate States (Class 5183):

• West Virginia: $1.17 per $100 payroll
• Oregon: $1.19 per $100 payroll
• Indiana: $1.37 per $100 payroll
• North Dakota: $1.41 per $100 payroll
• Arkansas: $1.45 per $100 payroll

Five Highest WC Rate States (Class 5183):

• New York: $8.92 per $100 payroll
• New Jersey: $6.02 per $100 payroll
• Vermont: $4.93 per $100 payroll
• Maine: $4.84 per $100 payroll
• Hawaii: $4.51 per $100 payroll

Combined Insurance Cost Analysis

For comprehensive benchmarking, we've analyzed states offering the best combined value considering both GL market dynamics and WC rates.

Top 5 Most Affordable Combined Insurance States:

1. Kansas

• GL range for revenue: 0.8% to 5.9%
• GL potential savings: 69.4% possible when moving from average to low rates
• WC rate 5183: $2.34 per $100 payroll
• Exceptional GL market with the lowest minimum rates nationally combined with moderate WC costs creates strong value for contractors

2. Virginia

• GL range for revenue: 1.2% to 2.9%
• GL potential savings: 48.2% possible when moving from average to low rates
• WC rate 5183: $2.56 per $100 payroll
• Outstanding combination of low GL rates and reasonable WC costs with conservative legal climate supporting both

3. Oregon

• GL range for revenue: 2.5% to 5.9%
• GL potential savings: 26.7% possible when moving from average to low rates
• WC rate 5183: $1.19 per $100 payroll
• Despite higher GL ranges, Oregon offers the second-lowest WC rates nationally, creating strong overall value

4. West Virginia

• GL range for revenue: 2.0% to 6.3%
• GL potential savings: 44.1% possible when moving from average to low rates
• WC rate 5183: $1.17 per $100 payroll
• The nation's lowest WC rates combined with strong GL savings potential offsets moderate GL base rates

5. Missouri

• GL range for revenue: 1.3% to 3.6%
• GL potential savings: 53.5% possible when moving from average to low rates
• WC rate 5183: $3.65 per $100 payroll
• Highly competitive GL market with significant savings opportunities despite moderate WC rates

Top 5 Most Expensive Combined Insurance States:

1. New York

• GL range for revenue: 5.2% to 8.7%
• GL potential savings: 12.2% possible when moving from average to low rates
• WC rate 5183: $8.92 per $100 payroll
• Highest WC rates nationally combined with severe GL pricing creates most expensive insurance environment

2. South Carolina

• GL range for revenue: 4.3% to 9.8%
• GL potential savings: 13.5% possible when moving from average to low rates
• WC rate 5183: $3.54 per $100 payroll
• Highest GL rate ranges in the data with limited shopping benefits, though WC rates remain moderate

3. New Jersey

• GL range for revenue: 4.2% to 7.5%
• GL potential savings: 23.5% possible when moving from average to low rates
• WC rate 5183: $6.02 per $100 payroll
• Second-highest WC rates with high GL ranges, though moderate shopping opportunities exist

4. Connecticut

• GL range for revenue: 3.3% to 5.0%
• GL potential savings: 20.0% possible when moving from average to low rates
• WC rate 5183: $4.47 per $100 payroll
• Above-average costs in both GL and WC with limited market competition

5. Louisiana

• GL range for revenue: 3.1% to 8.4%
• GL potential savings: 56.5% possible when moving from average to low rates
• WC rate 5183: $2.91 per $100 payroll
• While GL shopping provides significant savings potential, base rates remain among the highest

Note that even in expensive states, strategic shopping can yield significant savings. Kansas contractors can potentially reduce GL premiums by 69.4%, while Louisiana shows 56.5% savings potential despite high base rates.

Coverage Components - General Liability

Understanding GL Limit Structures

General liability limits significantly impact both premium costs and protection adequacy. Most plumbing contractors choose between three standard limit configurations:

$500K/$1M Limits (Per Occurrence/Aggregate)

• Suitable for smaller residential service work
• Typical premium impact: Base rate
• May not meet commercial contract requirements

$1M/$2M Limits (Per Occurrence/Aggregate)

• Industry standard for most plumbing contractors
• Typical premium impact: No increase from base rate
• Meets most residential and light commercial requirements

$2M/$4M Limits (Per Occurrence/Aggregate)

• Required for large commercial projects and municipal work
• Typical premium impact: Moderate to significant increase from base rate
• Often achieved through primary plus umbrella coverage

Deductible Strategies

Deductible selection provides premium flexibility while requiring careful cash flow consideration:

$0 Deductible

• Maximum insurer responsibility from first dollar
• Appropriate for new businesses with limited reserves
• Premium impact: Base rate

$2,000 Deductible

• Eliminates nuisance claims while preserving major loss protection
• Provides minor to modest premium reduction
• Requires maintaining operating reserves

Specialized Plumbing Endorsements

Faulty Workmanship Coverage - Available as a GL endorsement with sublimits, this coverage addresses allegations of improper installation or design errors. Critical for contractors providing system design or consultation services beyond pure installation work.

Tools & Equipment Coverage - While often available as a GL endorsement for hand tools, contractors with significant equipment investments should consider separate inland marine policies. Service plumbers with fully equipped trucks typically need substantial tool coverage.

Cost-Saving Strategies

Strategic Shopping Timeline

General Liability Renewal Approach: Begin shopping 60 days before renewal to allow proper underwriting and negotiation. Submit applications to 5-7 carriers simultaneously, emphasizing safety records and specialization expertise. Avoid last-minute shopping which limits options and prevents premium financing arrangement if needed.

Workers' Compensation Timing: Start WC shopping 90 days prior to renewal, particularly when seeking alternative rating factors or retro programs. State funds require longer lead times than private carriers. Coordinate WC renewal with GL when possible to maximize account credits.

Workers' Compensation Optimization Strategies

Classification Code Management - Proper employee classification can generate substantial savings. A plumber with $300,000 payroll in New York at $8.92 per $100 pays $26,760 annually. The same payroll in West Virginia at $1.17 per $100 costs only $3,510. Document time allocation through daily work logs and separate payroll records by work type.

Payroll Segregation Tactics - Separate clerical employees from field classification for significant savings. A $40,000 clerical salary in New York saves $3,568 when properly classified versus field rates. Maintain detailed records showing physical separation from plumbing operations.

Experience Modification Management - Focus on claims under $10,000 which disproportionately impact mod calculations. Implement return-to-work programs reducing lost time claims. Consider deductible programs to eliminate frequency-driven mod increases. A 0.80 mod versus 1.20 mod saves 33% on manual premium.

Premium Audit Preparation - Organize records by classification code before audit. Exclude overtime premium from payroll calculations. Document subcontractor certificates of insurance. Proper audit preparation prevents unexpected additional premiums and supports classification arguments.

General Liability Cost Reduction

Safety Program Documentation - Formalized safety programs with weekly toolbox talks, documented training, and written procedures support premium credits. Focus on water damage prevention protocols and excavation safety given plumbing-specific exposures.

Subcontractor Management - Require certificates showing appropriate GL limits from all subs. Implement written agreements transferring liability. Track insurance compliance through dedicated software. Uninsured subcontractor exposure can significantly increase GL premiums.

Claims Management - Report claims immediately regardless of perceived merit. Investigate and photograph all incidents thoroughly. Never admit liability or promise payments. Maintain 5-year claims history documentation for underwriting credits.

Contract Review Protocols - Avoid blanket hold harmless agreements accepting others' negligence. Limit liquidated damages to reasonable amounts. Require mutual waiver of subrogation on larger projects. Poor contracts create uninsurable exposures affecting renewals.

Methodology Note

This analysis synthesizes general liability data from plumbing contractors across all 50 states, with varying sample sizes per state. GL premium ranges reflect actual market conditions from the data provided, showing low-end and high-end percentages of revenue. Workers' compensation rates represent current manual rates for classification 5183 before experience modifications or schedule credits. National averages and favorable rates based on aggregated premium data across three revenue tiers. Potential savings calculations based on the difference between national average and favorable market rates as provided in the data, representing the possible reduction when moving from average to low-end market rates. All examples assume standard coverage forms without significant endorsement modifications.