For plumbers in Illinois, having adequate insurance coverage is an absolute must to protect their business, employees, clients and reputation from the many risks in this industry. From minor mishaps to major lawsuits, the various liabilities that plumbers face make insurance an essential safeguard. This comprehensive guide will provide Illinois plumbers with a detailed overview of the key factors that influence the costs of insurance, typical premium ranges based on business size, supplemental coverages to consider, how carriers calculate rates, and most importantly, advice on working with the right insurance professional to secure optimal protection specific to your business needs and budget. With the proper insurance program in place, Illinois plumbers can focus on delivering excellent service, running a profitable enterprise and serving customers, not worrying about risks.
For plumbers in Illinois, having the right plumbing insurance coverage is essential. This usually includes general liability protection for plumbers to protect against third-party claims and workers’ compensation insurance for plumbing businesses to cover employee injuries on the job.
Key Factors Influencing Insurance Costs for Plumbers in Illinois
Several pivotal factors determine how much plumbers will pay for insurance policies in the state of Illinois:
Type of Insurance Coverage – The specific types of insurance policies that a plumbing business carries play a significant role in overall insurance costs. Core coverages like General Liability, Workers’ Compensation, Commercial Auto and others all come at different prices depending on limits,Deductibles and other variables.
Size of Plumbing Business – The total number of employees on payroll, number of company-owned vehicles, annual payroll amount and overall annual revenues of a plumbing business have a direct impact on insurance premiums. Generally, larger plumbing businesses with more employees, vehicles, payroll and revenue exposure will pay higher overall insurance costs.
Claims History of the Plumbing Business – Insurance carriers take a close look at past claims history when underwriting policies. Plumbing contractors with frequent past claims are deemed higher risk and will likely pay elevated premiums. Maintaining a clean claims history with few or no claims is a key way to help keep insurance costs in check.
Geographic Location Within Illinois – Insurance premiums can vary across different regions of the state based on localized risk factors. Rural areas may have lower costs, while urban zones like Chicago often come with higher premium expenses due to elements like more stringent regulations, higher crime rates, and costlier legal environments.
Services Offered – Plumbers who focus on routine residential repair and installation work will often pay less than contractors who do more specialized tasks like sewer line repair, drain cleaning, pipe relining/bursting, or commercial plumbing jobs. Insurers classify risk accordingly.
Policy Limits and Deductibles – The specific liability limits and deductibles that a plumbing business chooses for their various insurance policies also impact costs. Higher limits or lower deductibles mean the insurer takes on greater potential risk and liabilities, and this increased exposure gets reflected in higher premiums.
Small Plumbing Business Insurance Costs
To give Illinois plumbers a general idea of estimated insurance costs for businesses of different sizes, here are some illustrative premium ranges for a small plumbing company:
Profile:
- 1 Owner
- 1 Full-Time Employee
- $150,000 in Annual Revenue
Typical Insurance Coverage:
- General Liability – $2,400 to $9,900
- Workers’ Compensation – $4,386 to $7,676
- Surety Bonds – $250 to $1,250
For a small plumbing business structured like this, with approximately $150,000 in annual revenues, insurance costs typically fall within these ranges.
General liability coverage protects against third party property damage and bodily injury claims, which are constant concerns for plumbers while on job sites. For a business of this size, the annual premiums often equate to 2-6% of total annual sales revenue.
Workers’ compensation insurance covers work-related injuries to employees as mandated by the state of Illinois. Premiums are driven by payroll size, risk classification, and claims history.
Surety bonds are required in most jurisdictions in order for plumbing contractors to maintain licensure and permits. Most bond requirements fall in the range of $5,000 to $25,000, depending on the location. Plumbers then pay an annual percentage (usually 1-5%) of the bond amount as a premium.
Medium Plumbing Business Insurance Costs
Expanding in size, a medium-sized plumbing business in Illinois may fit this profile:
Profile:
- 1 Owner
- 3 Full-Time Employees
- $500,000 in Annual Revenue
Typical Insurance Coverage:
- General Liability – $17,200 to $28,400
- Workers’ Compensation – $13,159 to $23,029
- Surety Bonds – $250 to $1,250
For a company of this scale, insurance costs grow accordingly:
The general liability premiums now equal 4-6% of the $500,000 in revenue. Workers’ compensation is determined based on the larger payroll and increased risk exposure from more employees. At this stage, commercial auto insurance, commercial property coverage, and an umbrella liability policy are often secured as well.
Large Plumbing Business Insurance Costs
Finally, for a full-scale plumbing operation structured along these lines:
Profile:
- 1 Owner
- 5 Full-Time Employees
- $1,000,000 in Annual Revenue
Typical Insurance Coverage:
- General Liability – $41,600 to $60,700
- Workers’ Compensation – $21,932 to $38,381
- Surety Bonds – $250 to $1,250
Insurance costs are highest for plumbing businesses of this size, but the premiums provide broad protection. General liability premiums now range from 4-8% of the $1 million in total annual sales. Workers’ compensation claims exposure is greater given the larger employee size. Commercial auto, property, umbrella, and other policies are essential for full risk protection.
Supplemental Insurance Coverages to Consider
In addition to the core business insurance policies outlined above, plumbing contractors in Illinois should also consider these supplemental insurance coverages:
Commercial Auto Insurance – Beyond state minimum requirements, plumbers need added auto liability and physical damage coverage for any vehicles used for business purposes, whether owned, leased, rented or employee-owned. This covers liability claims and damage to vehicles.
Commercial Property Insurance – This covers plumbing business locations against losses from perils like fire, wind, hail, theft and vandalism. It also extends to business equipment and tools on premises. Earthquake and flood protection involve separate add-ons.
Cyber Liability Insurance – With growing reliance on computers and technology, cyber insurance is crucial to guard against losses from data breaches, hacking incidents and electronic theft. It covers costs of investigation, notification and PR crisis management.
Equipment & Tools Insurance – Also called inland marine insurance, this covers tools, equipment and materials stolen from vehicles and jobsites or damaged in transit between work locations. Some items may need scheduled coverage.
E&O – Errors & Omissions Insurance – Also known as professional liability insurance, this protects against financial loss due to alleged mistakes, negligence or failure to perform and resulting client damages. It covers legal expenses and settlements. Vital for plumbing pros.
EPLI – Employment Practices Liability Insurance – Covers legal claims from employees over discrimination, wrongful termination, sexual harassment or other employment practice violations. An optional but recommended policy that pays defense and settlement costs.
How Insurance Carriers Determine Plumber Premiums
To calculate premium rates for plumbers, insurance carriers take many factors into account for each type of policy:
Workers’ Compensation – Classifies employee types by risk level using codes set by the National Council on Compensation Insurance. Plumbers fall under Code 5183. Rates based on claims history, payroll and safety record.
General Liability – Considers annual sales, services provided, claims history, experience, location and other variables to arrive at final premiums. Rates for plumbers range from 2-8% of total revenue.
Commercial Auto – Analyzes driving records of company drivers, radius of travel, vehicle types, garaging and safety features to set premium costs. Numerous variables affect auto premiums.
Cyber Liability – Examines the sensitivity of company data collected and stored, security protocols in place and past data breaches when pricing cyber insurance. Revenue size also factors in.
E&O (Errors & Omissions) – Scrutinizes experience, specialty, past claims, licensing status and typical project size when setting professional liability premiums.
EPLI (Employment Practices Liability) – Profiles company hiring process, employee handbook and policies, past lawsuits and safety practices when quoting EPLI premiums.
The wide range of considerations illustrates the complexity of plumber insurance pricing. This is where having an expert insurance advisor pays dividends through their knowledge and carrier access. To fully understand the process of acquiring an Illinois plumbing license, read the detailed guide in this article.
Getting the Right Insurance for Your Illinois Plumbing Business
Purchasing proper insurance for a plumbing business in Illinois comes with many complexities. Here are tips for plumbers in the state looking to secure optimal, affordable coverage:
- Use a Specialist Agent or Broker – Work with an independent insurance agent or broker that specializes in providing insurance for plumbers and has expertise in this profession. They will have valuable insight compared to captive agents with limited carrier options. A true specialist has access to top insurance markets that cater their products and services to plumbers.
- Create a Customized Program – With an expert plumbing insurance agent as your advisor, you can craft a tailored insurance portfolio specifically addressing the distinct risks your business faces. Don’t settle for generic, cookie-cutter policies off the shelf. You want insurance tailored to plumbing contractors.
- Conduct Regular Reviews – Update your insurance coverage limits and types as your business evolves. Growth in the number of employees, fleet vehicles, specialty services offered or overall revenue necessitates adjustments to your insurance policies to ensure adequate protection as operations expand.
- Consider Policy Bundling – Purchasing multiple insurance policies from the same carrier can lead to premium discounts in some cases. But don’t sacrifice comprehensive coverage just to save money.
- Raise Deductibles Cautiously – Assuming more out-of-pocket risk through higher deductibles lowers premiums, but make sure you have adequate capital reserves in case a major claim occurs. Find the right balance.
- Maintain Detailed Records – Insurers look closely at documentation like safety manuals, employee training logs, vehicle maintenance files and claim reporting procedures. Thorough record keeping demonstrates operational excellence and earns premium incentives.
- Prioritize Safety – Identifying and correcting safety hazards directly affects workers’ compensation costs in the long run. A clean claims history helps reduce general liability premiums as well. Safety pays dividends.
Conclusion
Purchasing appropriate, affordable insurance coverage is a crucial part of running an economically sustainable plumbing business in Illinois. While insurance costs naturally rise in proportion to a company’s growing size and exposure, working with a specialist agent or broker that provides customized options ensures Illinois plumbers can secure a tailored suite of policies at competitive rates backed by top-tier carriers in the market. With the right insurance program in place, plumbing professionals can focus their efforts on serving customers and building their business, confident they have the financial protection to weather any storm.