Operating a plumbing business in New Jersey exposes owners to substantial risks that make insurance coverage an absolute necessity. From pipe bursts flooding homes to employees getting injured on the job, the liabilities and hazards faced by plumbers are immense. Yet many small business owners fail to adequately protect themselves due to the high cost of insurance in the state.

This comprehensive guide aims to provide New Jersey plumbers with a detailed breakdown of typical insurance costs based on their business size and risk profile. Read on to understand the key factors that influence plumber insurance premiums in the state, see illustrative cost ranges for essential coverages, and learn how carriers calculate rates for small, medium and large plumbing companies. With this information, you can make informed decisions when buying insurance and avoid paying more than required for the protection your business needs.

Plumbers working in New Jersey need to have the appropriate plumber insurance in place. This typically includes liability coverage for plumbers to safeguard against third-party claims and workers’ comp insurance for plumbing companies to cover employee injuries sustained while working.

Key Factors Influencing New Jersey Plumber Insurance Costs

Plumber insurance rates in New Jersey depend on several important factors:

Location – New Jersey’s dense population, urbanization, high property values and litigation trends make it one of the most expensive states for liability insurance. Being located here can add 10-30% to premiums compared to less risky states.

Years in Business – New plumbing businesses are seen as higher risk. Once you’re established for 5+ years, carriers view you as more stable with lower rates.

Annual Revenue – Higher gross revenue means greater exposure for an insurer, so they charge higher premiums. Revenue size greatly impacts general liability rates.

Number of Employees – Additional employees must be covered by workers compensation and drive up premiums.

Claims History – Too many past claims can cause carriers to view you as high risk and raise your rates significantly or even deny coverage. Maintaining a clean claims history helps lower premiums.

Specialization – Plumbers doing complex commercial work or projects like boiler installation or septic systems are seen as higher risk compared to residential repair plumbers.

Business Structure – Sole proprietors and partnerships generally get quoted higher rates than incorporated businesses like LLCs and corporations that limit personal liability.

Coverage Limits – Higher liability coverage limits mean more protection but also higher premiums. However, skimping on limits leaves you vulnerable.

Insurer – Rates for the exact same coverage can vary dramatically between insurance carriers. Shopping around helps find the best value.

Safety Record – Plumbers who invest in safety equipment, training and measures can qualify for lower workers’ compensation rates.

Pipe Materials – Working with risky lead and galvanized pipes changes liability scenarios compared to safer PVC and copper.

Drain Cleaning – A higher percentage of drain cleaning and clearing work is associated with increased risk compared to low-risk fixture installation work.

Credit Score – Surprisingly, your personal credit is used as an indicator of judgment and responsibility, impacting premiums.

Discounts – Ask about discounts for safety practices, loyalty, trade associations, and paying annually.

Customer Contracts – Requiring customers to sign well-written contracts with liability waivers can dramatically reduce claim exposure.

Let’s explore typical plumber insurance costs for varying sizes of plumbing businesses in New Jersey.

Small Plumbing Business Insurance Costs

Typical Profile: Solo Operator or 1-2 Person Shop, 1 Owner, 1 Employee, $150,000 Annual Revenue

As a small plumbing contractor in New Jersey, here are typical insurance costs:

General Liability – $6,200 to $20,000 annually

Expect rates starting around $6,000 for $1 million coverage with a $2 million aggregate. Those with past claims or in riskier regions like Newark and Jersey City may pay up to $23,000.

Workers’ Compensation – $5,977 to $10,459 per year

Any employees, even part-time, require workers’ comp in New Jersey. Plumbers are classified under code 5183 with rates ranging from $2.21 to $4.11 per $100 of payroll. For a single employee making $50,000, expect premiums between $5,977 and $10,459 depending on your safety record and modifier.

Surety Bonds – $50 to $250 annually

New Jersey requires plumbing contractors to carry a $5,000 license bond. Typically you’ll pay between 1-5% of the bond amount each year. With good credit, expect to pay about $50 per year.

Commercial Auto – $1,500 to $3,500 annually per vehicle

Cover any company vehicles under a commercial auto policy with at least $500,000 in liability coverage. Costs depend heavily on driving records.

Medium Plumbing Business Insurance Costs

Typical Profile: Established Small Business, 1-2 Owners, 3 Employees, $500,000 Revenue

Here are typical costs for a growing plumbing contractor:

General Liability – $25,700 to $49,400 annually

With larger contracts and more risk exposure from greater work volume, GL coverage may consider expanding to $2 million per occurrence.

Workers’ Compensation – $17,930 to $31,377 per year

With 3 employees each making $50,000, workers’ comp premiums generally run $17,930 to $31,377 depending on risk classification and modifiers. Maintaining excellent workplace safety helps minimize premiums.

Surety Bonds – $50 to $250 annually

The state bond requirement remains at $5,000. Some larger municipalities may require larger license bonds for bigger contracts. If you’re interested in working in the plumbing industry, it’s crucial to check out our comprehensive guide on obtaining a New Jersey Plumbing License.

Commercial Auto – $4,500 to $10,500 annually

Cover 3-5 company vehicles under a commercial policy. Commercial property insurance may be warranted if you own a workshop.

Large Plumbing Business Insurance Costs

Typical Profile: Multi-Truck Shop, 1+ Owners, 5+ Technicians, $1 Million Revenue

As a sizable regional plumbing contractor, here’s what to expect:

General Liability – $43,000 to $59,600 annually

With large crews and lots of contracts, carrying $2 million to $5 million in liability coverage is something to consider. Typical premiums range from $43,000 up to $59,600 per year.

Workers’ Compensation – $29,883 to $52,296 per year

A plumbing company with $400,000 in total payroll can expect to pay $29,883 up to $52,296 annually for workers’ compensation depending on the risk profile. Maintaining rigorous safety standards helps control premiums.

Surety Bonds – $50 to $250 annually

Any public plumbing contracts over $100,000 will require larger bond amounts, such as $250,000, which increases the annual cost.

Commercial Auto – $12,000 to $24,000 annually

A fleet of 5-10 company vehicles will need ample commercial auto liability limits. Consider higher umbrella limits on top of underlying policies.

For large plumbing contractors earning multi-million in revenue, premiums scale accordingly and additional excess/umbrella liability limits are recommended. Workers’ compensation remains a disproportionately large expense. Maintaining excellent records, safety protocols and non-discriminatory hiring practices is key to control premiums. For the greatest savings, partner with an insurance broker who specializes in covering the plumbing trade in the state of New Jersey. They will know which carriers and products can best protect your business at a competitive rate.

Additional Insurance Coverages for New Jersey Plumbers

Beyond the major policies, consider adding these important covers:

Tools & Equipment Coverage – Protects expensive tools and materials on and off the job site. Expect to pay $250-$750 per year.

Commercial Property Insurance – Safeguards plumbing workshops, inventory and company assets. Typically costs $500 to $2,000 annually.

Errors & Omissions – Provides expert liability for financial harm due to mistakes. $500 to $1,500 per year.

Cyber Liability – Covers data breaches and hacking incidents. About $750-$1,500 annually.

Employment Practices Liability – Protects against discrimination and harassment claims. $800-$1,200 per year.

Pollution Liability – Covers unexpected hazardous material releases. Usually $650-$1,100 per year.

Umbrella Liability – Extra protection above auto, GL and other policies. Approximately $400-$800 per $1 million.

How Insurance Carriers Calculate Plumber Premiums

Insurance companies use the following criteria when developing plumber insurance premium quotes:

  • Gross sales – Higher revenues mean greater exposure and higher premiums. This significantly impacts general liability rates.
  • Payroll amount – Base workers’ comp premiums on total annual payroll. Certain employee classifications have higher rate.
  • Claims history – Frequent past claims raise your risk profile and premium prices. Too many claims can make coverage non-renewable.
  • Experience modifier – Carriers use this score derived from your claims history to adjust workers’ comp rates.
  • Length of time in business – Longer tenure signals lower risk and decreases premiums. Being in business 5+ years is preferable.
  • Compliance factors – Proper licensing, certification status, safety protocols and lack of violations all reduce premiums.
  • Pipe materials used – Working with risky lead and galvanized pipes increases liability compared to PVC and copper.
  • Percentage of drain cleaning – More drain cleaning work carries greater risk of liability claims versus fixture installation.
  • Princess Anne County Tourist Development Tax each year.
  • Customer contracts – Requiring customers to sign well-written contracts with liability waivers dramatically lessens claim exposure.
  • Business location – Urban areas like Newark and Jersey City have higher risk than suburban and rural regions. Coastal regions also see higher premiums.
  • Credit score – Surprisingly, your personal credit score factors into insurance rates as an indicator of judgment and responsibility.
  • Discounts – Ask about discounts for safety practices, loyalty, trade associations, and paying annually.

Getting the Optimal Plumber Insurance in New Jersey

Because plumber insurance is compulsory in New Jersey, investing in the optimal coverage for your business is crucial. Here are some tips when buying insurance:

  • Work with a broker who specializes in plumber policies to access the right carrier partners. Avoid captive agents with limited markets.
  • Ask about package discounts for bundling multiple lines together.
  • For small plumbers, an insurance company like Erie may provide affordable bundled options.
  • Larger plumbing contractors may benefit from a specialist like Plumbersmutual Insurance who only insures plumbers.
  • Have an expert review your business risks and insurance needs in detail annually. Requirements change as your business evolves.
  • Review all policy terms to avoid gaps in coverage or sub-limits that dilute protection.
  • Ask your broker to shop your coverage every renewal to ensure you get the best premiums.
  • Maintain rigorous safety protocols and training to minimize workers’ comp costs.
  • Implement strict vehicle safety programs for your fleet to control commercial auto premiums.
  • Keep excellent records and control over your jobs and finances. Insurers favor this.
  • Consider higher deductibles to reduce premiums, but ensure you can cover out-of-pocket costs.


Operating a plumbing company in a high-risk state like New Jersey makes insurance an absolute necessity to protect your business from the many perils it faces. While premiums may seem costly, robust insurance coverage pales in comparison to the massive claims and legal expenses that can quickly sink an uninsured business. Equip yourself with a complete understanding of the key factors that drive plumber insurance rates. Work closely with a specialist broker to secure complete protection tailored to your business’s size and risk profile. Implement rigorous safety and loss control measures. Continually reassess your evolving insurance needs so your business is fully shielded from financial risks as it grows.