Operating a plumbing business in New Mexico involves considerable risks and liabilities. From on-the-job injuries to accidental property damage, claims and lawsuits can quickly derail a plumbing company without the proper insurance safeguards in place. This guide will provide New Mexico plumbers with an in-depth overview of the key insurance policies needed to protect their business, factors that influence costs, pricing examples based on business size, how insurance carriers calculate premiums, and tips for obtaining optimal coverage.

For plumbers in New Mexico, having the right insurance for their plumbing business is essential. This usually includes general liability protection for plumbers to protect against third-party claims and workers’ compensation coverage for plumbing businesses to cover employee injuries on the job.

Key Factors Influencing Insurance Costs for New Mexico Plumbers

Several important factors determine how much a plumbing business will pay for insurance coverage in New Mexico:

Location – Insurance rates can vary significantly across states and even between cities/counties within a state. This is due to differences in regulations, risk exposures, litigation rates, medical costs, and other regional variables. New Mexico sits around the middle nationally in terms of insurance costs. Premiums tend to be lower than neighboring states like Arizona and Colorado. However, costs in major metro areas like Albuquerque and Santa Fe tend to be higher than in rural parts of the state.

Number of Employees – The more employees a plumbing company has on staff, the greater the potential risk exposure. More employees means more people out in the field performing work that could lead to liability claims or on-the-job injuries. Large plumbing contractors with numerous employees on payroll will pay substantially higher premiums across multiple insurance lines like General Liability, Workers’ Compensation, etc.

Annual Payroll – For insurance policies such as Workers’ Compensation that are directly tied to employee payroll amounts, higher total payroll equates to higher premiums. Some insurers may provide discounts for lower wage employees, but in general, plumbing businesses with total payrolls exceeding $500k or more can expect to pay significantly higher premiums.

Type of Work Performed – Plumbers that focus on more specialized or hazardous types of work will often pay higher insurance rates. Examples include sewer line repair, drain cleaning services, water restoration, new construction plumbing, commercial boiler repair, and other higher-risk tasks. Doing a greater proportion of simple residential drain unclogging or faucet repair work can result in lower costs.

Claims History – Insurance carriers will carefully review a plumbing business’s past claims history when determining premiums. Too many liability, property damage or workplace injury claims over a 3 to 5 year window will likely result in increased rates. Maintaining a clean claims history without frequent, large payouts helps keep insurance costs affordable.

Selected Policy Limits – The higher the per-claim or aggregate coverage limits a plumbing business chooses on policies like General Liability, the more they will pay in premiums. Higher limits mean the insurance company is on the hook for increasingly large payouts in the event of claims or lawsuits. However, adequate limits are crucial to protect against catastrophic losses.

Deductible Amounts – Choosing higher deductibles (the amount the policyholder pays on a claim before insurance kicks in) reduces policy premiums. However, high deductibles can leave plumbing businesses underinsured for smaller or moderate claims.

Physical Locations Covered – Plumbers with multiple business premises and properties will pay more for policies like commercial property insurance versus a plumber operating from a single location.

Estimated Insurance Costs for Small Plumbing Businesses in New Mexico

Here are typical insurance costs for a small plumbing business in New Mexico:

Typical Company Profile

  • 1 Owner, 1 Employee
  • $150k Annual Revenue

Estimated Annual Premium Expenses

  • General Liability – $5,400 to $10,900
  • Workers’ Compensation – $1,925 to $3,368
  • Commercial Auto – $1,500 to $2,500 Per Vehicle
  • Surety Bonds – $100 to $500
  • Tools & Equipment Coverage – $250 to $500
  • Total Insurance Costs – $9K to $17K+ Per Year

For most small plumbing companies, General Liability and Workers’ Compensation make up the bulk of annual insurance expenses. As revenue increases, so will the General Liability premium. Higher employee wages also drive up Workers’ Comp costs. The number of company-owned vehicles insured dictates Commercial Auto premiums. Many small plumbing businesses skip optional policies like Commercial Property insurance if they rent rather than own their premises. However, Tools & Equipment coverage is essential to insure expensive plumbing tools while out in the field. Higher revenue bands, more employees and business vehicles will push total insurance costs toward the upper end of the $9k to $17k range.

Typical Insurance Costs for Mid-Sized Plumbing Companies

Mid-sized plumbing businesses in New Mexico can expect the following range of insurance costs:

Typical Company Profile

  • 1 Owner, 3 Employees
  • $500k Annual Revenue

Estimated Annual Premium Expenses

  • General Liability – $15,500 to $28,900
  • Workers’ Compensation – $5,774 to $10,105
  • Commercial Auto – $3,000 to $5,000 Per Vehicle
  • Surety Bonds – $100 to $500
  • Tools & Equipment Coverage – $500 to $1,500
  • Commercial Property – $1,000 to $5,000
  • Cyber Liability – $500 to $2,500
  • Total Insurance Costs – $25K to $48K+ Per Year

For mid-sized plumbing contractors with several employees, multiple vehicles and business locations, insurance costs scale up significantly, with General Liability and Workers’ Comp remaining the two largest expenses. Higher revenue results in a jump in General Liability premiums. More employees, especially those with higher wages, drives Workers’ Comp costs higher. The number and types of insured vehicles also factors into Commercial Auto premiums. Mid-sized plumbing businesses also frequently add coverages like Cyber Insurance and higher Tools & Equipment limits. Expect total yearly insurance costs for a midsized plumbing contractor to range from the mid $20k’s up to $50k or more.

Estimated Insurance Premiums for Large Plumbing Companies

Larger plumbing contractors with the following profile can anticipate higher insurance costs:

Typical Company Profile

  • 1 Owner, 5+ Employees
  • Over $1M Annual Revenue

Estimated Annual Premium Expenses

  • General Liability – $50,300 to $65,400
  • Workers’ Compensation – $9,624 to $16,842
  • Commercial Auto – $4,000 to $6,000 Per Vehicle
  • Surety Bonds – $100 to $500
  • Tools & Equipment – $3,000 to $5,000
  • Commercial Property – $5,000 to $20,000
  • Umbrella Liability – $1,000 to $2,000 per $1M
  • Builders Risk – $2 per $1,000 project value
  • Cyber Liability – $2,000 to $5,000
  • Total Insurance Costs – $66K to $88K+ Per Year

For large plumbing contractors with significant employee counts, high revenue volumes, multiple locations, specialized work and large fleets of vehicles, yearly insurance premiums can easily exceed $100,000 across a roster of policies. General Liability and Workers’ Comp scale up significantly. More vehicles drive up Commercial Auto premiums. Higher equipment values increase Tools & Equipment rates. Specialized work may necessitate supplemental policies like Builders Risk. Larger plumbing companies also take out higher limits on Umbrella Liability and Cyber policies. All these factors can conspire to push total annual insurance costs well above the $100k mark.

Additional Insurance Coverages for Plumbers to Consider

Besides the major insurance lines like General Liability and Workers’ Compensation, plumbing contractors may wish to consider carrying the following supplemental policies:

  • Errors & Omissions Insurance – Also termed Professional Liability, this coverage protects against financial harm to clients stemming from alleged mistakes, negligence or failure to perform work properly. Common causes of E&O claims against plumbers include improper installation of pipes, fixtures or drains that necessitate costly repairs. Premiums range from $1,000 to $2,500 annually.
  • Cyber Liability Insurance – With increased reliance on digital devices and software in the field, and the storage of client data, Cyber Insurance can safeguard against data breaches, hacking and electronic theft. For small plumbing companies, premiums are typically $500 to $2,000 per year.
  • Pollution Liability Coverage – Since plumbers frequently work with hazardous chemicals and substances, having Pollution Liability insurance can be prudent. This covers damages from accidental spills or improper waste disposal. Premiums range from $1,500 to $5,000 annually depending on revenue.
  • Builder’s Risk Coverage – Provides protection for plumbing projects under construction. Around $2 per $1000 of completed project value.
  • Group Health Insurance – Provides major medical and dental benefits for employees. Premium costs vary widely based on plan design, employee count, and other variables.

How Insurance Carriers Calculate Premiums for Plumbers

Insurance carriers take many factors into account when evaluating risks and establishing insurance policy premiums for plumbing contractors. A few of the key data points utilized include:

  • Class Codes – The NCCI class code assigned to employees based on their specific trades. Plumbers generally use code 5183, which carries moderately high workers’ comp rates reflecting the physical nature of the work and risk of on-the-job injuries. Higher risk trades mean higher premiums.
  • Employee Payroll – The total employee payroll and breakdown by class code is integral to determining workers’ comp premiums, which are expressed as rates per $100 of payroll. More employee payroll means higher premiums.
  • Company Revenue – Annual company revenue is used as a proxy for overall company size and risk exposure. Under General Liability policies, higher revenue leads to higher premiums.
  • Geography – Insurance rates for plumbers can vary across zip codes and regions within an individual state based on localized risk factors.
  • Claims History – Plumbing contractors with frequent insurance claims will likely see increased premiums across many policy types. However, a long history of no claims can earn discounts.
  • Experience Mod – This value is an adjustment to workers’ comp premium based on an employer’s loss run history. Too many injuries will increase the mod and prices.
  • Policy Limits – Plumbers selecting higher limits on policies like General Liability or Workers’ Comp will pay accordingly higher premiums as the carrier’s risk increases.
  • Deductibles – Selecting higher deductibles lowers premiums, but fewer small claims will be covered before reaching the threshold.

Tips for New Mexico Plumbers to Get the Right Insurance at the Best Price

Here are some top recommendations when shopping for plumber insurance coverage in New Mexico:

  • Work with an insurance agent or brokerage that specializes in the plumbing trade. They will have access to top regional and national insurance carriers catering to plumbers and be able to shop for the optimal mix of coverage and rates.
  • Get quotes from multiple insurance providers before selecting a policy. Rates and coverage can vary widely across insurers. Don’t just opt for the cheapest policy.
  • Discuss higher deductibles to reduce premiums, but don’t sacrifice comprehensive protection. Consider dropping collision coverage on older work vehicles.
  • Carefully evaluate optional policies like E&O, Cyber Liability, and Pollution coverage to see if they make sense for your plumbing operations.
  • Conduct periodic insurance reviews as your business changes to confirm you have adequate limits and the right coverage. Adjust accordingly.
  • Implement strong safety protocols and training to minimize workplace injuries and other claims. This keeps your experience mod low.
  • Make sure to disclose and comply with all insurer requirements to avoid coverage gaps or denials if claims arise.


Operating a plumbing business in New Mexico comes with substantial risks from work accidents to large liability claims. Having adequate insurance tailored for plumbing contractors is crucial to financially protect against unforeseen losses. Be sure to account for major cost factors like payroll, revenue, number of employees, vehicles, and business locations as your plumbing company grows. Partnering with an insurance specialist who understands the plumbing industry can help New Mexico contractors secure complete, cost-effective protection policies for their business. If you’re interested in obtaining your New Mexico Plumbing License, our detailed article can provide you with the necessary guidelines.