As a plumber operating in South Dakota, having proper insurance coverage in place is critically important to safeguard your business from the various risks inherent to the plumbing trade. From on-the-job injuries, to property damage, lawsuits, and other exposures, working without adequate insurance leaves your company financially vulnerable. This could potentially put you out of business.

This comprehensive guide will provide South Dakota plumbers with a detailed overview of the key insurance policies needed to protect your business, factors that influence costs, illustrations of potential premium ranges based on your company’s size, types of additional specialty coverages to consider, details on how insurance carriers calculate your rates, and most importantly – the significant value of partnering with an insurance professional who specializes in the plumbing industry to secure tailored protection at the best available price.

South Dakota plumbers must have the right insurance for plumbers to operate legally in the state. This usually 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 Impact Plumber Insurance Costs

While your exact insurance rates will depend on your specific business circumstances and risk profile, there are several universal factors that influence premium costs across the board:

Location – Being located in South Dakota can potentially result in lower premiums compared to more litigation-heavy states. However, costs still vary significantly across different regions of SD based on local crime rates, risks, regulations, and ordinances specific to your geographic area and county/city in which you operate.

Business Size – The more employees, vehicles, equipment, payroll, and annual revenues your plumbing business has, the higher your insurance premiums will be. Your rates scale alongside business growth. A 1-person operation will pay significantly less than a multi-million dollar enterprise.

Claims History – Too many insurance claims on your policies over a short period of time can cause your premiums to skyrocket. Maintaining a clean claims record with few or no claims helps keep your costs affordable over the long-term.

Policy Limits – The higher the liability limits you choose for policies like general liability and auto insurance, the greater the potential payout that insurance companies may be on the hook for in the event of a severe claim. Higher limits mean increased premiums.

Nature of Work – If you perform specialized, complex, or inherently hazardous plumbing work, such as sewer line repair, chemical piping, or high-rise installations, this may necessitate insurance policies with higher liability limits to adequately cover potential accidents. Higher limits lead to higher premiums.

Risk Environment – Operating your plumbing business in areas with high crime rates, poor infrastructure, severe weather risks, or other characteristics that make claims more likely will drive premiums upward.

Small Plumbing Business Insurance Cost Ranges

Typical Profile:

  • 1-2 Employees
  • $150K Annual Revenue

Estimated Annual Premium Ranges:

  • General Liability – $5,100 to $13,700 annually
    Covering third-party bodily injury and property damage
  • Workers’ Compensation – $2,018 to $3,531 annually
    Covering employee injuries and lost wages
  • Surety Bonds – $50 to $250 annually
    Fulfilling licensing and permit requirements

Costs assume minimum state-required policy limits and at least 1 year in business without significant claims. Higher limits or poorer claims history increase costs. Premium ranges account for policy “base” rates and individual business risk characteristics.

Medium Plumbing Business Insurance Cost Ranges

Typical Profile:

  • 3-4 Employees
  • $500K Annual Revenue

Estimated Annual Premium Ranges:

  • General Liability – $14,600 to $31,000
  • Workers’ Compensation – $6,053 to $10,592
  • Surety Bonds – $50 to $250

Premium ranges assume minimum required limits and a reasonably clean claims history. Actual costs may vary based on specific business risk profile. Higher liability limits would also increase costs.

Large Plumbing Business Insurance Cost Ranges

Typical Profile:

  • 5+ Employees
  • $1M+ Annual Revenue

Estimated Annual Premium Ranges:

  • General Liability – $49,200 to $72,700
  • Workers’ Compensation – $10,088 to $17,653
  • Surety Bonds – $50 to $250

Ranges assume minimum required limits and an average claims history. Actual premiums depend on individual risk characteristics, choice of policy limits, and more. Poor claims history and higher liability limits would increase costs.

Additional Insurance Policies to Consider

Beyond the core business insurance policies above like commercial general liability and workers’ compensation, South Dakota plumbers may need supplemental specialty insurance coverages:

  • Commercial Auto Insurance – Protects vehicles used for business purposes like work vans. Provides liability and physical damage protection.
  • Tools & Equipment/Inland Marine – Safeguards plumbing equipment, tools, and materials onsite and in transit. Protects against theft and damage.
  • Cyber Liability – Covers costs associated with data breaches, hacking, and electronic theft of customer/client information.
  • Errors & Omissions – Shields against third-party financial loss arising from alleged professional errors or negligence.
  • Employment Practices Liability – Protects against employee lawsuits alleging discrimination, wrongful termination, harassment, etc.
  • Builder’s Risk – Insurers construction projects against damage during the building phase. Useful for plumbing contractors involved in new construction.

How Insurance Carriers Determine Premiums for Plumbers

Insurance companies rely on a range of factors and business data points to calculate and determine premiums rates specifically for plumbing contractors and businesses:

  • Class Codes – Workers’ compensation carriers assign codes based on employee type and job descriptions to categorize and gauge occupational risk levels. Plumbers typically fall under class code 5183.
  • Experience Modifier – A value rating based on your past claims history and safety record. It starts at a baseline of 1.0, then increases with more frequent claims (indicating greater risk), or decreases with fewer claims (lower risk). A higher experience mod means greater workers’ comp premiums.
  • Payroll – Workers’ compensation premiums are largely calculated based on total employee payroll. The basic formula is: payroll / 100 x base rate x experience mod. Higher payroll equals higher premiums.
  • Driver History – For commercial auto policies, drivers with clean records, no accidents or violations typically earn lower premiums. Multiple incidents raise rates due to greater perceived risk.
  • Equipment Values – For inland marine policies, the higher the total value of your tools, gear, and equipment being covered, the more premium you will have to pay.
  • Security Measures – For cyber liability insurance, carriers reward businesses that invest in robust IT security protections with lower premiums, compared to those with inadequate cyber defenses.

Partnering With a Plumbing Insurance Specialist

The plumbing trade comes with an array of distinct risks and exposures that standard business insurance policies may not adequately address. Working with an insurance advisor who focuses specifically on the plumbing industry is key to building tailored protection that fully covers your business at an affordable price.

These plumbing insurance specialists have established relationships with carriers that cater specifically to the needs of plumbing contractors. They have extensive knowledge regarding the profession’s unique risks, required coverages, and specialty endorsements needed to fill coverage gaps.

A plumbing insurance expert takes the time to thoroughly understand your business operations, services, clients, risk exposures, safety record, and insurance needs in great detail before constructing a customized insurance program. This enables them to match your company with the ideal carriers and policy types to minimize gaps, reduce overlaps in coverage, and maximize savings.

Don’t leave your business vulnerable – partner with a trusted, dedicated plumbing insurance professional to cost-effectively safeguard against your industry’s wide range of hazards and pitfalls. They have more insight into plumber risks than general agents, plus better access to niche insurance products and markets suited for the trade.


Operating a plumbing contractor business in South Dakota carries an array of potential risks and hazards, making insurance coverage critically important. While exact premium costs depend heavily on your particular circumstances, rates are primarily driven by factors like business size, claims history, location, policy limits selected, and nature of work. For more detailed information, check out our comprehensive guide on obtaining a South Dakota Plumbing License.

Beyond core policies like general liability and workers’ compensation, specialty insurance should be considered as well to fill gaps. Work closely with an insurance professional who focuses specifically on plumbers to identify optimal coverage and secure the right policies from markets suited to your niche. This expertise provides peace of mind your business is fully protected, allowing you to focus entirely on providing quality plumbing services to your South Dakota customers and community.