Operating a plumbing business in the state of Tennessee involves far more than just having technical skills with pipes, drains, and fixtures. To truly run a successful plumbing company and protect your livelihood, you need to safeguard your business, employees, assets, and reputation from the many inherent risks in this industry.

The most crucial shield against the financial dangers and liabilities plumbers face is insurance specifically tailored for the needs of plumbing contractors. This comprehensive guide will illuminate exactly what kinds of insurance coverage Tennessee plumbers need, how much it may cost based on your business size and characteristics, what key factors drive insurance costs up or down, and why partnering with the right insurance professional makes all the difference in getting adequate protection at a competitive price.

Whether you are just starting out or have an established larger plumbing outfit, read on to learn everything Tennessee plumbers need to know about getting the proper insurance to protect your company and allow you to focus on providing quality work.

Plumbers working in Tennessee need to have the appropriate plumbing business insurance coverage 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 That Influence Insurance Costs

Several important factors primarily determine the insurance costs for a plumbing business in Tennessee:

  • Annual Revenue: The higher your annual revenues, the more plumbing work your company is undertaking. This increased volume of work raises the overall chances of insurance claims occurring. More exposure is perceived as higher risk by insurance carriers, so higher revenues get reflected in higher insurance premiums.
  • Number of Employees: The more employees you have on your team, the greater risk of injuries, incidents, and claims, especially when it comes to workers’ compensation insurance. Each additional employee increases your risks and consequently raises your insurance premiums.
  • Claims History: If your plumbing business has a history of frequent past claims being filed, whether justified or not, this will push your insurance premiums higher across the board. Insurance carriers see frequent claims activity as indicative of higher risks. Maintaining a clean claims record helps keep your insurance costs lower.
  • Geographic Location: Operating your plumbing business in certain parts of Tennessee with more stringent insurance regulations, hazardous environmental factors, threats of natural disasters, high crime rates or other risks can increase your premiums versus doing business in lower risk areas of the state. Urban regions also typically have higher premium costs.
  • Policy Limits: Choosing higher liability coverage limits reduces your potential financial exposure in the event of a large claim, but also raises your insurance premiums. Lower limits save on premiums but expose you to higher risks if claims exceed those limits.
  • Insurance Carrier: Specialist insurance carriers that focus on plumbers and plumbing contractors are able to offer more suitable coverage options at better insurance rates than generalist insurers. Access to those specialist carriers is key.

Having awareness of these key factors that insurance carriers use to determine costs allows plumbing business owners to make more informed decisions on risk management and insurance as their business evolves. Now let’s explore how insurance costs may differ based on the size of your plumbing operation.

Insurance Costs for Small Plumbing Businesses

For licensed plumbing contractor businesses in Tennessee that are just starting out or have around $150,000 or less in annual revenue, and only 1-2 employees, here are some typical ranges for annual premiums:

  • General Liability Insurance: $3,800 to $8,600
  • Workers’ Compensation Insurance: $1,054 to $1,844
  • Surety Bonds: $50 to $250

At this early small business stage, insurance coverage primarily aims to meet Tennessee’s minimum state licensing, bonding and regulatory requirements so that you can operate legally as a professional plumbing contractor.

Working with an insurance broker that specializes in plumbing and understands the needs of smaller contractors is key to getting access to suitable policies at competitive rates from carriers familiar with this field. Avoid brokers that try to fit you into a generic “contractor” policy.

Insurance Costs for Medium-Sized Plumbing Businesses

As your Tennessee plumbing contractor business grows into the medium-size range, with approximately $500,000 in annual revenue and somewhere between 3-4 employees on your team, you should expect to see the following typical ranges for annual insurance premiums:

  • General Liability Insurance: $7,000 to $25,200
  • Workers’ Compensation Insurance: $3,162 to $5,533
  • Surety Bonds: $50 to $250

At this stage, you’ll need to consider adding supplementary insurance policies beyond the core requirements, such as Commercial Auto insurance to cover your company vehicles, Tools & Equipment insurance to protect your more extensive equipment assets, and Umbrella Liability insurance to provide extra protection beyond your primary policy limits.

Working with a specialist plumbing insurance broker becomes even more crucial at this business scale in order to get access to experienced carriers that can tailor broader insurance packages and preferred rates to properly match your larger-sized plumbing business and risks.

Insurance Costs for Large Plumbing Businesses

For well established plumbing contractor businesses in Tennessee that have grown into the large size category, with approximately $1,000,000 or more in annual revenues and 5+ employees, typical insurance premium ranges are:

  • General Liability Insurance: $15,300 to $50,500
  • Workers’ Compensation Insurance: $5,270 to $9,222
  • Surety Bonds: $50 to $250

At this size, insurance becomes essential to protect your substantial business assets and income streams from the many complex risks that large plumbing contractors face. Partnering with the right insurance professional is critically important to make sure you get matched to specialty insurance carriers that deeply understand the unique needs and exposures of larger plumbing contractor businesses.

This expertise ensures you get tailored coverage options at optimal rates, as well as access to risk management guidance to help avoid claims. Avoid insurers that try to fit you into a generic policy not designed for larger plumbing contractors.

Additional Insurance Coverages to Consider

Beyond the major lines of General Liability, Workers’ Compensation, and Surety Bonds that provide baseline protection, Tennessee plumbing contractors should also consider these supplemental insurance policies:

  • Commercial Auto Insurance – Protects your company vehicles used for business purposes when they are involved in an at-fault accident. Provides coverage for liability, medical bills, damage repair, etc.
  • Tools & Equipment Insurance – Also called Inland Marine insurance. Safeguards your expensive plumbing equipment such as pipe threaders, drain snakes, trenchers, pipe cutters, and other costly gear that’s on job sites and in transit between locations.
  • Cyber Liability Insurance – Provides protection if you experience a data breach or loss of sensitive customer information stored digitally. Essential if you collect payment info or store client data electronically.
  • Employment Practices Liability Insurance (EPLI) – Shields against employee lawsuits alleging discrimination, harassment, wrongful termination and other employment practice violations.
  • Errors & Omissions Insurance – Also called Professional Liability insurance. Defends against third party allegations of financial harm due to a mistake, error or alleged negligence by your plumbing company.

A reputable plumbing insurance broker will educate you about these additional risks that contractors face and help craft a comprehensive insurance program tailored for plumbers.

How Insurance Carriers Calculate Premiums

To provide context on why insurance costs differ between plumbing contractors, here are some of the key criteria insurers use to calculate premiums:

  • Class Codes – The National Council on Compensation Insurance (NCCI) assigns numbered risk class codes that categorize employees based on the type of plumbing work being performed. This determines workers’ compensation insurance rates.
  • Payroll – For workers’ comp insurance, employee payroll directly factors into the premium calculations. Higher total payroll equals higher premiums.
  • Location – Insurance costs vary based on the city, county and geographic region of Tennessee where your business operates, due to differences in local laws, risks, cost of living, rate of litigation, etc.
  • Experience Modification – Plumbers with a history of frequent past claims get an increased experience modification risk factor that raises premiums. A clean claims history lowers this modifier.
  • Policy Limits – Choosing higher liability coverage limits reduces your financial risk in the event of a large claim, but also raises premium prices. Lower limits cost less upfront but expose you to higher out-of-pocket costs later if a claim exceeds those lower limits.
  • Claims History – Too many past claims will get your business labeled as “high risk”, resulting in increased premiums across the board. Maintaining a clean claims record helps lower costs.
  • Annual Revenue – As mentioned earlier, higher annual revenue means expanded operations, so insurance carriers see that as higher overall risk, and consequently raise premium prices.

Having visibility into how insurance carriers calculate premium pricing allows you to make more informed business decisions on managing your plumbing company’s risks and insurance costs.

Finding the Right Insurance for Your Plumbing Business

Partnering with the right insurance professional or agency that specializes in plumbing contractors makes all the difference in getting insurance coverage tailored for this trade while avoiding unnecessary policies that don’t apply to your business. Here are some best practices on finding the right insurance guidance:

  • Specialization Matters – Seek out agents/brokers who focus exclusively on the plumbing and trades industries. Their niche expertise ensures you get insurance that suits the unique risks plumbers face, without paying for irrelevant coverage.
  • Carrier Access is Key– Your broker should have established relationships with Tennessee’s top plumbing insurance carriers. These connections provide access to specialized coverage options and preferred rates unavailable otherwise. Avoid agents using generic insurers.
  • Local Experience is Ideal – Finding an insurance advisor familiar with Tennessee’s legal landscape who works frequently with local plumbing contractors is advantageous. They understand the local risks and regulations in your operating region.
  • Offer Full Guidance – Your insurance broker should provide ongoing education and guidance as your business evolves, periodically reviewing risks and policies to ensure you have adequate, affordable coverage at all stages.

The right plumbing insurance advisor guides you through Tennessee’s insurance landscape to get the optimal coverage for your business. Avoid carriers offering barebones generic contractors policies not tailored for plumbers. Work only with trusted specialists.

Conclusion

Insurance tailored specifically for plumbers is crucial to defend Tennessee plumbing businesses against the many costly liabilities and risks inherent in this trade—risks that can jeopardize your company’s finances and livelihood if left unprotected.

Partnering with the right plumbing insurance specialist gives you access to carriers that understand this trade and provide coverage options calibrated for your business’s unique risks. Insurance costs vary based on your company’s revenues, number of employees, claims history, location, policy types, liability limits and other factors.

But the right insurance coverage helps Tennessee plumbing contractors shield their business, preventing avoidable losses so they can have peace of mind to focus on delivering quality plumbing services and growing their company. By following this guide, plumbers can make informed insurance decisions that protect their business for the long-term. If you’re a professional plumber looking to get certified, you should definitely read about obtaining your Tennessee Plumbing License on our website.