Public Liability Insurance for Air-Conditioning & Heating Contractors
Understand the exclusions, costs and risks to get the right cover that protects and saves money!
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Key insurances for HVAC contractors
The goal of any business owner is to make sure they get the right cover at the right price.
And whilst there are a range of insurance classes available to any business, not every insurance policy is required by every business.
The bigger and more complex the business, the greater the areas of exposure which require risk management via insurance.
What insurances you need depends on the size and complexity of your business.
Here below we discuss what insurances at a minimum should be considered by people in the air-conditioning trade.
The three most relevant for any small business are:
- Liability Insurance for HVAC Contractors
- Personal Accident and Sickness Cover
- Motor vehicle insurance
Liability Insurance for HVAC Contractor
This is an insurance without which you probably would struggle to get work because:
- Your customers would expect you to have it and often will ask for a certificate of currency of your insurance policy
- Other business that you might have a sub-contracting relationship will definitely ask for a certificate
And you should have it because it protects you against financial ruin should there be a claim made against you for property damage to other people’s property or even worse if your work resulted in injury to someone or in a really bad scenario – someone’s death.
Insurance doesn’t cover you for everything – there are exclusions
Main Conditions attached to Public Liability Insurance for Air Conditioning Trade
Every insurer has their own preference of risk, which results in them adding certain exclusions to policies.
Those exclusions can often make a policy unsuitable if the insurer doesn’t want to cover a certain activity that you undertake as part of your profession.
Most common policies will have the one or more exclusion. See below:
There is a common question asked by insurers trying to understand if you work on cooling towers.
Is there any risk of claims arising as a result of people inhaling legionella bacterium and getting a severe pneumonia.
Think about where are these cooling towers? Shopping centres, big buildings where lots and lots of people gather.
You may only need a bad stuff up at one cooling tower which pumps enough poor quality air to make 100s of people unwell.
This means a large number of claims that run into millions of dollars.
Hot Works to Australian Standards
Insurers expect and you are taking all precautions to prevent any fire when it comes to hot works, whether it’s using a grinder or welding. Anything that produces a spark really.
Moral of the story here is – be careful with hot works and follow the Australian Standard rules because a claim will be declined if there is an event and you’ve decided to be a bit of a rebel.
Industry Specific Exclusions
Some insurers want to make sure you don’t do any work for industries that they class as high risk.
Freezers, Coldstores, Abotoirs & Furnaces Exclusion
Again one of those work activities that can generate big losses due to property damage is excluded by certain insuers.
Imagine you working on air-conditioning/chilling system for a cold storage that stores Milk for a large super market chain.
The damage could run into some very large figures which the insurers want to avoid.
One of most common conditions on a trades policy, the “dial-before-you-dig” requirement. Insurers want you to do the checking before you start digging.
You don’t want to accidentally damage underground services like gas, electricity or telco utilities.
Demolition Height Restrictions
Demolition being a specialist industry, the insurers don’t want untrained people demolishing anything that is greater than 2 storeys or 10 metres high.
Excavation Depth Restrictions
Excavation depth is also a common restriction, again digging can generate a claims due to movement of earth in adjoining properties affecting buildings. Many insurers avoid it.
Australian Standards Compliant Products
Many of the claims arise out of the use of products that are just substandard. The insurers have seen that a few times and understand the impact that cheap imports are having on the claims.
They require you to use products that comply with Australian Standards.
Organising the right insurance is more than just getting the cheapest insurance, but price is important!
HVAC Liability Insurance Cost
When it comes to the cost of insurance for air-conditioning installers, you can easily tell that there are insurers that either love the trade or hate the trade.
It’s one of those trades like Plumbing, depending on the type of claims experience an insurer has had they either price it low or high.
The vast majority of insurers consider it to be a high risk trade, which is reflected in higher average premium offered with only a handful of insurers charging low price and that also for lower turnover customers.
The chart below shows HVAC premiums on the higher side, just like Plumbers.
There are bargains to be found however
Notice in the table below, the market price can be much higher than a good hidden bargain available.
But only if you knew which insurer prefers a certain occupation and are pricing aggressively.
|SA||$ 602||$ 1,365||$ 3,233|
|QLD||$ 625||$ 1,408||$ 3,174|
|VIC||$ 630||$ 1,517||$ 3,203|
|WA||$ 630||$ 1,324||$ 3,203|
|NSW||$ 723||$ 1,649||$ 4,412|
Public Liability Insurance Air Conditioning – Higher Limits
Not everyone who starts needs the $5 Million liability limit, some might need more because you’ve become a sub-contractor to another business who requires you to have $10 or $20 Million limit.
That has an impact on pricing! See table below.
|$5 Million||$ 602||$ 1,115||$ 2,598|
|$10 Million||$ 781||$ 1,418||$ 3,235|
|$20 Million||$ 898||$ 1,824||$ 4,412|
What happens when your business starts to grow?
So far we’ve focussed on the start up business but as your business becomes bigger i.e. Turnover increases, it has an impact on the cost of insurance.
Risks increase for a number of reasons including taking on new staff and apprentices who all need to be supervised and their potential mistakes have an impact on your business.
Personal Accident & Sickness Insurance Risks
People in the air conditioning trade need to be mindful of the increased risks of their occupation.
On any given day, you’d be going to a different worksite. This unfamiliarity of the job location brings in an element of risk that an office worker would never face.
An office worker is going to the same place, day in day out.
Trades also have the highest rates of injury and accident out of any other occupation group.
When doing air-conditioning work you expose yourself to electrical shocks, their is risk of slipping down a ladder, hurting yourself using a power tool etc.
No only that, exposure to dust and silica can create long term health issues that can be difficult to manage.
It is important to manage the personal risk very well. Remember YOU are your biggest asset!
Talk to us to organise the right insurance that covers various risks faced by you and your business.