Insurance for residential service plumbers

What homeowners and property managers will ask you for

Homeowners usually ask two questions: are you licensed, and are you insured? Some add a third: are you bonded? Have a clean answer ready for each, along with a certificate showing your liability coverage.

Answer the bond question carefully. "Bonded" might mean your state license bond or a business service bond, and they protect different things. A license bond backs your promise to follow licensing law. A service bond protects the customer from theft by your employees. Neither one pays for a leak. If you carry both, say so plainly. Condo and HOA boards may also want a certificate before you work on shared risers or in common areas.

Property managers ask for more, in writing. A vendor agreement for a portfolio of rentals commonly asks for:

• general liability at stated limits, often $1 million per occurrence and $2 million aggregate
• the property manager or owner added as an additional insured by endorsement
• a waiver of subrogation, so your insurer won't try to recover from them
• workers' comp for your techs, or proof you don't need it
• sometimes a business service bond, because your techs enter occupied units

A certificate alone doesn't add anyone to your policy. The endorsement does. Our guide to certificates of insurance and additional insured explains each request, and how to get bonded and insured covers the bond side.

Growing a residential service shop

Residential shops grow in a familiar order, and coverage has to move at each step.

The first hire. Workers' comp becomes required in most states once you have employees. Rules vary, and Texas lets most private employers choose whether to carry it. In Ohio, comp comes only from the state fund, so the employee lawsuit protection called stop-gap is usually added to your GL.

The second and third vans. Each new truck goes on the commercial auto policy, and each new driver's record affects the price. Schedule higher-value gear, like a jetter or camera rig, by name on your tools floater instead of leaving it in a blanket limit.

The first property management account. That's often when additional insured requests, waivers and service bonds show up together. It's also a good time to price an umbrella policy, since a portfolio of rentals multiplies how many homes your work touches.

The office hire. Once someone besides you handles payments, deposits or the parts budget, crime coverage earns a look.

A shop and a parts room. Moving out of the garage into a rented shop adds property to insure: shelving, inventory, a compressor, office equipment. A business owner's policy can bundle general liability, property and business income, which replaces lost income while covered damage is repaired. Not every plumbing business qualifies, and a BOP doesn't include comp, auto or professional liability.

Drain work on the side. If your residential shop starts jetting laterals or replacing sewer lines, your exposures shift toward sewage, digging and permits. Read drain and sewer contractor insurance before you add the truck.

Your price depends on payroll, revenue, claims history, the work you do and the limits you choose. A clean loss record and a stable crew help at every renewal.

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