Should Plumbers Review Their General Liability Insurance?
Imagine hiring a plumber to do some repair work on pipes in a home, however, due to some negligence on the part of the plumber, the pipes were all damaged and the plumber was not willing to take responsibility. The plumber claimed limited liability based on the contract that was signed, according to him legally he was not responsible for the damages. The homeowner goes to their insurance company to make a claim for the damages and was told that homeowners insurance does not cover damages caused by plumbers. The homeowner was stuck with a repair job that was poorly done, couldn’t file any claims for it and would have to pay someone else to do it. While seeking other alternatives and trying to see what other options are available, someone recommended sueing the plumber that did the job since he damaged the pipes and didn’t disclose anything about it.
In the situation above, the homeowner mentioned was also advised when looking for a plumber to make sure it was a registered contractor with the Washington State Department of Labor and Industries, having adequate plumber’s insurance if anything should go wrong. If the client was to sue the plumber mentioned above however, this can damage his practice and his plumbing business depending on the outcome. Plumbers can avoid situations like these by ensuring they are protected from anything that can happen, they need to ensure they have general liability to avoid any claims for financial compensations that can be made against them.
Types of Plumbers
There are two different type of plumbing businesses that will require insurance coverage when doing business. Depending on which one you are, there are different requirements that are needed. This however, depends on your City or State and everyone should check their insurance company for advice
The two types of plumbing contractors are:
- Residential Plumbers, GL Class Code 98482. Many plumbers do work on New Residential Construction projects, Tract Developments, and New Condo Construction Projects. Ask your broker if your coverage excludes such types of projects if these are in your business plan. Such plumbers would not install fire sprinklers, liquefied petroleum gas (LPG), septic tank, excavation, swimming pools, process piping, public utilities, hospitals or industrial work, or steam/boiler work. They typically do Water softener installations, break concrete & repair to install pipes, lay sewer line/pipe drain and use ditch witch for underground lines (apartments allowed). Lawn sprinklers installation ok.
- Non-resident plumbers, GL Class Code 98483. Many General Liability policies exclude Residential work, so be careful and ask your broker if your coverage has this exclusion if considering plumbing work such projects. These plumbers also do Water softener installation, break concrete & repair to install pipes, lay sewer line/pipe drain and use ditch witch for underground lines. Lawn sprinklers installation ok.
Residential and non-residential plumbers generally have to provide certificate of insurance and a contractor license bond when obtaining their contractor license in States like Washington and Oregon. The Washington State Department of Labor and Industries and the Oregon Construction Contractors Board have different contractor license bond requirements. If the plumber wants to do work for clients in Washington State and Oregon, then they will need a separate license bond for each of the two States. Consult your licensed Washington State and Oregon agent/broker for more information.
It is important to note that plumbers need different types of coverage depending on their business operation. Some plumbers may not need certain types of coverage while others may need all. Plumbing contractors need these type of coverage to protect themselves legally and it’s important to have legal liability protection at all cost. They will need:
- General liability coverage or special plumbers coverage
- Coverage if they have employees and some sort of workers compensation
- Commercial auto coverage if they have vehicles in their business
- Faulty Workmanship Coverage (not available in all States)
- Umbrella or Excess Liability Insurance
- Pollution Liability – Most policies exclude mold and fungus, yet most plumbers and their insurance agents overlook this very valuable coverage that can save the plumber’s business in the event of a mold related claim.
The cost of your insurance will depend on many different factors some of which include:
- The size of your business- this includes employee payroll
- The type of plumbing work performed, whether it be for new construction or repairs, homes, condos, apartments, tract developments, industrial, or commercial buildings
- The insurance carrier that the agent or broker quoted. Is it an Occurrence Form or a Claims Made Form of General Liability Insurance? Does it have a tract exclusion? Does it have a water intrusion sublimit? Does it have a Manifestation Clause or a Sunset Clause? All of these affect the outcome of some claims made against your business and its future. Choosing a broker that specializes in contractor’s general liability insurance can give a contractor a more thorough consultation and ask the subtle and often overlooked, yet important questions that can determine which plan makes best serves and protects the business.
As mentioned before, you may think that your General Liability policy protects your business from all potential claims made for the work you’re doing, but getting your coverage reviewed by an agent/broker who specializes in protecting contractors can make the difference between you continuing your business and being successful and having to shut down operation due to a lawsuit.
In conclusion, having the right plumbers insurance and protecting yourself legally and otherwise should not be one of those business decisions that plumbers and contractors neglect to make because they do not think it is necessary. This a rather important aspect of your business success and continued growth. While insurance may not be the only way to protect your business from any unforeseen risk that may occur, it is one of those things that can really save you in the long run. There are many different companies offering these types of coverage and helping plumbers and other contractors cover whatever liabilities that may occur. It is important to see what these people are offering and choose the one that can meet your needs fully. Marc Perez of All Contractors Insurance and Bonds specializes in listening to the needs and plans of contractors in Washington State and Oregon, including plumbers, and will match the plans that make most sense. Call Marc Perez at 253-252-2533 for a consultation and quote today.