Here's the thing about insurance for your HVAC business: you can buy everything separately, or you can bundle it. And unlike those bundle deals that sound too good to be true, a Business Owner's Policy (BOP) actually delivers. But here's what most HVAC contractors don't realize—there's a tipping point where bundling stops making sense.
If you're running a small HVAC operation with a handful of employees and a couple of service trucks, a BOP is probably your best bet. But if your business is growing—more crews, bigger jobs, higher revenue—you might need to graduate to standalone policies. Let's break down when each option makes sense for your business.
What's Actually in a BOP for HVAC Contractors?
A BOP packages three critical coverages into one policy: general liability insurance, commercial property insurance, and business interruption insurance. Think of it as the essential protection bundle designed specifically for small businesses.
General liability covers the big worries—if you accidentally damage a customer's home while installing a new HVAC system, or if a client trips over your equipment and gets hurt. Commercial property insurance protects your business assets like your office space, warehouse inventory, and some of your tools and equipment. Business interruption coverage kicks in if something forces you to temporarily close, like a fire at your shop.
Most BOPs for HVAC contractors come with standard limits of $1 million per occurrence and $2 million aggregate. That's enough to cover most incidents small businesses face. The average deductible sits around $500, which is manageable for most contractors.
The Real Cost Comparison: BOP vs Separate Policies
Let's talk numbers, because this is where a BOP really shines for smaller operations. The average BOP for an HVAC contractor costs about $124 per month or roughly $1,493 per year. Some contractors pay closer to $141 per month, but that's still a solid deal.
Now compare that to buying policies separately. General liability insurance alone averages around $78 per month or $941 per year. Add commercial property coverage, and you're looking at significantly higher total costs. When you bundle these coverages into a BOP, you're saving anywhere from 18% to 26% compared to purchasing them individually.
That bundling discount isn't just marketing fluff. Insurance companies genuinely prefer writing BOPs because they're simpler to underwrite and manage. They pass some of those savings along to you. For a small HVAC business trying to keep overhead manageable, that difference adds up quickly.
Who Actually Qualifies for a BOP?
Here's where things get specific. Not every HVAC business can get a BOP, and that's by design. These policies are tailored for small to midsize operations, so insurers set clear eligibility boundaries.
The typical cutoffs are 100 employees or fewer, annual revenue under $5 million to $6 million, and no single location exceeding 35,000 square feet. If you're running a small HVAC shop with 5 to 20 employees doing residential and light commercial work, you almost certainly qualify.
But there's also a risk factor. Insurers want BOPs to cover lower-risk businesses. HVAC work is generally considered moderate risk, which works in your favor. However, if your operation involves particularly hazardous work—like extensive refrigerant handling, industrial installations, or high-rise projects—you might fall outside typical BOP eligibility even if you meet the size requirements.
When You Need to Switch to Standalone Policies
Growth is good for business, but it complicates your insurance situation. Once you cross certain thresholds, your BOP won't cut it anymore—either you'll exceed eligibility limits, or the coverage won't adequately protect your larger operation.
The most common trigger is revenue. If you're approaching that $5 million to $6 million annual revenue mark, start planning your transition. Same goes if you're nearing 100 employees. Even if an insurer stretches the rules slightly for you, you're likely paying more for less appropriate coverage at that point.
Higher liability limits are another reason to switch. That standard $1 million per occurrence might have been plenty when you were doing residential service calls, but if you're now installing systems in large commercial buildings, you need higher limits. Standalone general liability policies can go much higher—$2 million, $5 million, even $10 million per occurrence if you need it.
When you outgrow a BOP, you'll typically move to a Commercial Package Policy (CPP). It's basically a grown-up version of a BOP—more flexible, higher limits, customizable to your specific risks. You can add or remove coverages as needed, adjust limits independently, and get specialized endorsements for unique situations.
What a BOP Doesn't Cover (And Why You Still Need Other Policies)
Even if you're the perfect candidate for a BOP, don't expect it to be your only policy. There are critical coverages that never come bundled in a BOP, and you absolutely need them.
Workers' compensation is required in almost every state if you have employees. It's always a separate policy. Same with commercial auto insurance—if you've got service trucks, vans, or any company vehicles, you need dedicated auto coverage. Your BOP won't touch that.
Then there's your tools and equipment. A BOP might cover some basic tools and small equipment, but if you've invested heavily in specialized HVAC equipment—expensive diagnostic tools, commercial-grade installation equipment, refrigerant recovery machines—you probably need an inland marine policy or specific contractor's tools and equipment coverage. Those items are worth tens of thousands of dollars; standard BOP property limits might not fully cover them.
Making the Right Choice for Your HVAC Business
So how do you decide? Start with an honest assessment of where your business is right now. If you're a small operation—under 50 employees, less than $3 million in revenue, primarily residential and light commercial work—a BOP is your most cost-effective option. You'll get solid coverage at a bundled discount.
If you're approaching those eligibility thresholds or taking on riskier work, start shopping for standalone policies now. Don't wait until your renewal gets declined. Talk to an insurance broker who specializes in contractor insurance. They can help you transition smoothly and make sure you're not over-insured or under-insured during the switch.
And remember, your insurance needs will evolve as your business grows. What works today might not work in two years. Review your coverage annually, especially if you've had significant growth, added new services, or expanded into new markets. Your insurance should grow with you, not hold you back.
