Here's something most plumbing contractors learn the hard way: your skills with a pipe wrench won't protect you from a lawsuit. One customer slipping on water you tracked into their home, one accidental dent in a hardwood floor while moving equipment, or one property owner claiming you damaged their wall—any of these can result in a five-figure legal bill. That's where general liability insurance comes in.
If you're running a plumbing business, general liability isn't just a smart idea—it's often legally required to get licensed, pull permits, or work with commercial clients. Beyond the legal requirements, it's the financial safety net that keeps your business running when accidents happen. Let's break down what this coverage actually does, what it costs, and why you can't afford to skip it.
What General Liability Insurance Covers for Plumbing Contractors
General liability insurance protects your plumbing business from claims made by third parties—meaning customers, property owners, or anyone who isn't your employee. The coverage kicks in when someone alleges you caused bodily injury, property damage, or advertising injury. Here's what that actually looks like in real life.
Bodily injury coverage pays if someone gets hurt because of your work. A homeowner trips over your toolbox and breaks an ankle. A property manager slips on water from your pipe repair. A client's dog runs out an open door you left ajar and gets hit by a car. Your general liability policy covers their medical expenses and legal costs if they sue you.
Property damage protection handles situations where you accidentally damage someone else's property. You crack a tile floor while installing a new toilet. Your equipment gouges a wall. You drop a wrench through a skylight. Even if the damage wasn't your fault—maybe a pipe burst unexpectedly—you could still face a claim. Your policy covers repair or replacement costs and defends you in court if necessary.
One of the most valuable parts of general liability for contractors is completed operations coverage. This protects you after you finish a job and leave the site. If a pipe you installed leaks six months later and floods a basement, or a fixture you mounted falls off the wall and injures someone, completed operations coverage handles those claims. Without it, you'd be exposed to lawsuits long after collecting payment.
Standard Coverage Limits and What They Mean
Most plumbing contractors carry a policy with $1 million per occurrence and $2 million aggregate limits. These are industry-standard numbers, and they're usually what general contractors and commercial clients require before letting you on a jobsite.
The per occurrence limit is the maximum your insurance will pay for a single incident. If a customer sues you for $800,000 because your work caused water damage to their home, your $1 million per occurrence limit covers it. If they sue for $1.5 million, you're on the hook for the extra $500,000 unless you have umbrella coverage.
The aggregate limit is the total amount your policy will pay for all claims during your policy period, typically one year. If you face three separate claims totaling $2.3 million in one year, your $2 million aggregate is exhausted, and you'll pay the remaining $300,000 yourself. Once you hit your aggregate, your policy is essentially tapped out for the rest of the term.
You can purchase lower limits—some states only require $100,000 or $300,000 for licensing—but that's rarely enough protection. A single serious injury or major property damage claim can easily exceed those minimums. If you work on larger commercial projects, clients often require higher limits or ask you to add umbrella coverage that boosts your total protection to $3 million, $5 million, or more.
What General Liability Insurance Costs in 2025
Plumbing contractors pay an average of $115 per month for general liability insurance, or about $1,378 per year. That's for a standard $1 million per occurrence, $2 million aggregate policy. However, your actual premium depends on several factors specific to your business.
Smaller operations—say, a solo residential plumber with no employees—typically pay between $75 and $115 per month. Larger companies with multiple crews, higher revenue, and commercial contracts can expect premiums in the $150 to $300 range or higher. Location matters too. Plumbers in Kansas pay premiums around 0.8% of revenue, while contractors in South Carolina face rates closer to 9.8% due to different regulations and lawsuit climates.
Your claims history plays a major role. If you've had multiple liability claims in the past few years, insurers see you as higher risk and charge more. Conversely, a clean record can qualify you for discounts. The type of work you do also affects pricing. Commercial plumbing on large construction sites is riskier than residential service calls, so your premium reflects that. Even the coverage limits you choose impact cost—moving from $1 million to $2 million per occurrence adds to your bill.
Why Certificates of Insurance Matter
If you work on commercial projects, you've probably been asked to provide a certificate of insurance before starting work. This document—often called a COI—proves you carry the required coverage. General contractors, property managers, and commercial clients use it to verify you won't leave them exposed if something goes wrong.
Your insurance company or agent can issue a certificate within minutes, and it's usually free. The COI lists your policy details—coverage types, limits, effective dates—and names the requesting party as the certificate holder. Some contracts also require you to add the general contractor or property owner as an additional insured on your policy, which extends your coverage to protect them from claims related to your work.
Without a COI, you won't get on the jobsite. Period. Even if you have insurance, failing to provide proof when asked can cost you the contract. Keep digital copies of your COI handy, and make sure it's up to date before bidding on new work.
State Licensing and Insurance Requirements
Many states require plumbing contractors to carry general liability insurance to get or maintain a license. The specific minimums vary widely. Florida requires $100,000 in liability coverage and $25,000 for property damage. Texas mandates at least $300,000 in coverage. Illinois asks for $100,000 general liability, $300,000 bodily injury, and $50,000 property damage.
Even if your state doesn't require insurance for licensing, municipalities might. Some cities and counties won't issue permits unless you prove you're insured. And regardless of legal requirements, operating without general liability is a financial gamble. One lawsuit could wipe out years of profit and force you to shut down.
Check with your state's contractor licensing board to understand your specific requirements. Don't assume the legal minimum is adequate coverage—it's usually the bare minimum to stay legal, not enough to fully protect your business.
Getting Started with General Liability Coverage
Shopping for general liability insurance is straightforward. You can get quotes online from carriers that specialize in contractor coverage, or work with an independent insurance agent who represents multiple companies. Be ready to provide details about your business—annual revenue, number of employees, types of projects you handle, claims history, and coverage limits you need.
Most plumbing contractors bundle general liability with other coverages into a Business Owner's Policy (BOP), which combines liability protection with commercial property insurance for your tools and equipment. This often costs less than buying policies separately. The average BOP for plumbers runs about $166 per month, or roughly $2,000 per year.
Don't skimp on coverage to save a few dollars a month. The difference between a $100,000 policy and a $1 million policy might only be $30 or $40 per month, but the gap in protection is enormous. Compare quotes from at least three insurers, ask about discounts for bundling or having a clean claims record, and make sure you understand what's covered and what's excluded before signing on.
