Running a plumbing contractor business means you're constantly managing risks. Water damage claims, on-site injuries, equipment theft, vehicle accidents—any of these can cost you tens of thousands of dollars. The right insurance checklist keeps you protected without overpaying for coverage you don't need.
Whether you're a one-person operation or managing a team of plumbers, this checklist walks you through the essential coverages, optional add-ons, and annual review items that keep your business financially secure. Let's break down exactly what you need and when you need it.
Essential Coverage: The Non-Negotiables
These four coverages form the foundation of your plumbing contractor insurance. Without them, you're exposed to catastrophic financial risk.
General Liability Insurance covers third-party bodily injury and property damage. If you accidentally flood a customer's basement or a client trips over your equipment and breaks their arm, this policy handles the medical bills and legal defense. Most plumbing contractors carry $1 million per occurrence and $2 million aggregate limits. Many commercial clients won't hire you without proof of this coverage. Expect to pay $500-$1,500 annually depending on your revenue and claims history.
Workers' Compensation Insurance becomes mandatory once you hire your first employee in most states. It covers medical expenses and lost wages if a worker gets injured on the job. Plumbing work involves physical labor, confined spaces, and heavy equipment—all high-risk factors that make this coverage critical. Costs vary by state but typically run $2,000-$5,000 per employee annually. Some states allow sole proprietors to opt out, but you'll need coverage if you have any W-2 employees or subcontractors you treat as employees.
Commercial Auto Insurance protects your work vehicles and company trucks. Personal auto policies exclude business use, so if you're driving to job sites with tools and materials, you need commercial coverage. This includes liability for accidents you cause and physical damage to your own vehicles. If you use personal vehicles for business occasionally, consider hired and non-owned auto coverage as an affordable alternative. Commercial auto typically costs $1,200-$2,500 per vehicle annually.
Professional Liability Insurance (also called errors and omissions) covers claims that you made a mistake, gave bad advice, or failed to complete work properly. If a client says your pipe installation was faulty and caused water damage six months later, this policy defends you. General liability covers accidental damage during the job, but professional liability covers claims about your workmanship quality. Policies typically cost $500-$1,200 annually for $1 million in coverage.
Optional Coverage: When to Add More Protection
Once you have the essentials covered, these optional policies address specific risks based on your business model and growth stage.
Tools and Equipment Coverage (also called inland marine insurance) protects your pipe threaders, drain snakes, inspection cameras, and other specialized tools. If you carry more than $10,000 in equipment or regularly work at multiple job sites, this coverage makes sense. It covers theft, damage, and loss whether tools are in your truck, at a job site, or in storage. Most policies have minimal deductibles ($250-$500) and cost $300-$800 annually.
Commercial Property Insurance covers your office, warehouse, or shop if you own or lease business premises. This protects the building structure (if you own it) and your business property inside—inventory, furniture, computers, and stored equipment. If you work from home and use a dedicated office space, your homeowners policy won't cover business assets. Commercial property insurance typically costs $500-$1,500 annually depending on property value and location.
Umbrella Liability Insurance adds an extra layer of protection above your general liability and auto liability limits. If a major claim exceeds your standard $1 million limit, umbrella coverage kicks in. This is smart protection once your business reaches $500,000+ in annual revenue or if you work on high-value commercial properties. Umbrella policies typically provide $1-5 million in additional coverage for $400-$800 annually.
Cyber Liability Insurance protects against data breaches and cyberattacks. If you store customer information, accept credit cards, or use cloud-based scheduling software, you're exposed to cyber risks. A breach could expose customer addresses, payment details, and service histories. Cyber policies cover notification costs, credit monitoring for affected customers, and legal defense. Basic coverage starts around $500-$1,000 annually for small contractors.
Business Owner's Policy: Bundle and Save
A Business Owner's Policy (BOP) combines general liability, commercial property, and business interruption insurance into one package. For plumbing contractors with a physical location, a BOP often costs 15-30% less than buying these coverages separately. The business interruption component is particularly valuable—it replaces lost income if your shop floods or catches fire and you can't work for weeks.
BOPs typically cost $1,000-$3,000 annually depending on your revenue, property value, and claims history. Not all insurers offer BOPs to mobile plumbing contractors without a fixed location, so if you work exclusively from your truck, you might need to purchase coverages separately.
Annual Review Checklist: Keep Your Coverage Current
Insurance needs change as your business grows. Review your coverage every year—or immediately after major business changes—to avoid gaps or overpaying for protection you don't need.
Revenue changes: Most policies base premiums on your annual revenue. If your revenue increased significantly, inform your insurer—they'll adjust your premium, but you'll avoid being underinsured. If revenue dropped, you might qualify for lower rates.
Employee count: Hiring or laying off employees directly impacts your workers' comp premium. Report changes promptly to avoid surprise audit bills or overpaying for coverage on employees who left.
New services: If you added services like gas line installation, backflow testing, or commercial project work, your risk profile changed. Some higher-risk services require policy endorsements or increased limits.
Equipment value: If you purchased new trucks, cameras, or specialized tools, update your tools and equipment coverage limits. Underinsuring means you won't get full replacement value after a theft.
Contract requirements: Commercial clients often require specific coverage limits and additional insured endorsements. Before bidding large projects, confirm your insurance meets their requirements to avoid last-minute policy changes.
Claims history: If you've gone several years without claims, you might qualify for better rates. Shop your policy with 2-3 insurers annually to ensure you're getting competitive pricing. A clean claims record can save you 10-20% on premiums.
How to Get Started with Your Insurance Checklist
Start by getting quotes for the essential four: general liability, workers' comp (if you have employees), commercial auto, and professional liability. Most commercial insurance agents who specialize in contractors can quote all four simultaneously. Provide accurate revenue figures, employee counts, and vehicle information to get realistic pricing.
Once you have core coverage in place, evaluate optional policies based on your specific situation. Own expensive equipment? Add tools coverage. Lease a shop? Add property insurance. Work on high-value commercial projects? Consider umbrella liability.
Set a calendar reminder to review your coverage every January or on your policy renewal date. Business insurance isn't set-it-and-forget-it—your coverage should evolve as your business grows. Taking 30 minutes annually to verify your limits, update your information, and shop for better rates protects both your business assets and your peace of mind.
