Finding a Contractor: Commercial Plumbing Contractor Liability Insurance Requirements

Finding the right contractor for the job takes a little research. If you’re talking about a job on commercial property like an office building or retail space, it’s obviously important to hire someone who is both qualified and experienced, whether you’re talking about an electrician, plumber or landscape contractor.  That said, there’s more to the contractor vetting process than experience or even recommendations. It is also very important to find a contractor who has the right insurance for this specific job.

Most states require that all professional tradesmen (plumbers, electricians and the like) carry a minimum amount of general business liability insurance. Liability insurance typically doesn’t come into play unless a contractor is sued and has to pay damages resulting from the performance of a job, the liability insurance covers the damages to the limit of the policy. The amount of liability coverage required varies by state, so check to see what the limits are in your state.

Commercial Plumbing Contractor Liability Insurance Considerations

One of the most important things to do to find a contractor that is right for a particular project is to carefully assess the risks involved. Does it mean knocking down walls or tearing up floors? Does the project involve steam fitting or work with other high-pressure compressed gas systems? Make sure that the contractor you are considering is carrying enough insurance to cover potential damages resulting from the work being done.

Types of Insurance

  • Workers compensation insurance compensates employees who have been injured on the job, including some percentage of lost wages and most medical expenses. All employers are required to carry workers compensation insurance on their employees, including plumbing companies. That said, it is a good idea to check to make sure that the business is up to date with their workers comp premiums and is fully compliant with the workers comp agency in your state.
  • Umbrella liability insurance is designed to cover liabilities not covered in the general liability policy. The umbrella liability policy could be as simple as additional liability coverage above the amount of the original policy, or it could include coverage for libel, false arrest, legal costs and the like.
  • Some projects are so large they require bonding or bond insurance. A bond is a specific amount of money held by a third party to guarantee contractual agreements. Bond insurance can be designed to act as both a performance bond and an indemnity bond, that is, guaranteeing both that the project is started and completed on time and covering any penalties if the contractor finishes late or does not meet a specification of the project. Bond insurance can also be used for the purposes of a payment bond to guarantee payment for subcontractors and vendors.

Additional Resources

Fixxbook can help you find a contractor that’s right for your job. We offer a number of useful resources for facilities managers. Check out the Resources for Facilities Management page to learn more about choosing the right plumbing contractor for your job.

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