HVAC—heating, ventilation, and air conditioning—companies provide services needed by almost every homeowner and business. It’s a high-need and high-demand line of work, with people depending on these services to keep their homes and workplaces at comfortable, and in some situations safe and livable, temperatures.
A business owner needs a range of insurance products to protect an HVAC company from financial losses. General liability, professional liability, commercial property, and worker’s compensation are just some of the key coverages any small business owner needs to consider.
Among the different forms of insurance important to an HVAC business is business interruption insurance.
Protect your business
What is business interruption insurance?
Business interruption insurance is designed to help your business stay afloat if a covered event prevents you from being able to provide services to your customers.
The types of qualifying events that business interruption insurance covers can be extensive, including some that businesses might not have even considered. Some obvious ones are physical damage to the main place of business that requires closure, such as a fire or a tree falling on the roof. Business interruption insurance can help to pay bills and keep the business running while you’re closed for repairs.
It can also cover things that may force the closure of your business, such as a municipality repairing roads or shutting off the water to complete an infrastructure project like replacing water or sewer lines.
Some business interruption insurance policies cover losses related to cyberattacks, while others require you to purchase a separate cyber insurance policy, which offers business interruption coverage. This is a growing area of loss for businesses, and any company that stores customer or business information electronically is potentially vulnerable.
What does business interruption insurance help to cover?
Business interruption insurance can help you to make payroll, lease and rental payments, cover loan payments, and even cover tax payments if something happens and you are unable to do business as usual.
Essentially, business interruption insurance is designed to help keep your HVAC company running during that period when you are unable to provide services to clients and have no revenue coming into the business.
When does business interruption insurance kick in?
Your business interruption insurance policy will typically define what constitutes a business interruption. Usually, a business will need to experience a closure of more than one or two days to reach the threshold at which you are able to make a claim. You can expect this period to be at least 48 to 72 hours.
In other words, business interruption insurance is to protect against financial losses caused by extended closures.
What doesn’t business interruption insurance cover?
As with most forms of insurance, business interruption insurance does have exclusions. There are instances where events that prevent you from performing HVAC work are not covered.
Some examples of exclusions are earthquake and flooding damage. These natural disasters are almost always excluded from insurance coverage and require the purchase of separate riders.
Similarly, business interruption insurance won’t cover damage that is covered by another policy. For example, if your HVAC business is interrupted because a tree fell through the roof of your headquarters and damaged your office equipment, replacing desks and computers would be covered under your commercial property policy.
Another common exclusion that business owners can expect to see in their business interruption insurance policy is for operational shutdowns caused by communicable diseases. This exclusion is likely a relic of the COVID-19 pandemic. Because HVAC companies work on systems and equipment in homes and businesses, the spread of a communicable disease could have a dramatic negative impact on your HVAC business, if you are unable to send technicians into homes and businesses due to quarantines or other restrictions.
Business interruption insurance will also frequently exclude payments for utilities, because those typically will not be in use when your business is closed. Check your policy for details on what is excluded from coverage.
How much does business interruption insurance cost for HVAC companies?
Premiums are calculated based on a lot of different factors, so the cost of business interruption insurance for HVAC companies could vary considerably.
Business interruption insurance is frequently included in a Business Owners Policy (BOP), which will bundle together some important forms of business insurance. A BOP will usually include commercial property insurance and general liability insurance, along with business interruption insurance.
Some of the variables your insurance company will consider when calculating your premium are things like how much revenue your HVAC business generates, where you are located, how many employees you have, and coverage choices.
HVAC companies provide important services to their customers, especially when temperatures are at the extremes. Protecting your business from an unexpected closure is important, and business interruption insurance can help you fund your operations if you have to close.
If you’re wondering how much business interruption coverage your HVAC company needs, contact the experts at Rate Insurance. With access to a wide range of commercial insurance providers, they can find the right coverage for your business at the right price.
Get your free consultation
Disclaimer:
All information provided in this publication is for informational and educational purposes only, and in no way is any of the content contained herein to be construed as financial, investment, or legal advice or instruction. Rate Insurance does not guarantee the quality, accuracy, completeness or timelines of the information in this publication. While efforts are made to verify the information provided, the information should not be assumed to be error free. Some information in the publication may have been provided by third parties and has not necessarily been verified by Rate Insurance. Rate Insurance, its affiliates and subsidiaries do not assume any liability for the information contained herein, be it direct, indirect, consequential, special, or exemplary, or other damages whatsoever and howsoever caused, arising out of or in connection with the use of this publication or in reliance on the information, including any personal or pecuniary loss, whether the action is in contract, tort (including negligence) or other tortious action.
