Soft Costs, Delay and Debris Removal: Builders Risk Considerations for HVAC Subcontractors

HVAC subcontractors working on commercial or large residential construction and renovation projects in the United States face concentrated exposures: high-value equipment and materials, time-sensitive schedules, and complex site logistics. Builders risk insurance plus appropriate contractors' equipment and soft-cost endorsements are critical to protect revenue, margins and reputation when a covered loss occurs. This article explains the key builders risk considerations HVAC subcontractors in the USA (with emphasis on urban markets such as New York City, Los Angeles, Houston and Chicago) must evaluate for soft costs, delay in completion, and debris removal.

Table of Contents

Why HVAC subcontractors must focus on soft costs, delay and debris removal

HVAC materials and assemblies (rooftop units, chillers, ductwork, controls) are high-value and often staged on-site or in storage.
Schedule delays from damage — even if the physical loss is repairable — can generate significant indirect costs: extended supervision, temporary HVAC rentals, overtime, liquidated damages and lost profit.
Debris removal after a covered peril (fire, wind, collapse) is commonly excluded or limited; failure to buy adequate debris removal limits can leave subcontractors or the GC liable for substantial unbudgeted expense.

Key coverages and how they apply to HVAC work

Builders Risk primary coverages relevant to HVAC subs

Buildings and materials on-site, in transit and in storage: protects HVAC equipment as part of the project property.
Soft costs / Delay in Completion (also called Delay in Start-Up or Advanced Loss of Profits): reimburses certain indirect costs that continue while work is delayed due to a covered physical loss.
Debris removal: pays to remove damaged HVAC equipment and construction debris necessary to make repairs.
Testing and commissioning coverage: protects equipment during operational testing (critical for HVAC systems).

For a primer comparing which policy protects HVAC materials on-site, see: Builders Risk vs Contractors' Equipment: Which Insurance Protects HVAC Materials on a Jobsite?

Contractors' equipment / inland marine considerations

Contractors' equipment policies (also called equipment floater or inland marine) protect the subcontractor’s tools, lifts, cranes and portable HVAC equipment. They are critical for HVAC contractors who own temporary chillers, scaffolding or hoisting equipment.

For temporary installation and rigging exposures, see: How Contractors' Equipment Coverage Protects Temporary HVAC Installations and Rigging

Soft costs and delay — what to request on a builders risk policy

Soft costs typically include:

Extended general conditions (site supervision, temporary facilities, security).
Professional fees (engineering, inspection).
Interest on construction loans (if applicable).
Additional marketing or lease-up costs for owner-occupied projects.
Delay in completion endorsements can also be written to cover subcontractor increase-in-costs (overtime, premium freight) and rental equipment (temporary HVAC units).

Important underwriting points:

Limit: Soft costs are usually purchased as a sublimit (example: 10–25% of the project value) or as a stated dollar limit tied to the estimated soft costs.
Waiting period: Delay coverage often includes a waiting period (e.g., 24–72 hours or a calendar period such as 30 days) before indemnity is due.
Duration: Policies typically limit the indemnity period (e.g., 120–365 days).

Debris removal — don’t underinsure cleanup

Debris removal after a pause or loss can be costly for HVAC subs due to heavy rooftop units and refrigerant disposal. Typical approaches:

Automatic debris removal allowance: Many builders risk policies include a % of the loss (commonly 5–25%) for debris removal; ensure this is sufficient for heavy equipment.
Specific debris removal limit: Consider adding a separate debris removal limit for large equipment.
Pollution cleanup: If refrigerant or oils could be released, validate whether pollution cleanup is included or excluded and buy contingent pollution coverage if needed.

Valuation, settlement options and coordination with GC/owner policies

Valuation methods (actual cash value, replacement cost, agreed amount) and who holds the policy affect claim recovery:

HVAC subcontractors must coordinate coverage with the GC and owner to avoid gaps or overlaps. See: Coordinating Coverage Between GC, Subcontractor and Owner Policies for HVAC Work.
Stated values for high-ticket HVAC equipment on builders risk minimize settlement disputes; provide invoices, serial numbers and delivery receipts at bind.
Consider site-to-site transit and storage endorsements when materials are moved between storage yards and the jobsite. See: Site-to-Site Coverage for HVAC Equipment on Large Construction Projects

Pricing benchmarks and example calculations (U.S. market)

Builders risk and equipment premium rates vary by carrier, project type, location (e.g., NYC vs. Phoenix), deductible, and risk controls. Industry guidance and carrier materials show typical market ranges:

Sources:

Insurance Information Institute — what is builders risk insurance: https://www.iii.org/article/what-is-builders-risk-insurance
The Hartford — Builders Risk Insurance overview and pricing drivers: https://www.thehartford.com/business-insurance/builders-risk
Nationwide — Builders risk insurance overview: https://www.nationwide.com/business/insurance/builders-risk-insurance

Typical market examples (estimates for budgeting; actual quotes required from carriers):

Builders risk premium: ≈ 0.5% to 2.0% of the total completed value for many commercial projects (higher in coastal or high-hazard locations).
- Example: $5,000,000 renovation → builders risk premium estimate ≈ $25,000–$100,000 (one-time policy premium for the construction period).
Contractors' equipment / tools floater: ≈ 1% to 4% of the scheduled equipment value annually (or pro-rated for a shorter term).
- Example: $100,000 of HVAC equipment/tools → premium ≈ $1,000–$4,000/year.
Soft costs/delay endorsements: Often priced as a function of the amount insured and length of indemnity; expect additional premium of several thousand to tens of thousands on mid-to-large projects depending on exposure.

Carriers active for HVAC subs and project builders risk:

The Hartford — strong in mid-market builders risk and contractors' equipment (see The Hartford link above).
Travelers, Chubb and Nationwide — major admitted markets for large commercial builders risk.
Next Insurance and Hiscox — digital-first insurers offering tools/equipment and small-contractor packages that can deliver lower entry-level premiums for smaller HVAC shops. For small tool schedules (values under $50k) entry premiums often range from $300–$2,500/year depending on deductible and territory (urban centers and high-theft areas increase rates).

(Note: the above pricing examples are illustrative; request firm quotes. Market conditions and carrier appetites change.)

Practical best practices and checklist for HVAC subcontractors

Provide an accurate, itemized schedule of values for HVAC materials and equipment with serial numbers and invoices at binding.
Confirm who will name whom as additional insured and who holds the builders risk policy (owner or GC). Include waiver of subrogation where required.
Add explicit Delay in Completion / Soft Costs and Debris Removal limits keyed to realistic worst-case scenarios (include temporary HVAC rental/day rates and possible liquidated damages).
Ensure testing & commissioning and operational losses are included for systems startup.
Buy inland marine coverage for owned cranes, rigging and temporary chillers; add transit and storage inland marine endorsements.
Document storage locations and security measures on site; maintain photos and inventory logs.

Quick comparison: Builders Risk vs Contractors' Equipment for HVAC exposures

Exposure	Builders Risk	Contractors' Equipment
Insures completed project property, installed and stored project materials	✓	✕ (unless included by endorsement)
Insures subcontractor-owned tools and mobile equipment	✕ (usually)	✓
Covers soft costs/delay in completion	✓ (by endorsement)	✕
Covers debris removal of damaged project property	✓ (if limit included)	✕
Best for large project-material values (rooftop units, chillers)	✓	✕
Best for protecting lifts, cranes, portable chillers and hand tools	✕	✓

Final notes

HVAC subcontractors in major U.S. markets should engage both a knowledgeable broker and the general contractor early in the project lifecycle to align builders risk schedules, soft cost limits, debris removal provisions and contractors' equipment schedules. For deeper guidance on adding HVAC equipment to a builders risk policy and valuation methods, read: How to Add HVAC Equipment to a Builders Risk Policy During Installation and Valuation Methods and Settlement Options for Damaged HVAC Project Materials.