Common COI Red Flags for HVAC Contractors and How to Fix Them

Certificates of Insurance (COIs) are the first line of defense for HVAC contractors and their clients. A sloppy or inaccurate COI can cost time, money, and reputations — and in some cases lead to denied claims or contract termination. This guide, aimed at HVAC contractors operating in the United States (with examples for Los Angeles, CA and Dallas, TX), outlines the most common COI red flags, the business and financial impact, and step-by-step fixes you can implement today.

Sources for COI basics and industry cost context:

• Insurance Information Institute — Certificate of Insurance overview: https://www.iii.org/article/certificate-of-insurance-what-it-is-and-how-to-read-one
• Insureon — HVAC business insurance overview and cost ranges: https://www.insureon.com/small-business-insurance/hvac
• Next Insurance — Small contractors and HVAC insurance cost guidance: https://www.nextinsurance.com/business-insurance/hvac-insurance-cost/

Why COIs matter for HVAC contractors (short summary)

A COI documents that a policy exists and summarizes key coverages: general liability, workers’ compensation, commercial auto, and limits/endorsed interests (like Additional Insured). For contractors working on commercial property or serving property management firms in Los Angeles or municipal projects in Dallas, clients will often require specific endorsements, precise policy limits, and verifiable expiration dates before work can begin.

See a deeper primer on reading COIs: Reading a COI: How HVAC Contractors Verify Coverage Quickly and Accurately.

Top COI red flags HVAC contractors encounter (and why they matter)

1. Expired or Near-Expired Policies

   • Why it’s a red flag: Contract holders and general contractors require active coverage for the full project timeline. An expired COI puts your client at risk and can stop work.
   • Typical impact: Stop-work orders, lost revenue, and in some cases contract termination or bond claims.

2. Insufficient Limits

   • Why it’s a red flag: A $1M / $2M GL limit is typical, but many commercial clients require higher or project-specific limits.
   • Financial note: Small HVAC businesses often carry $1M/ $2M GL as standard. Upgrading to $2M+ may increase annual premium by 15–40% depending on location and claims history (see policy providers below).

3. Missing Additional Insured Endorsement

   • Why it’s a red flag: Large customers often ask to be named Additional Insured (AI) — but a COI that only lists the AI in the “certificate holder” box without an endorsement is insufficient.
   • Outcome: Client may refuse entry to jobsite until a proper AI endorsement is provided.

4. Unclear Policy Holder Name / DBA Errors

   • Why it’s a red flag: If the legal name on the policy doesn’t exactly match the contracting name (including DBAs), the COI may not actually cover work under the contract.
   • Example: "ABC HVAC LLC" vs "ABC Heating & Cooling" — mismatch can void AI coverage.

5. High Deductibles or Unacceptable Exclusions

   • Why it’s a red flag: Exclusions for pollution, mold, or operations-specific hazards (e.g., refrigerant handling) can expose clients and contractors to uncovered liability.
   • Impact: Claims denied, out-of-pocket defense costs.

6. Certificates that are Hand-Altered or Non-Standard

   • Why it’s a red flag: Handwritten endorsements or altered documents are frequently rejected by risk managers and can indicate fraudulent or temporary coverage.

7. No Waiver of Subrogation When Required

   • Why it’s a red flag: Many general contractors require a Waiver of Subrogation in favor of the owner/GC. Missing waiver can lead to contract non-compliance.

How to fix each red flag — step-by-step actions

1. Expired or Near-Expired Policies

• Implement COI expiration tracking (calendar or software).
• Require your broker to send renewal COIs at least 30 days before expiration.
• Use automated renewal workflows: see COI Expiration Tracking and Renewal Workflows for Busy HVAC Businesses.

2. Insufficient Limits

• Review client-contract requirements before bidding.
• Get multiple quotes for higher limits — ask carriers about umbrella policies to stack limits cost-effectively.
• Typical cost example: upgrading from $1M to $2M GL may add $400–$1,200/year for a small HVAC firm, depending on state and history (pricing examples below).

3. Missing Additional Insured Endorsements

• Always request the specific AI endorsement form required by the client.
• Ask the insurer for an ISO Additional Insured endorsement (CG 20 10 or CG 20 37 variants) if applicable.
• Keep PDF copies of the actual endorsement, not just the COI.

4. Policy Holder Name / DBA Errors

• Confirm legal entity name on the declarations page.
• If you operate under a DBA, verify the insurer lists the DBA or add it via endorsement.
• Store a copy of the declarations page with every COI file.

5. High Deductibles / Unacceptable Exclusions

• Review policy exclusions with your agent—ask for endorsements that limit exclusions (e.g., refrigerant-specific coverage).
• If exclusion cannot be removed, document client sign-off and obtain written waiver or additional coverage.

6. Hand-Altered or Non-Standard COIs

• Require ACORD 25 (standard) COIs or carrier-generated digital COIs.
• Educate clients and GC risk departments that altered certificates are not accepted.

7. No Waiver of Subrogation

• Ask your broker to add Waiver of Subrogation in favor of specified entities if required by contract.
• Confirm conditions in the workers’ comp and GL policies.

Example costs and carrier comparisons (Los Angeles, CA vs Dallas, TX)

Note: Premiums vary by payroll, revenue, claims history and payroll mix. Use these as starting reference ranges for small HVAC outfits (1–5 employees).

Sources: Insureon and carrier guidance pages (see links above). These ranges reflect market pricing from major small-business carriers (Next Insurance, The Hartford, State Farm). Always get a tailored quote.

Carriers & typical entry-level pricing examples:

• Next Insurance — marketed to contractors with digital quotes; small GL policies often advertised starting around $30–$50/mo for low-risk profiles (see Next Insurance small business pages).
• The Hartford — known contractor insurance programs; typical premiums for HVAC small shops often start a few hundred dollars/year for GL but depend heavily on payroll and services.
• State Farm — offers local agent-based quotes; workers’ comp and auto often quoted higher for CA.

Quick COI compliance checklist for HVAC bids (copy/paste)

• Policy effective and expiration dates cover full project.
• General Liability limits meet contract minimums (often $1M/2M).
• Additional Insured endorsement attached (actual endorsement PDF).
• Waiver of Subrogation added (if required).
• Correct legal entity name (DBAs noted if needed).
• Specific exclusions that matter (refrigerant, pollution) are handled.
• Certificate is an ACORD 25 or carrier-generated COI — not hand-altered.
• Declarations page stored with COI for high-risk contracts.

For downloadable templates and wording examples, see: COI Templates Every HVAC Contractor Should Use: What to Include and What to Avoid.

Tools to simplify COI management

• Use automated COI management tools to track expirations, deliver endorsements, and archive policy documents. For multi-project teams see: How to Issue and Manage Certificates of Insurance for Multiple Projects and Clients.
• Consider platforms that integrate with your CRM or bid software and can auto-notify brokers 30–60 days before renewal.

Final notes for Los Angeles and Dallas HVAC contractors

• California often means higher workers’ comp rates and more stringent local requirements — budget additional premium and build renewal reminders into your workflows.
• Texas (Dallas) typically has lower WC base rates but still requires strict COI documentation for commercial work.
• When a client asks for unusual endorsements or higher limits, respond with documented options and costs; see: Step-by-Step Guide to Verifying Additional Insured Endorsements on a Certificate of Insurance.

Stay proactive: a clean, accurate COI process prevents downtime, maintains client trust, and protects your business when claims occur.