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Checklist for Purchasing the Right Excess Liability Policy for an HVAC Company

Content Pillar: Umbrella & Excess Liability Strategies — HVAC Contractor Insurance (USA)

Running an HVAC contracting business in the United States brings both steady revenue and outsized liability exposures: job-site bodily injury, property damage from faulty installs, auto losses from service fleets, and contractual indemnity obligations. An excess liability (umbrella) policy is a cost-effective way to protect your balance sheet when underlying limits are exhausted. Below is a practical, transactional checklist designed for HVAC companies operating in major U.S. markets (examples use Houston, TX; Los Angeles, CA; and Chicago, IL), plus vendor/pricing context and underwriting guidance.

Why excess/umbrella matters for HVAC contractors

  • Large third-party injury or property damage claims (falls, carbon monoxide events, fire from improper installs) can quickly exceed primary CGL or auto limits.
  • Fleet exposure: service vans and trucks on public roads increase frequency/severity of auto liability claims.
  • Contract requirements: many general contractors and commercial clients mandate umbrella limits in RFPs/subcontracts.
  • Cost efficiency: paying for incremental umbrella coverage is generally cheaper than raising all underlying policies to equivalent limits.

For a deeper dive on how umbrella policies protect HVAC firms, see: How Umbrella and Excess Liability Protect HVAC Contractors from Catastrophic Claims.

Quick definitions — know these terms

  • Excess vs Umbrella: Umbrella can drop down and cover gaps/not-covered underlying policies; excess typically follows form and only responds after underlying limits are exhausted.
  • Underlying limits: minimum primary policy limits the insurer requires before umbrella attaches (commonly $1M or $2M for CGL; $1M each for auto BI/PD combined).
  • Self-Insured Retention (SIR): amount the insured pays before umbrella pays (acts like a deductible).
  • Drop-down coverage: umbrella pays as primary when an underlying policy excludes a loss that umbrella covers.

Read more about structuring underlying limits here: Structuring Underlying Limits to Qualify for an Umbrella: A Guide for HVAC Firms.

Pricing reality check (market estimates, 2024)

Below are estimated annual premium ranges for HVAC contractors purchasing business umbrella/excess liability limits. Actual prices vary by loss history, payroll/subcontractor use, fleet size, and jurisdiction.

Company (examples) Typical $1M Umbrella Annual Premium (HVAC contractor) Notes
The Hartford $650 – $1,800 Competitive for established contractors; available nationwide. Source: The Hartford business umbrella info.
Travelers $700 – $2,200 Strong contractor appetite, preferred pricing for safety programs.
Nationwide $600 – $1,900 Often bundled discounts with primary policies.
Market Range (independent brokers) $500 – $3,500 High-risk accounts (large fleet, recent losses) push to upper range.

City-specific market examples (estimated cost for $1M umbrella for a mid-sized HVAC contractor, 2024):

  • Houston, TX: $700 – $1,800 per $1M
  • Los Angeles, CA: $900 – $2,400 per $1M (higher severity/ litigation environment)
  • Chicago, IL: $800 – $2,000 per $1M

Sources consulted for these market ranges: The Hartford business umbrella overview, Travelers business umbrella pages, and industry marketplace pricing summaries (Insureon). See:

Note: these are market ranges, not guaranteed quotes. Request firm quotes from carriers or brokers.

Detailed checklist — what to evaluate before you buy

Use this checklist during procurement and renewal conversations with brokers and underwriters.

  1. Policy structure and form

    • Confirm whether the policy is an umbrella (may drop down) or excess (follow-form).
    • Ask for a copy of policy form — review exclusions and “drop-down” language.

  2. Minimum underlying limits required

  3. Coverage triggers and exclusions

    • Confirm coverage for:
      • Auto liability (including hired/non-owned autos)
      • Completed operations
      • Professional services (if you offer HVAC design or system commissioning)
      • Pollution/abatement arising from HVAC work (many umbrellas exclude pollution; look for broad wording or endorsements)

  4. Drop-down provisions & defense costs

    • Does the umbrella have drop-down for excluded underlying losses?
    • Are defense costs inside limits or outside? (Outside limits is preferable to preserve limits for indemnity.)

  5. Self-Insured Retention (SIR) and deductibles

    • Understand SIRs; some policies apply SIRs to certain claims (e.g., employer’s liability).
    • Model worst-case cashflow: SIR + primary retentions + legal costs.

  6. Additional insureds & endorsements

    • Does the umbrella recognize additional insured endorsements provided on the underlying policies?
    • Verify contractual liability and waiver of subrogation handling.

  7. Aggregate limits & per-occurrence limits

    • Confirm whether umbrella limits are per-occurrence and how aggregates apply across multiple losses.

  8. Underwriting requirements & inspections

    • Expect requests for safety manuals, driver training logs, loss runs (5 years preferred), vehicle schedules, payroll/sales breakdowns.
    • Proactively provide a subcontractor management program and certificate controls — these reduce pricing.

  9. Claims handling / defence counsel

    • Ask about choice of counsel, defense panel, and how settlement authority is handled between primary and excess carriers.

  10. Price vs. breadth trade-offs

    • Cheaper premiums may come with narrow forms, high exclusions, or SIRs. Evaluate total exposure, not just cost.

For more guidance on when umbrella policies kick in for HVAC contractors, read: When an HVAC Contractor Needs an Umbrella Policy: Risk Thresholds and Claim Scenarios.

Underwriting red flags that increase price or lead to declination

  • Recent large losses (one or more > $50,000 in 3 years)
  • Poor fleet controls, multiple at-fault preventable accidents
  • High subcontractor ratio without adequate additional insured/waiver documentation
  • Work in high-severity areas (e.g., high-rise HVAC, environmental remediation)
  • Prior policy lapses or cancellation for nonpayment

Negotiation tactics & cost controls

  • Bundle umbrella with primary policies for multiliine credits.
  • Implement documented safety and driver safety programs — ask carriers for premium credits.
  • Raise primary auto limits to $1M CSL to qualify for better umbrella pricing.
  • Consider a layered tower: buy a $1M umbrella plus an excess layer (another $4M) — this can yield better marginal cost-per-million than a single large umbrella.

Compare cost-benefit of umbrella vs raising primary limits: Cost-Benefit Analysis: Buying Umbrella vs Raising Underlying Policy Limits for HVAC Businesses.

Example claim scenario (why umbrella saved a business)

A commercial rooftop install in Los Angeles resulted in a fall causing catastrophic injury with $2.5M in medical and indemnity exposure. The contractor had $1M CGL and $1M umbrella limit. Primary paid $1M; umbrella paid the excess $1.5M — protecting corporate assets and avoiding bankruptcy. For multiple claim examples see: Claim Examples Where an Umbrella Policy Saved an HVAC Contractor Millions.

Action plan — what to do right now

  • Gather 5 years of loss runs, vehicle schedules, payroll / subcontractor spend, safety programs, and current policy forms.
  • Request comparative quotes from at least 3 reputable carriers/brokers (e.g., The Hartford, Travelers, Nationwide).
  • Require carriers to provide sample policy forms and explicitly state whether defense costs are inside/outside limits.
  • Reconcile contract requirements: ensure you meet client-mandated umbrella limits before bidding large commercial jobs.
  • Set renewal reminder 90 days out to allow time for underwriting documentation and market placement.

Useful external resources

Final checklist (printable)

  • Confirm umbrella vs excess form and drop-down language
  • Verify underlying limits meet carrier minimums (CGL, Auto, Employer’s Liability)
  • Obtain full policy form and read exclusions (pollution, professional services)
  • Check defense costs — inside vs outside limits
  • Review SIR/deductible structure and model cashflow impact
  • Provide broker with 5-year loss runs, safety program, vehicle/driver details
  • Negotiate bundle discounts and ask for endorsements for hired/non-owned autos
  • Confirm endorsement language on Additional Insureds and waiver of subrogation
  • Get firm quotes from at least 3 carriers and compare forms, not just price

Purchasing the right excess liability policy for your HVAC company requires balancing price with form quality and operational controls. Start with the checklist above, gather underwriting documentation early, and involve a broker experienced with contractor accounts to secure the best combination of limit, form, and price for your business location (Houston, Los Angeles, Chicago, or other U.S. markets).

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