Insurance Curator When bidding commercial or residential HVAC work in the United States, contractors increasingly face onerous insurance demands — excessive limits, blanket additional insureds, overly broad indemnity, and mandatory waivers of subrogation. These can increase costs dramatically, shift risks you can’t insure, and expose your business to catastrophic losses. This guide shows practical, contract-level strategies to push back — with sample language, negotiating tactics, and real-world cost context for HVAC contractors in key U.S. markets (Houston, Los Angeles, Miami).
Why push back? The real cost of unreasonable insurance terms
Unreasonable insurance requirements often create hidden, recurring costs:
- Higher premiums — asking for high limits (e.g., $5M GL + umbrella) or to name many additional insureds can bump premiums by 20–100%, depending on the insurer and endorsement costs.
- Endorsement fees — carriers frequently add administrative fees for additional insured endorsements or endorsements that extend coverage; these can be $50–$300 per endorsement.
- Coverage gaps — broad indemnity that is not tied to negligence can obligate you to pay third-party claims outside insurance coverage.
- Lost bids / cashflow impacts — the cost of meeting onerous terms can make a competitive bid unprofitable.
Estimated annual insurance costs for a small HVAC contractor (5 employees, ~$500k revenue) — 2024 estimates:
- General Liability: $1,000–$3,000
- Workers’ Compensation: $4,000–$15,000 (state-dependent)
- Commercial Auto: $800–$2,500
- $1M Umbrella: $400–$1,200
Sources: Insureon, Next Insurance, The Hartford. See references below for market validation.
Common unreasonable insurance demands and why they’re problematic
- Blanket Additional Insureds: demanding AI status for owners, lenders, tenants, and other parties without restricting scope or time. This often converts your policy into a primary defense for everyone tied to the project.
- Unlimited Indemnity / Broad Hold Harmless: promising to indemnify ever party “to the fullest extent permitted by law” — regardless of your negligence.
- High Limits without Risk-Based Justification: requiring $5M or $10M limits on small retrofit jobs where those limits are unnecessary.
- Mandatory Waiver of Subrogation for All Parties: removes insurers’ right to recover from responsible third parties, increasing premium exposure.
- Primary and Non-Contributory Without Carve-Outs: forces your policy to respond first even when another party is at fault, often with no reimbursement mechanism.
Before you bid: preparation that strengthens your negotiating position
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Know your baseline costs (by location)
Prepare a one-page cost estimate showing current premiums and how much each demanded change will cost. Example estimated annual range by city (2024):City GL Workers' Comp Auto 1M Umbrella Typical Annual Total Houston, TX $1,000–$2,500 $3,500–$10,000 $900–$1,800 $400–$900 $5,800–$15,200 Los Angeles, CA $1,200–$3,200 $6,000–$18,000 $1,000–$2,500 $500–$1,200 $8,700–$24,900 Miami, FL $1,100–$2,800 $5,000–$14,000 $900–$2,200 $450–$1,000 $7,450–$20,000 -
Get carrier input up front
Ask your broker whether the required endorsements exist, how carriers price them, and whether the carrier will accept the requested primary/non-contributory or additional insured wording. -
Collect comparable market evidence
Use insurer quotes (The Hartford, Travelers, Chubb, etc.) showing that carrier-standard AI language uses restrictions you can offer. Having quotes from The Hartford, Travelers, or Next Insurance that reflect lower-cost, limited AI forms strengthens your case. -
Prepare alternative language
Have polite, contract-ready alternatives (sample language below) that protect owners while shielding you from unlimited exposure.
Negotiation tactics that work
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Start with education, not confrontation
Provide the owner/GC a short summary showing incremental premium and endorsement fees tied to their ask. Numbers motivate compromise. -
Offer limited AI and time-bound coverage
Propose: “Additional Insured — CG 20 10 (or CG 20 37) but only for vicarious liability arising out of our work and limited to project operations through final completion.” This narrows exposure. -
Trade scope for price
If they insist on higher limits, ask for a contract price increase or split the cost (e.g., 50/50 additional premium reimbursement) — owners are often willing when they see dollar figures. -
Use conditional acceptance
Accept indemnity clauses that are “to the extent caused by our negligence” and decline ones that require indemnification for the owner’s sole negligence. -
Leverage prequalification & owner-provided insurance
For larger owners, ask whether owner’s policy can cover certain exposures so you don’t have to carry duplicative limits. -
Escalate strategically
If GC or owner won’t budge, involve your broker or insurer to explain underwriting constraints and possible policy rescission risks from overbroad contractual transfers.
Sample contract language to propose (practical & insurer-acceptable)
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Additional Insured (limited):
“Owner and Owner’s agents shall be named as Additional Insureds on Contractor’s Commercial General Liability policy, but only for liability arising out of Contractor’s ongoing operations performed by or on behalf of Contractor. Coverage shall be provided on a primary and non-contributory basis only to the extent of Contractor’s negligence and only during the term of active operations.” -
Indemnity (negligence-tied):
“Contractor shall indemnify and hold harmless Owner to the extent caused by Contractor’s negligence or willful misconduct. Contractor shall not be required to indemnify Owner for Owner’s independent negligence, except to the extent Contractor’s acts contributed to the loss.” -
Waiver of Subrogation (limited):
“Waiver of subrogation is effective only where required by the Owner and only to the extent such waiver is permitted under Contractor’s insurance policies and applicable law; where such waiver increases Contractor’s premium, Owner shall reimburse Contractor for the increased premium.”
For more sample clauses and language, see Sample Contract Language for HVAC Contractors That Limits Insurance Exposure.
Also review additional insured impacts: Additional Insured Endorsements: Why Clients Require Them and How They Impact Your Policy.
When to walk away — red flags
- Owner demands unlimited indemnity for all claims regardless of fault.
- Requests to add lenders and unrelated third parties as AI without scope limits.
- Requires you to revise your insurer’s policy wording (you can’t legally change your carrier’s policies).
- Owner refuses to discuss cost-sharing when their requirements materially increase your premiums.
If you face these, escalate to counsel and consider declining the job — litigation exposure may exceed job profit.
Quick checklist before signing
- Broker confirms AI endorsement language and cost.
- Owner agrees to limited AI with time/scope restrictions.
- Indemnity tied to contractor negligence or mutual negligence allocation.
- Waiver of subrogation limited or reimbursed for premium increases.
- Primary/non-contributory only when insurer will provide a written acceptance.
- Requestored proof: Signed endorsement or explicit insurer letter confirming coverage terms.
For a dedicated, printable list, see Review Checklist: Insurance and Indemnity Clauses Lenders, Owners and GCs Often Demand from HVAC Subs.
References & further reading
- Insureon — HVAC insurance cost and coverage overview (market cost estimates and sample premiums): https://www.insureon.com/small-business-insurance/hvac
- Next Insurance — “How Much Does HVAC Insurance Cost?” (endorsement and premium factors): https://www.nextinsurance.com/hvac-insurance-cost/
- The Hartford — Contractor/HVAC insurance overview (product offerings and typical coverages): https://www.thehartford.com/business-insurance/contractors/hvac
For deeper dives on how contractual clauses affect underwriting and premiums, read: How Contractual Requirements Influence Underwriting and Premiums for HVAC Insurers.
If you’d like, I can draft a one-page “cost impact memo” you can deliver to owners/GCs showing the incremental premium and endorsement fees tied to specific contract demands for a Houston, Los Angeles, or Miami job.