HVAC Business Advice: Just How Insured Is Your Business?

This may turn out to be the most important HVAC business advice you ever get: Make sure you have the right amount of liability insurance.

That starts with making sure you have the right agent. Don't take it for granted that your agent has scrutinized your coverage and compared it with your needs -- or even that he has basic knowledge of the HVAC industry. You and your agent should carefully review your policy to ensure that your coverage is thorough -- and that you've identified all your potential savings.

Ask a lot of questions, and make sure you understand your insurance's limits and how you will be covered in various situations. In general, liability insurance covers damages suffered by your client, including:

• Bodily injury.
• Medical expenses.
• Property damage.
• Personal injury, which can include injury to someone's mental or emotional health.
• Advertising injury, which covers damage such as copyright abuse, invasion of privacy, slander and libel.

If you have a $250,000 limit in any of those categories and settle a claim for $500,000, you're on the hook. This is why it's wise to consider an umbrella policy, as well. An umbrella policy provides supplemental liability and property coverage. It takes over where your primary insurance leaves off. The cost tends to be very affordable, because it's a supplemental plan.

To greatly reduce the likelihood that you'll need to use either your primary or your supplemental insurance, carefully evaluate your risk. Consider, among many factors, the experience of your work force, along with the record in your area of large court-ordered awards to accident victims.

Then consider ways you can reduce your risk. Do you have an in-house safety program? Creating one is a smart move: It reduces your risk by keeping everyone on his toes, and it demonstrates your diligence if you're ever accused of negligence.

Start by asking your agent for safety tips tailored to HVAC contractors (another reason to go with someone who knows the industry). Communicate your company's safety practices consistently and repeatedly -- make safety part of your company culture -- in meetings, on posters and in your monthly reports to co-workers.

Some contractors create a safety committee composed of co-workers -- they're the ones who know what risks they face. Committee meetings are a chance for your co-workers to air their own safety concerns, which may be news to you. And the committee members themselves can be resources for other co-workers who may be reticent to share their concerns with higher-ups.

Looking for sound HVAC business advice? I'm glad to help contractors of all sizes. Please contact me anytime.

By Ron Smith