What type of insurance do you need for a small plumbing business and what does bonded mean?

Plumbers Insurance

Plumbing contractors need:

Commercial General Liability

Bonding for the licensing bureau in their state

Workers Compensation if they have employees

Commercial auto if they have people driving for the work

Being bonded means that there is money set aside should you for some reason cause financial damage to a party you are performing work for. Bonds are unlike insurance as if your bond is garnished, you must repay the bonding company that amount. Most states have contractor licensing bureaus that dictate how much bonding is required to have a contractor license. You pay a bond premium (Cheap!) for the bond company to guarentee there will be payment if there is a small loss.


My answer will have to be general because this is another state to state issue. There are different types of bonds. Contractors are generally required to provide a Bond in compliance with either federal or state laws. Most often a License and Permit Bond will be requested by your state, municipal ordinance or local regulation as a condition precedent to the granting of a license to engage in a particular business. If you are lucky your state may require a bond generally in the area of $10,000 - 25,000 limit. The requirements are pretty specific regarding limits for your general liability and related coverages which may be state specific such as workers compensation. You should be able to obtain those guildlines from the department which oversees General Contracting licenses. Your best option is to work with an agent who can better address your specific needs. Check with other contractors who may recommend an agent who is doing a good job for them. Keep in mind, your cost will be dependent upon a number of factors, including, but not limited to how you are classified for insurance rating purposes. A plumber who is heavily involved in sewer and underground work could be more expensive than a residential plumber who is primarily doing faucets, water heaters and related work.