SERVICE EXPERTS HEATING & AIR

Service Experts operates on a maintenance agreement model — recurring service, annual renewals, and a large base of customers in each territory. Every unit under contract is a completed operations exposure that does not close when the job ends. It extends for as long as that system operates after your last visit.

Commercial general liability insurance at $1,000,000 per occurrence and $2,000,000 aggregate on an occurrence form. Completed operations coverage must be included. HVAC systems installed or serviced today can produce claims months or years later — a gas line connection that fails slowly, refrigerant that releases over time, or a furnace that was serviced and produces a carbon monoxide event eight months after the visit. 

An occurrence form responds to when the damage happened. A claims-made form responds only during the active policy period. For any trade with long-tailed completed operations exposure — and HVAC is one of the longest — the occurrence form is not optional.

Commercial auto liability at a combined single limit of $1,000,000 covering all owned, hired, and non-owned vehicles. Service vehicles for an HVAC franchise carry refrigerant, parts, and equipment on every route. The hired and non-owned auto coverage protects you when a technician uses their personal vehicle on company business.

Workers' compensation insurance at statutory limits with employers' liability limits of $1,000,000 per accident, $1,000,000 per disease per employee, and $1,000,000 per disease policy limit. HVAC technicians carry the physical exposure of electrical work, gas line connections, confined space access, refrigerant handling, and elevated equipment installation. The workers' compensation policy is the foundation of that protection.

Umbrella liability at $2,000,000 per occurrence and $2,000,000 aggregate. HVAC claims involving carbon monoxide, gas line failures, or completed operations on installed systems can reach or exceed the primary general liability limits quickly. The umbrella sits above all three underlying lines — general liability, auto, and employers' liability — and responds when the primary limits are consumed.

Additional insured endorsements must be written to cover both ongoing operations (ISO CG 20 10) and completed operations (ISO CG 20 37). A blanket additional insured endorsement may satisfy the ongoing operations requirement but will not always include completed operations. Confirm both forms are on the policy.

Primary and non-contributory language and waiver of subrogation in favor of the franchisor are standard additional insured requirements in HVAC franchise agreements. Confirm both are on your declarations page.

This is the question that exposes the most serious coverage gap in HVAC franchise insurance — and the one most agents do not address when writing standard general liability for a service contractor.

Carbon monoxide exposure from a furnace service call sits at the intersection of two coverage issues: the pollution exclusion and the completed operations claim structure.

First, the pollution exclusion. Standard general liability policies exclude bodily injury and property damage arising from pollutants. Carbon monoxide is consistently treated as a pollutant under standard policy language. If a customer claims carbon monoxide exposure after your tech serviced their furnace, the standard general liability carrier will evaluate the pollution exclusion before anything else. If the policy does not include a pollution buy-back endorsement — or if you do not carry contractors pollution liability — the carrier has a defensible basis to deny.

Second, the completed operations structure. If the furnace was serviced three months ago and the carbon monoxide event happens today, this is a completed operations claim. The work is done. The event is now. Your general liability policy covers completed operations if written on an occurrence form with that coverage included. But the pollution exclusion analysis happens regardless of the form type.

The scenario where carbon monoxide causes serious bodily injury — or worse — is also the scenario where the claim can exceed your primary general liability limits entirely. A $1,000,000 per occurrence limit may resolve straightforward property damage. A carbon monoxide fatality or permanent disability claim in a residential building is a different scale of exposure.

Your general liability policy covers your operations. But commercial accounts often require COI language your residential franchise policy was not built to produce — and the difference matters when the COI request comes back.

The standard franchise GL policy is written at $1,000,000 per occurrence. Commercial accounts — property management companies, office buildings, light industrial facilities — commonly require $2,000,000 per occurrence as a condition of service. Some require $5,000,000 for certain property types.

The franchisor's additional insured language on your COI satisfies your franchise agreement. A commercial property manager who also needs their own entity named as additional insured is a separate endorsement — one that requires your agent to act, not one your policy generates automatically.

Commercial accounts also bring higher stakes completed operations exposure. A residential HVAC failure in August is a serious inconvenience. An HVAC failure in a commercial building with occupants — particularly an elderly care facility, a server room, or a food storage operation — is a potentially catastrophic event. The GL limits that satisfy a residential franchise agreement may not be sufficient for the commercial accounts you are building.

If you carry commercial accounts, confirm your policy limits match the COI requirements those accounts send back. The franchise agreement minimum and the commercial market minimum are two different numbers.

Completed operations coverage is the part of your general liability policy that responds when a system you installed fails after the job is done. The coverage applies to property damage and bodily injury — it does not cover the cost of repairing or replacing your own defective work.

That distinction is important. If an HVAC system you installed fails in the second summer and the customer's home sustains heat or humidity damage from the failure — damaged furniture, warped flooring, mold in the walls — the resulting property damage is a general liability completed operations claim. The cost to replace the unit itself, or to redo your installation, is not. General liability protects the world from your mistakes. It does not protect your mistakes from you.

HVAC franchisees regularly subcontract specialty work — sheet metal fabrication, controls wiring, refrigerant recovery. Each sub carries a separate certificate on their own renewal schedule. None of them will tell you when it lapses. A subcontractor's completed operations failure during a job you coordinated still comes back to your general liability if the sub's certificate cannot be produced for the relevant date. See how subcontractor compliance monitoring works for HVAC franchisees at subcontractor-compliance.

For Service Experts franchisees with active maintenance agreements across hundreds of systems, the completed operations tail is not a theoretical exposure. It is an ongoing one. Every unit under contract is a system your technicians have touched — and a potential completed operations claim if it fails in a way the customer links to your service.

Workers' compensation is the most variable line in an HVAC franchise insurance program. For Service Experts franchisees, it is also the line where the premium calculation is most frequently misunderstood at the start of a policy year.

How workers' compensation premium is calculated

Your workers' compensation premium is built from this formula: payroll divided by 100, multiplied by the rate for your NCCI classification code, multiplied by your experience modification factor.

HVAC installation and service work falls under NCCI code 5537 — Heating, Ventilation, Air Conditioning and Refrigeration Work. Rates under NCCI 5537 vary significantly by state: approximately $2.24 per $100 of payroll in Arkansas on the low end, and $5.14 per $100 in Florida on the high end. The same payroll, the same technician, and the same services produce a different annual premium depending on where the franchise operates.

Gas line work can trigger a separate classification in some states. If your technicians perform gas piping installation or connection as part of their HVAC scope, confirm with your carrier whether that work is within NCCI 5537 or whether it elevates to a separate code. The reclassification at audit produces the same result as any other misclassification: an adjustment bill at year end.

General liability and subcontractor expenses at audit

Your general liability carrier also audits at year end. General liability premium for HVAC operations is typically built on annual revenue. If your revenue increased during the policy year — from commercial account additions or a strong service contract renewal season — your audit may produce a general liability adjustment as well.

On the subcontractor side: if you used any outside labor — including 1099 technicians for overflow work — the carrier reviews those payments. A subcontractor without a current certificate is treated as your employee for audit purposes on both the workers' compensation and general liability sides.

What the Service Experts FDD says about insurance costs

No FDD was available for this review. Service Experts' franchise disclosure document does not appear in publicly available records at this time. Coverage requirements and cost estimates in this article reflect the Rikor home services benchmark for single-territory HVAC operations. Compare these figures against your specific franchise agreement when you receive it.

The five variables that determine your actual number

Your premium for a complete Service Experts franchise insurance stack is determined by five variables:

Your state. Your payroll. Your fleet. Your claims history. Your subcontractor use.

Insurance premium for a Service Experts franchise is not a single number. Your state, your zip code, your payroll, your fleet, and your claims history all move it. A quote built for your operation, your state, and your specific service lines is the only number that applies.

These are not required by your franchise agreement. Experienced HVAC franchise operators carry them because the gaps they fill are real — and because the claim patterns in this trade have made the gaps visible.

Contractors pollution liability covers refrigerant releases, carbon monoxide exposure, and other chemical or gas incidents from HVAC work. The standard general liability pollution exclusion removes these claims. For Service Experts franchisees who service gas furnaces, perform refrigerant recovery, and work in commercial environments, this is not a supplemental coverage. It is the coverage that responds to the most serious claims your service category produces. Refrigerant release causing a respiratory event, carbon monoxide from a furnace service — the standard general liability policy explicitly excludes these. Contractors pollution liability is the policy designed for them.

Contractors errors and omissions covers design or specification errors on equipment installations. A franchisee who sizes a unit incorrectly for a home's square footage, installs it, and the customer runs it for two summers with inadequate cooling — the claim they file is a professional negligence claim, not a general liability property damage claim. Errors and omissions is the policy that responds. Service Experts' maintenance agreement model creates recurring professional contact with customer systems. Each contact creates potential E&O exposure.

Tools and equipment coverage (inland marine) covers HVAC-specific equipment — refrigerant recovery units, manifold gauges, diagnostic tools, and specialized equipment — when it is in vehicles, at job sites, or in temporary storage. Tools and equipment stolen from an HVAC service vehicle can represent $20,000 to $35,000 in replacement cost. Standard commercial property coverage does not apply off-premises without this endorsement.