ROTO-ROOTER

The Roto-Rooter franchise agreement requires general liability insurance through an admitted carrier rated A-VII or better by A.M. Best. The minimum limit is $1,000,000 per occurrence. The agreement requires the occurrence form, not claims-made.

The named insured on your certificate of insurance is your legal business entity — the LLC, corporation, or other legal entity through which you operate your franchise. Roto-Rooter Inc. is the franchisor. Roto-Rooter Inc. is not the named insured. The named insured is your entity. These are two different roles on the certificate and they cannot be reversed.

Workers' compensation is required at statutory limits for every state where you operate. The employers liability portion requires $1,000,000 each accident, $1,000,000 disease per employee, and $1,000,000 disease policy limit. These minimums apply to everyone on your payroll — plumbing crews and restoration crews alike.

The Roto-Rooter franchise agreement, as reviewed, does not list commercial auto as a separate mandate. That does not mean your vehicles are covered by your general liability policy. They are not. A general liability policy does not cover auto accidents. Franchise agreement silence on commercial auto means the requirement was not written in — it does not mean you can operate an emergency dispatch fleet without auto coverage.

Most general liability policies contain a subcontractor exclusion. The exclusion removes coverage for property damage or bodily injury caused by independent contractors working on your jobs. It does not matter that you assigned the work. It does not matter that the customer saw your truck, your uniform, and your brand. If an uninsured subcontractor caused the damage, the exclusion applies.

The exclusion is typically removed by endorsement — a modification to the policy that restores coverage for damage caused by subcontractors who carry their own current general liability insurance. The word current matters. A certificate that was valid six months ago and has since expired does not satisfy the endorsement. At claim time, an expired certificate is treated the same as no certificate.

For Roto-Rooter franchisees, the subcontractor exposure runs on both sides of the operation. On the plumbing side, 1099 licensed plumbers come in during overflow weeks or for specialty work. On the restoration side, drywall crews, flooring contractors, and pack-out services may be independent contractors as well. Each side creates its own exposure. One general liability policy must cover both.

Most plumbing franchisees bring in licensed 1099 plumbers during overflow weeks or for specialty work. When that plumber causes a water loss and his certificate has lapsed, your carrier finds the subcontractor exclusion before you do. Rikor's subcontractor compliance monitoring tool tracks those certificates in real time so you know before the next job starts. See how it works for plumbing franchisees →

Require a current certificate of insurance from every independent contractor — plumbing and restoration — before they start any job. Keep the certificates on file. Verify renewal dates before work begins, not after a claim comes in.

This is the completed operations question. Completed operations coverage extends your general liability policy to cover damage that surfaces after your crew has left the job. The pipe you replaced, the fixture you installed, the water line you connected — if any of these fail months after the job and cause damage, completed operations is what applies.

The occurrence form required by the Roto-Rooter agreement handles this well. With the occurrence form, what matters is when the damage-causing event happened — not when the claim is filed. A pipe failure that traces back to work performed during an active policy period is covered under that period's policy, even if the claim arrives two years later.

The risk that catches franchisees is a coverage lapse or a carrier switch without proper completed operations continuity. If your policy lapses for any period, work done during that gap is uncovered. If you switch carriers, confirm your completed operations tail with your new agent before the old policy expires.

The standard general liability policy excludes mold in most forms. The exclusion language removes coverage for bodily injury or property damage arising from fungus, mold, mildew, or related organic materials — regardless of whether the mold resulted from your plumbing work or your restoration crew's drying job.

For Roto-Rooter franchisees, this exclusion hits on both sides of the business. A slow leak behind a wall after a plumbing repair can produce mold that the homeowner traces to your work. Inadequate drying or a missed moisture pocket after a restoration job can produce mold within weeks. Both scenarios trigger the exclusion on the standard policy.

A mold endorsement is a policy modification that adds limited coverage for mold arising from your operations. Not all carriers offer this endorsement. Those that do typically limit it to $25,000 to $100,000 per occurrence. For a franchise whose restoration crews regularly work inside water-damaged homes, a $25,000 limit does not go far on a serious mold remediation claim.

The second exposure belongs to the pollution side. Drain chemicals, sewage, and mold-affected building materials all fall under the pollution exclusion in the standard general liability policy. The contractors pollution liability policy — a separate policy designed for contractors who work in environments with chemical or biological exposures — is built to fill that gap. Roto-Rooter's confirmed service lines include drain cleaning with chemicals, sewer work, and water damage restoration. The standard general liability pollution exclusion removes all of it from the primary policy.

This is the question that catches Roto-Rooter franchisees more than any other — because the answer is not about whether you have workers' compensation. It is about whether your policy carries the right classifications for everything your crews actually do.

Workers' compensation carriers classify operations using NCCI codes. Each code carries a rate per $100 of payroll. Plumbing work is classified under NCCI code 6400 — Plumbing, Heating and Air Conditioning. Water damage restoration and drywall work is classified under NCCI code 5610 — Water Damage Restoration and Drywall. These are two different codes with two different state rates.

Most plumbing franchise insurance programs are built with NCCI 6400 as the only classification. That is correct for a plumbing-only operation. Roto-Rooter is not a plumbing-only operation. If your crews perform emergency water removal, structural drying, or restoration work and that payroll is classified under NCCI 6400, your carrier will find and correct the misclassification at year-end audit.

The honest answer: your premium depends on factors specific to your operation that no published estimate can account for. What you can understand is how the number gets built — and what to check when evaluating a quote.

How workers' compensation premium is calculated

Workers' compensation is the most variable line in any home service franchise insurance program. For Roto-Rooter franchisees, it involves two classifications instead of one.

Your premium is calculated using a formula every carrier applies:

Your payroll ÷ 100 × your state's rate for your classification code × your experience modification = your base premium

For plumbing work, the primary classification is NCCI code 6400 — Plumbing, Heating and Air Conditioning. For water damage restoration, the classification is NCCI code 5610 — Water Damage Restoration and Drywall. Both codes need to appear on your workers' compensation declarations page if your operation covers both service lines. If only NCCI 6400 appears, the restoration payroll is misclassified and the audit will correct it at your expense.

The rate for NCCI 6400 varies by state. Florida, California, and New York are among the higher-rate states. Virginia and Texas have historically run lower. The same payroll can produce a premium three to four times higher in a high-rate state than in a low-rate one.

Your experience modification starts at 1.0 for new operations. It moves based on your actual claims history compared to similar operations. One significant injury claim can push your modification from 1.0 to 1.25 over three policy years — a 25 percent increase in workers' compensation premium that follows you at every renewal.

What happens at audit if your subcontractor certificates are missing

Your workers' compensation carrier audits your actual payroll at the end of every policy year. The auditor reviews both your W-2 payroll and your 1099 payments to independent contractors and subcontractors.

If a subcontractor cannot produce a certificate of insurance showing their own workers' compensation coverage, your carrier treats their payroll as your payroll. The audit bill reflects premium on that additional payroll at your classification rate.

This is not a penalty. It is how the audit mechanism works for every workers' compensation policy in every state. The carrier is collecting premium they were always entitled to charge once they learned the exposure existed.

A certificate that was current when you hired the sub and has since lapsed provides no protection at audit. Collect certificates before work starts. Verify they are current — not expired. A lapsed certificate and no certificate produce the same audit result.

For Roto-Rooter franchisees using independent contractors on restoration jobs — pack-out crews, drywall subcontractors, flooring installers — this audit exposure is real and predictable. The jobs move fast. Certificate verification is the step most likely to get skipped under deadline pressure.

The Roto-Rooter franchise disclosure document does not disclose specific insurance cost estimates in Item 7. Coverage requirements are set out in the franchise agreement. Your actual cost should be built from a quote that reflects your specific state, payroll, fleet size, restoration volume, and the full coverage stack required by both the agreement and your actual dual-service operations.

The consistent pattern across plumbing franchise disclosure documents: Item 7 estimates almost always understate the full annual cost of a properly built program once workers' compensation for a real crew, commercial auto for a working fleet, and trade-specific coverages are included. The dual-service model adds restoration classification, bailee exposure, and contractors pollution liability to a plumbing baseline — all of which increase the program cost meaningfully over a plumbing-only quote.

What actually determines your number

Five variables drive your premium more than anything else.

Your state. Workers' compensation rates, general liability rate filings, and commercial auto rates all vary significantly by state. Get a quote specific to your operating state — not a national average.

Your payroll. Workers' compensation premium scales directly with payroll, and for Roto-Rooter franchisees it scales across two classification codes. A plumbing crew of three plus a restoration crew of two produces a materially different premium than a plumbing-only crew of three.

Your fleet. Each vehicle adds commercial auto premium. Emergency dispatch trucks, restoration equipment vehicles, and service vans carry different rating factors. Driver records affect rates for every person operating a vehicle on your jobs.

Your claims history. One significant claim affects both your general liability and workers' compensation rates at renewal for three to five years. A clean loss run is worth money at renewal.

Your subcontractor use. Any 1099 or independent contractor payroll you cannot document with a current certificate of insurance will appear in your year-end audit as additional premium.

The most useful thing you can do before accepting a quote is confirm it reflects all five variables accurately — and that the coverage stack accounts for both service lines your franchise operates.

The franchise agreement sets a floor. Experienced operators build from it.

Commercial auto (commercial auto liability and physical damage) is the most immediate gap in the minimum program. The franchise agreement as reviewed does not mandate it. The operation requires it. Every vehicle on a job — plumbing or restoration — needs commercial auto coverage. Personal auto policies exclude business use. An accident during a Roto-Rooter emergency call in a personal or unendorsed vehicle leaves the franchisee with no coverage on that vehicle.

Inland marine coverage — also called tools and equipment coverage — protects restoration equipment against theft, loss, and damage away from your premises. Dehumidifiers, air movers, moisture meters, and extraction units travel to every job. The standard commercial property policy covers property at a fixed location. Equipment in a truck, at a job site, or in transit is not covered. Inland marine fills that gap.

Bailee's liability covers client property in your crew's care, custody, or control. During water damage restoration, furniture, electronics, and personal contents are moved and stored by your team. If a client's property is damaged while in your care, your general liability policy typically does not respond — it covers damage you cause, not property you are responsible for. Bailee's liability is the coverage written specifically for this exposure.

Contractors pollution liability — environmental liability for contractors — covers bodily injury and property damage arising from pollution conditions caused by your operations. Drain chemicals, sewage exposure, mold-adjacent restoration materials, and off-gassing from remediation work are addressed under this policy. The standard general liability pollution exclusion removes all of them from the primary policy. Roto-Rooter's confirmed service lines create this exposure across both plumbing and restoration.

Commercial umbrella or excess liability extends your primary limits across general liability, auto, and employers liability. For a franchise operating 24/7 emergency dispatch with restoration crews present in client homes for extended periods, experienced operators typically carry $2,000,000 to $5,000,000 in excess coverage above the primary $1,000,000 general liability limit.

Cyber liability covers the cost of data breach response, notification, and recovery from network incidents. Roto-Rooter's emergency dispatch platform includes online booking, payment processing, and a customer portal. High transaction volume from emergency services creates payment data exposure that the standard general liability policy does not address.