A Guide to Pool and Spa Contractor Insurance in 2021

If you’re a contractor, you’ve had experience with different types of insurance for construction. Whether it be workers’ compensation, bonding, or general liability, it’s always a good idea to have a policy in place to protect your business and also in the event one is required by your state or by contract.

In the construction industry, all contractors are unique. No two contractors require the same insurance coverages. Your business is as unique as you are and requires coverages to reflect that.

Why are Policies Designed Specifically for Pool and Spa Contractor’s Important?

The right insurance policy can protect a pool and spa contractor from financial damage that can potentially cause them to go out of business. For example, consider the following scenarios:

1. A pool or spa that is being maintained and has been overly chlorinated due to staff error, or a mechanical malfunction, and swimmers suffer chemical burns on their bodies.
2. An employee is responsible for a multicar crash while driving a loaded work truck while on the way to, from or on the job site.
3. A child got injured on excavation equipment that was left overnight within the residential area being worked on.

These are some examples of issues that can arise and can be mitigated by having the right insurance coverage.

Here are some essential insurance coverages you need for your business.

1. General Liability

General Liability is coverage for any third party that is injured or has their property damaged because of your business operations. Example: You’re at a customer’s house and you’re filling the pool. Your phone rings and you place the hose in the pool and forget about it. When you return you find that it overflowed into your customers home and damaged it. That would be damage to the property of a third party and your policy would kick in to cover the clean-up and damage.

GL has different limits available, however the most common are $1 million for each occurrence and $2 million total (aggregate) for the policy term. Higher limits are available with most carriers, or you can purchase an umbrella/excess liability policy that would sit “over the top” of the GL policy— should the limits be exhausted in a severe claim.

Almost every GL policy will have the same basic coverage forms and exclusions. Additional coverages that are available with some carriers are very important to fill in the gaps found in a standard policy.

• Hazmat/Pollution coverage – This is excluded under a standard policy but there are custom programs that will offer limits to cover chemical spills, especially out of the back of a truck during an auto accident.
• Pool Pop-up coverage – This is common in the Southeast of the US because of the water table in that region but can happen anywhere. This coverage would apply if you had drained the pool for an acid wash or another reason, rains come and the shell “pops” out of the ground.
• Damage to plaster/surfacing during acid wash – Another common occurrence especially when working on older surfacing.
• Faulty Work or Faulty Work allegations – This is a unique coverage that will cover damage to property that you are working on. This is an exclusion in every GL policy so it’s very important to have some coverages for these allegations.

Commercial work and certain projects will require you provide certificates of insurance and often list other companies, entities, or individuals as additionally insured on your policy. This is important to discuss with your insurance professional to see if any additional charges or limitations exist when it comes to issuing these certs.

2. Workers’ Compensation 

Should a member of your team get injured on the job or while working, workers’ compensation will cover employee injury and medical bills. This acts as the sole remedy for workplace injuries regardless of fault. It is important to discuss workers’ compensation requirements for your state, with your insurance professional, to make sure you’re compliant and protected.

3. Commercial Auto Insurance

Depending on the coverage you selected, this policy covers your auto liability to a third party and can also cover damages to your truck. These policies will look, act, and feel like any other personal auto policy you’ve carried prior to starting your business.

Keep in mind every personal auto policy has a business use exclusion listed in the policy wording. There are many personal auto policies that offer a business use endorsement, but the requirements vary per company. Under that endorsement there is normally a maximum amount of stops per day specified, restrictions on any signage, who is the vehicle registered to, and other factors, will all play a part on whether coverage would apply in an accident or not.

Whether commercial or personal, auto policies generally have chemical spills or “pollution” incidents excluded from the policy. As this is a common occurrence in an auto accident, it is important to discuss with your insurance professional to obtain this coverage separately.

In most cases commercial auto policies are not much more expensive than a personal auto policy. Almost all carriers will allow for some personal use, so you will not need to carry two separate policies. It’s important to have the discussion with your Insurance professional to avoid any potential for denied claims.

4. Bonds and Licensing

Requirements will vary per state and often per county within that state. Your insurance agent should be able to help obtain any bond that is required for your license.

5. Employment Practices Liability Insurance (EPLI)

EPLI provides coverage for wrongful termination, harassment or discrimination claims. More frequently, employees who are terminated often seek damages through lawsuits against their prior employer and claim hostile work environment, harassment, etc. even if they are terminated for cause. If you have employees, you should be discussing this policy with your insurance professional.

6. Tools and Equipment Coverage 

Equipment coverage is also known as inland marine coverage. This policy protects your equipment from natural events and theft. There are a variety of ways to insure your tools and equipment, whether miscellaneous tools in your vehicle, inventory at a warehouse or more specialized expensive pieces of equipment, you need coverage on a policy.

There may be some coverage under a personal policy such as homeowner or renter, but you’ll want to speak to your insurance professional regarding concerns you may have for coverage in this area.

7. Completed Operations Insurance

Completed operations insurance covers damages caused by your work that occur after a job is completed. Compared to a general liability coverage, you do not need to be on the job site or the client’s premises to trigger coverage. This is an essential, and yet a specific part of a contractor’s insurance coverage and is usually included on most commercial general liability policies.

8. Crime and Cyber Liability Insurance

This policy covers both first- and third-party claims. Often this can be packaged with a cyber liability policy and would protect against instances like employee theft, forgery and electronic data mishandling. If you have employees and take credit cards and/or check payments this is worth a discussion with your insurance professional.

9. Property Coverage

Whether owned or leased, this policy protects the contractor’s pool or spa property— including equipment such as: cement mixers, backhoes, inventory, supplies, PVC piping, concrete mix, furniture, and tools that are used for pool or spa installation.

Changes in operations or services

Commercial policies are classified based on operations or the type of work performed. There is a very common policy condition/exclusion in almost all policies that limits coverage to described business operations. As you may have opportunities to move into additional services you offer outside of regular service and maintenance, here are some that will warrant a discussion with your insurance professional to ensure you are covered:

• Equipment repair and installation: Almost all pool service policies are fine with filter cleaning, but many stop there. If you are doing equipment swap outs, upgrades, repair or installation you’ll want to check with your Insurance professional to make sure the policy in place will cover those operations.
• Pool Inspections: General Liability policies will almost always have an exclusion for professional services. Since a pool inspection is warranting someone else’s work was done correctly, this would fall into that category. If inspections are a part of your operations, you’ll want to have a professional liability policy that would cover this service.
• Remodel, Construction and/or structural work: Even work like replacing some tile, patching some plaster/surfacing, replacing a skimmer or replacing heater lines would be considered remodel work under most policies. Check with your insurance professional as insurance will likely need to be updated or changed as you start to do this work.

Sub-Contractors

It may make sense to bring in a sub to complete specialty work or on larger jobs. What’s important to remember is that you are the party under contract with the homeowner or third party, therefore you are responsible regardless of damages/injury from a sub-contractor or employee.

You will want to verify insurance before hiring another company as a sub. If it is an owner/operator without employees than verify they have general liability insurance in place and request that you be listed as an additional insured. Your policy will likely have certain requirements for subcontractors as well, so talk to your insurance professional to determine what those requirements are before you hire them.

Finding good insurance options can be daunting and time-consuming. By choosing appropriate insurance coverage and limits, you can gain the peace of mind that comes with knowing you have protection in place just in case a mishap occurs. For more information, contact the California Pool Association now!