When the first cold snap hits the Wasatch Front, HVAC phones start ringing: tune-ups, no-heat calls, and new installs all land in the same few weeks. It’s the busiest stretch of the year, and it’s when a small mistake can turn into a big claim.
Most HVAC contractors carry general liability, commercial auto, and workers comp, and many assume that settles it. But having a policy and being properly covered are two very different things. Handling refrigerant, venting gas appliances, and hauling expensive gear runs straight into some of the most common exclusions in a standard policy.
Here are five gaps we see most often, and how to close them.
1. Refrigerant Releases and the Pollution Exclusion
The gap: The standard commercial general liability (CGL) policy excludes bodily injury and property damage caused by the release of “pollutants,” and it defines pollutants broadly as any solid, liquid, gaseous or thermal irritant or contaminant. Refrigerant fits that definition. So a refrigerant release, whether it’s a sudden hose failure or a slow leak found later, can be denied under your GL.
The scenario: Imagine a technician servicing a walk-in cooler at a local restaurant. A recovery hose fails, refrigerant vents into a small back room, and two kitchen employees go to the ER with breathing complaints. The restaurant also loses a day of business. The claims come to you, and your GL carrier points to the pollution exclusion.
Section 608 of the Clean Air Act prohibits knowingly venting refrigerant during service, repair, or disposal. Under EPA’s 2025 inflation adjustment (40 CFR 19.4), the maximum civil penalty for Clean Air Act violations is $124,426 per day, per violation. Fines and penalties are generally not insurable, but defending the claim and paying third-party damages can be.
The fix: Contractors Pollution Liability (CPL), a separate policy built to cover third-party injury, property damage, and cleanup costs arising from your operations. Some carriers offer a limited pollution buy-back endorsement on the GL instead, often with a low sub-limit, so read the limit carefully. Availability varies by carrier.
2. Carbon Monoxide and Completed Operations
The gap: A furnace or water heater you installed in August doesn’t get tested by real use until December. If a flue connection was left loose or a heat exchanger issue was missed, the injury happens months after you’ve left the job. That’s a completed operations claim, and it draws on a separate aggregate limit in your GL.
Carbon monoxide claims can also run into the pollution exclusion. Some courts have treated CO from a heating appliance as a “pollutant,” so whether your GL responds depends on your exact policy wording and the state where the claim is filed.
The scenario: Imagine a family that falls ill a few weeks into heating season. The investigation traces it to venting on a furnace your crew installed the previous summer.
This isn’t rare. According to the CDC, unintentional, non-fire carbon monoxide poisoning causes roughly 100,000 emergency department visits and at least 430 deaths in the U.S. each year, with cases peaking in December and January. Utah winters put HVAC contractors right in that season.
The fix: Confirm your GL has a full products-completed operations aggregate, ask how your pollution exclusion treats CO, and make sure your CPL policy (if you carry one) covers completed operations. A commercial umbrella adds limits above GL, but only where the GL itself responds.
3. Faulty Workmanship and the “Your Work” Exclusion
The gap: GL is designed to pay for damage your work causes to other property. It isn’t designed to pay to fix your own work. The “your work” exclusion and related “business risk” exclusions mean the cost of tearing out and redoing a bad install usually stays with you.
The scenario: Imagine a condensate line your crew installed comes loose in an attic. Water ruins drywall, flooring, and a finished basement ceiling. Your GL may respond to the resulting damage to the home. But the cost to re-run the line, replace a damaged air handler you supplied, and send a crew back out is likely excluded.
The fix: Know where the line falls before a claim. Installation checklists and photos help show which damage is “resulting damage.” Ask whether your carrier offers a limited faulty-workmanship endorsement (availability varies), and if you use subcontractors, make sure your GL keeps the standard subcontractor exception to the “your work” exclusion rather than an endorsement that removes it.
4. Tools, Gauges, and Equipment Not Yet Installed
The gap: Your commercial auto policy covers the van. It typically doesn’t cover the loose tools inside it. Recovery machines, manifolds, vacuum pumps, and leak detectors add up fast, and business property coverage often limits property away from your shop.
There’s a second piece many contractors miss: the condenser or furnace sitting on a job site waiting to be installed. Until it’s installed and accepted, it’s often your responsibility.
The scenario: Imagine a service van broken into overnight in a parking lot. Ladders, gauges, and a recovery machine are gone. Your auto policy pays for the broken window, and that’s about it. A week later, a condenser staged on a job site disappears.
The fix: A contractors equipment floater (inland marine coverage) for tools and equipment that move between the shop, vans, and job sites, and an installation floater for equipment and materials in transit or waiting to be installed. Check whether employee-owned tools and rented equipment are included.
5. Design Work and Professional Liability
The gap: If you size systems with load calculations, lay out ductwork, or take on design-build commercial jobs, you’re giving professional advice. Many contractor GL policies carry a professional services exclusion, and a system that “works” but was designed wrong often causes financial loss without any physical damage, which GL doesn’t cover anyway.
The scenario: Imagine a design-build job for a small office where the system you designed can’t keep up during a January cold spell. The owner hires an engineer, who says the system was undersized, and demands you pay for a redesign.
The fix: Contractors professional liability (E&O), which covers claims of errors in design, specifications, or advice. It’s often available combined with CPL.
💡 Ask your agent: Does my GL treat refrigerant and carbon monoxide as pollutants, and do I have CPL or a buy-back to cover them? Is my completed operations aggregate separate and adequate for heating season claims? Are my tools, recovery machines, and staged equipment covered off-premises and in my vans?
Quick Reference: HVAC Coverage Gaps
| Coverage | What It Covers | Why It’s Missed |
|---|---|---|
| Contractors Pollution Liability | Refrigerant releases, cleanup, third-party injury | Assumed to be part of GL |
| Products-Completed Operations | Injury or damage after the job is finished | Aggregate limits rarely reviewed |
| Contractors Equipment Floater | Tools and gauges at job sites and in vans | Assumed to be covered by auto |
| Installation Floater | Units and materials before installation | Assumed to be the customer’s risk |
| Contractors Professional Liability | Load calc and design errors | “We’re installers, not engineers” |
The Bottom Line
A standard contractor package is a good start, but refrigerant, carbon monoxide, completed work, and your equipment all sit near the edges of what it covers. A short policy review before the heating rush is far easier than finding the gap during a claim.
Contact Insure Right Insurance Agency at (801) 407-8360 or [email protected]. Our office is at 831 E 340 S, Suite 200, American Fork, UT 84003. You can also learn more at insureright.biz.
This post is intended for general informational purposes and does not constitute legal or insurance advice. Coverage availability and terms vary by carrier and state. Consult with a licensed insurance professional for advice specific to your business.
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