If you install smart HVAC systems, you will likely face a complaint about malfunctioning equipment, leaks or other problems. Be prepared with a two-pronged strategy that includes solid risk management and financial protection, such as HVAC contractor insurance.
Let’s look at some of the greatest risks HVAC businesses face and ways to avoid losses.
Installation or maintenance errors
The first thing to know when installing a smart HVAC system is that it may involve some rewiring. Some customers just want to add a smart thermostat to their home but find their system doesn’t include the C-wire required to power the device. The choice becomes to get a different thermostat that doesn’t need a C-wire, buy an adapter or rewire the configuration to install a C-wire.
You may also need to rewire the configuration if the smart thermostat includes a fan control, dehumidifier adjuster or remote sensors, or is connected to a whole-house assistant, like Google Home or Alexa. Some customers may also ask you to connect the smart HVAC to a solar power source.
Since wiring errors can cause serious problems, such as fires and system failures, it’s crucial to have only qualified personnel install and maintain smart HVAC systems. Your general liability insurance likely excludes your professional work, so you will need a professional liability policy. Professional liability insurance will cover damages caused by your company’s errors, negligence or omissions. However, it will not cover the value of your work, so you will have some potentially substantial losses for labor and replacement parts.
For commercial projects, you may be expected to connect the HVAC system to multiple devices across a building’s network, including refrigerators and freezers, blinds, medical devices, and computer systems.
For all these devices to work together to maintain an appropriately temperate ecosystem, your technicians may need to install or connect to an industrial internet of things (IoT) gateway. This is a computer that collects and analyzes massive volumes of building system data to help the systems perform optimally. Damaging these connections can cause all sorts of system failures, which you may have to pay to repair.
Product failures and warranties
The failure of an HVAC system can be a serious event. To get an idea of the costs associated with the failure of an air-conditioning system, just think of laboratories, senior living facilities and hospitals.
But what if your professional services were not the cause? What if a product failure was the culprit? You may benefit from a product liability insurance policy, which protects you from financial losses due to faulty materials you install or maintain.
Qualified labor
Keeping a steady flow of trained personnel has become more important as systems have gotten more complicated. Continuing education is also crucial since system capabilities and technologies are evolving rapidly.
An installation mistake due to a lack of knowledge, training or qualified supervision could result in a costly liability claim against your company. Or you could face a workers’ compensation incident resulting in a disability or fatality. Make training and continuing education a key operating principle to avoid errors and employee injuries.
Supply shortages
Smart HVAC systems require particular electronic components. These components are often subject to shortages caused by geopolitical instability and weather events. If you decide to stock up on mission-critical components, remember to discuss these supplies with your insurance professional. They could affect your need for contents coverage or require an increase in your insurance limits.
Cybersecurity
Consumers are attracted to smart features like the ability to adjust temperatures remotely, send
maintenance or malfunction reports automatically, and connect HVAC systems to other systems like vents, fans and sensors. Automated system optimization uses information and communication technologies that rely on the internet and Wi-Fi. Moreover, cloud computing is becoming essential in some settings, as it allows building operators to view and analyze HVAC data in real time and over time.
All of these new digital abilities and demands increase the risk of cyberattacks and failures, which can be devastating to a home or business. You may remember a Target data breach making headlines in 2014. Hackers infiltrated a company providing HVAC services to Target, compromising the financial data of millions of customers. The HVAC company had access to Target’s computer network so it could remotely adjust building temperatures.
Don’t let your company bear the brunt of such an expensive cyber failure. You can protect yourself by partnering with competent cybersecurity experts, employing your own cyber expert and carrying cyber risk insurance.
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