If you’re an electrical contractor, you know an electrical mistake can do a lot of damage. Just one error can hurt a client, lead to medical bills, missed work income, or set a property on fire. And clients will look to you to make it right, no matter the cost. That’s where insurance steps in.
The bad news is that there’s no one type of electrical contractor insurance to cover it all. But luckily, there are comprehensive insurance packages designed with electrical contractors in mind. These packages combine various coverages you need to protect your business. Keep reading to find out what these insurance bundles typically include.
What Types of Insurance Coverage Do Electricians Need?
Electricians need a variety of different insurance policies to cover them if an accident happens. But, what insurance is a must-have? Here are the top insurance coverages you should consider for your electrical contracting business (and don’t forget to ask your broker if you can bundle them into one policy):
General Liability Insurance
A general liability insurance policy is a must for electrical contractors. It protects you if a client or customer claims that you caused property damage or bodily injuries and sues your business: Small business owners use this insurance coverage to help pay for:
- Bodily injuries
- Property damage costs
- Medical expenses
- Legal fees
Maybe you broke your client’s new flat screen while running a conduit through their wall (oops!), or your client trips over your wires and lands in the ER (ouch!). With a general liability policy, you won’t have to pay for repairs and medical costs totally out of pocket.
Some states require general liability coverage before you can even get your electrical contractor’s license. Check with your state laws to make sure your policy’s coverage limits meet its minimum insurance requirements.
No matter whether you’re a solo contractor or manage a small team, general liability insurance is a business must. Keep your certificate of insurance handy, and don’t be surprised if your clients ask for it as proof of coverage.
Workers’ Compensation Insurance
Workers’ compensation is especially important if you’re an electrical contractor—whether or not you have employees. You work with live wires and active circuits, sometimes from another century. You’re more at risk of getting hurt than the average joe.
And if you do have employees (even just one in many cases!), most states say you have to have workers’ comp coverage for them.
Sure, it’s one more thing to pay for in your business, but workers’ comp can save you money and headaches down the line. Suppose an electrical worker suffers an electric shock or becomes ill from smoke inhalation on your job site. In that case, they get benefits, and you get peace of mind.
And Hourly makes it especially easy to get workers’ comp coverage for your business, so why not? With us your premiums are based on actual payroll amounts, so you’ll have the added convenience of never over or underpaying your workers’ comp insurance bill.
Workers’ comp can cover work-related injury costs like:
- Medical bills
- Ongoing care
- Funeral costs
- Lost wages
Commercial Auto Insurance
Electrical contractors can spend hours a day driving from one job site or customer to the next. And, let’s face it, accidents happen—like rear-ending the car in front of you while trying to change the radio station or ruining your client’s lawn while trying to pull your truck closer to the house.
Commercial auto makes it so you won’t have to pay entirely out of pocket for accident-related expenses like:
- Medical costs
- Car repairs
- Towing and labor
- Rental cars
What if you use your car for both personal and work things? Does your personal car insurance cover you while you’re on the clock?
Likely not. If you’re hauling tools and equipment from one location to the next, day after day, your best bet for covering work-related incidents is a commercial auto policy. Personal policies may cover you if you’re only driving to one or two job sites per day, but you’ll likely still have to list on your policy that your car is used for business before you can get coverage for work accidents.
If you rent vehicles for work or your employees use their own car for your jobs, you should look into something called a hired and non-owned auto policy. Or ask an insurance agent if your business auto policy could cover those cars as well.
Commercial Property Insurance
Commercial property insurance can protect your equipment, inventory, and even your company’s building (if you own it). It’s a good option for electrical contractors who own a property where they store equipment or meet clients.
This insurance helps you pay for damaged equipment, lost income, and operating expenses. If someone breaks into your building and steals all of your tools, you might be out of work for a while. Commercial property insurance can help pay for new equipment and replace any missed income. It also protects your business property from:
- Natural disasters
As an electrician, your tools go where you go and you do your best to protect them. But, just in case, equipment insurance has got your back.
Tools and equipment insurance protects your gear on the move, in storage, or in use at a job site. It covers your items against theft, vandalism, damage, accidents, and natural disasters.
If someone breaks into your van and steals your tools, your equipment insurance policy can pay to replace what you lost so you’re not out of work for too long. You can find coverage both for equipment you own and borrow.
You’re likely to find contractor’s equipment insurance as an add-on to other kinds of business insurance, like general liability insurance or a builder’s risk policy. It depends on your broker, but you might also be able to buy it as a stand-alone policy.
Business Income Insurance
Business income insurance is a kind of business interruption insurance that helps you get back some of your lost income when you can’t keep working because of property damage.
This type of insurance doesn’t pay to fix physical damages to your property (you’ll need commercial property insurance for that), but it does reimburse you for lost income while your property is being repaired or replaced.
If your equipment is damaged in a fire and you can’t take on projects for a while, business income insurance steps in to help you pay for operating expenses too. It can cover the cost of:
- Rent and mortgages
- Lost income
Business income insurance covers losses that happen from the time your business shuts down to when you reopen and it’s a great addition to your toolbox.
Business Owners Policy
A business owners policy (BOP) is ideal if you’re a small- to medium-sized electrical business or a solo contractor. It combines three standard business insurances electricians need (general liability, commercial property, and business income) into one convenient package.
Unlike other policies, it’s specifically for small businesses, so you might not qualify if your commercial space is over the maximum square footage. And, it doesn’t cover your employees. You still need to get your hands on a workers’ comp policy.
Professional Liability Insurance
Professional liability, or errors and omissions, comes in handy when a client claims you’ve made a mistake while providing a service. This insurance helps you pay for a legal defense if a client claims you:
- Made an error in your work
- Gave inaccurate advice
- Didn’t provide the service you said you would
Let’s say a restaurant owner blames you for overloading their circuit and putting them out of business for a night. Your client can accuse you of negligence, whether or not you actually made a mistake. With an E&O policy, you won’t have to foot the bill for legal fees.
Other Types of Coverage You Might Need
While the insurance mentioned above is the most common for electricians, there are some other coverages you might want to consider, like:
Technology makes it easier to run your electrician business, but it can also put you at risk. Your small business could be targeted by a hacker at any moment. If you store sensitive client information online, it’s time to look into cyber insurance.
Cyber insurance can help pay for legal fees if you suffer a data breach and your clients decide to sue. It can also help you:
- Notify clients about the breach
- Restore your client’s credit history
- Recover compromised data
- Repair broken computer systems
- Offer credit monitoring to victims
- Hire a PR Firm
A surety bond is not technically insurance, and there are many different types of surety bonds. As an electrical contractor, your focus should be on license bonds and permit bonds. These are financial guarantees that let clients know you’ll perform work in compliance with state laws. A surety bond may be required by your state if you want to receive an electrical contractor’s license.
You can get these from a surety bonds company. If your project doesn’t go as planned, the company pays for claims made by your client. But, unlike insurance, you’re required to pay those funds back to them.
Surety bonds are also great for marketing. You can highlight that you’re bonded on your website to build trust with clients and reassure them that their work will be completed. So, it’s good to get your hands on one even if they’re not required.
How Much Does Electrician Insurance Cost?
Electrical contractors’ insurance is a mix and match of common types of business insurance, so the costs will vary. It can depend on things like:
- Your location
- Your policy limits
- The length of coverage
- Number of employees
- Risks you face on the job
- Your industry
If you decide to stick to the basics and only get general liability coverage, expect to pay around $50 per month. Here are some average monthly costs for other types of insurance:
- Business Interruption Insurance: $40 to $130
- Business owners policy: $40 to $170
- Commercial auto insurance: $130
- Commercial property insurance: $80 to $250
- Cyber insurance: $120
- Equipment insurance: $13 to $70
- Professional liability insurance: $50 to $150
- Workers’ comp insurance: Five to 12 percent of your team's wages
Remember these are averages and prices can change based on all those factors we listed above. Brokers usually offer a free insurance quote, so it shouldn’t be too hard to find electrician insurance with coverage, premiums, and a deductible that fit your budget.
Get the Insurance That Works for You
Electrical work is a risky business. You need comprehensive coverage that fits your line of work. By combining various insurances, you can create a personalized electrician insurance policy to protect you against expensive claims. Make sure your policy is compliant with your state laws and covers your unique needs, like renting cars or owning property. Now that you know all there is about electrician insurance, all that’s left to do? Give your broker a call!