Photo of an electrician at work with an illustration of electrical contractors insurance documents

At any given time, an electrician could be performing work on a construction project that involves high stakes. For example, a faulty connection somewhere along a circuit could trigger a fire that causes significant damage or total loss to the structure. This type of damage may leave electrical contractors unable to foot the bill.

Scenarios like these stress the need for an electrician to have insurance coverage in place. While the odds of a large loss may be slim, they are still possible. Thus, a strong insurance plan helps you rest easier both on and off the job. 

Why can an electrical contractor use insurance?

Not all accidents that happen on jobs are large-scale and catastrophic. You also need to plan for more common occurrences. For example, an employee who is running wiring to an outlet might break a window. A series of small mishaps like these could put a dent in your profit margins from year to year. 

Insurance policies can help your business cover the costs of both minor and major incidents. You pay pennies on the dollar for coverage that could range into the millions for general liability (GL) insurance, for example. Along with helping preserve your company’s financial health, GL is one of the most important coverage components that owners or general contractors (GCs) will want you to have before they hire you for a project. 

Which types of policies are available to electrical contractors?

Alongside a core business owner’s policy that offers GL and property damage coverage, several other policy types may address different exposures for your business. Below is a list of coverages that can be obtained through a separate policy or amendment to an existing agreement. 

  • General liability insurance: A GL policy may help cover the cost of bodily injury or property damage that occurs on a jobsite. For larger projects, an electrical contractor may set their GL amount according to a GC or project owner’s requirements. 
  • Umbrella or excess insurance: The standard level of GL in a business owner’s policy may not be enough to meet a job’s contractual requirements — in which case you may want to look at an umbrella or excess liability policy that may extend your coverage for larger claims. 
  • Professional liability insurance (E&O): If you draw and sell electrical plans or blueprints, professional liability (errors and omissions) insurance can help cover the fallout from faulty design advice. 
  • Workers’ compensation insurance: This coverage can help replace income and cover medical expenses if an employee is injured while on the job. 
  • Equipment floater: When transporting building products from one place to another, this floater can help protect the value of items like wiring, outlets, or lighting fixtures. 
  • Commercial auto insurance: Much like your personal auto insurance, business auto policies offer coverage for accidents with other parties or damage incurred to your vehicles from events such as hailstorms, for instance. 
  • Contractor’s tools and equipment insurance: Also categorized as inland marine insurance, this coverage works like a materials floater but applies to tools and equipment, such as wire strippers and circuit finders, that you own and use in your daily operations. 

Coverages that fall under insurance policies for electricians 

It’s useful to retain insurance for unexpected circumstances. Below are some examples of situations that insurance policies for electricians commonly address: 

 Protecting your team

  • Electric shocks: An employee exposed to a live wire could get burned or shocked by high-voltage electrical currents. A workers’ compensation policy may help cover the cost of medical treatment for such injuries. 
  • Damaged wall: While carrying a ladder, you may incidentally bust a hole in the finished drywall. General liability may help pay for the cost of repair. 

 Protecting your property

  • Damaged equipment: An electrical storm may cause a surge that destroys a generator. Your business property damage insurance may help replace that item. 
  • Car accident: Your work van might slide off the road and become undrivable due to tire and axle damage. A business auto policy will help repair the vehicle and get it back into service. 

Protecting your business operations

  • Customer slip and fall: A homeowner visiting your office for advice may slip on a wet or icy surface. GL helps pay medical costs and defense costs if a lawsuit arises. 

Note that actual coverage available will depend on the details of each individual policy and may vary from carrier to carrier so it’s important to work with a knowledgeable broker or agent who can help you obtain the coverage you need.

How to get electrical insurance for your business

Before selecting an insurance policy, it may be helpful to seek out an insurance professional that can assist with choosing insurance policies that are suited for your business. An insurance agent or broker who is knowledgeable about your line of work, and the insurance market, can ensure you’re getting adequate coverage. They can also act as an intermediary between you and the insurance company. 

Finding an insurance agent can be done online or by phone. Once you’ve found someone to guide you through the process, you may be asked to provide certain information and documents about your business, including: 

  • Your business address
  • Tax identification number
  • Payroll and sales figures 
  • Claims history (if you’ve had any)
  • Types of electrical work you do 
    • Whole-house wiring and working on fuse boxes are considered more hazardous than light wiring or adding an outlet into a private residence. The cost of insurance coverage may increase if the jobs you typically carry out are considered more dangerous. 
  • Places you perform work
    • Certain areas where you complete jobs might be considered riskier than a private residence or main street commercial business. If you work in an area that an insurer deems high-risk, you may have to pay a bit more for coverage. These locations include: 
      • Airports
      • Government or healthcare facilities
      • Prisons
      • Public roads and spaces

Once this information is gathered and shared with the insurance company, you may be asked to fill out an insurance application. This information is then sent to an underwriter for the insurance company, who may ask you to answer some additional questions or provide more detail about existing information. 

How much does insurance cost for electricians?

How much you pay for electrician’s insurance can depend on the work you perform. It’s important for contractors to inform an insurance company about the scope of their electrical operations. If you’re a master electrician, your advanced skills may allow you to take on bigger and more complex jobs. While this expertise could be a huge advantage for you,  it may also increase the risks you face on the job.

In addition to having costs tied to the nature of your electrical work, other factors could affect the rate you’ll pay, including: 

  • Where you do business: You might operate in an area that’s prone to tornadoes or wildfires. These potential perils can increase the cost of your insurance policy. 
  • How much coverage you purchase: A GC may require you to raise your GL limits to $3 million from $1 million, depending on the size of the project and the risk that is involved. This additional protection could increase your premium rates. 
  • Who performs your work? If you’re a sole proprietor who does inside electrical work on homes, you may pay less for GL insurance than a contractor who has employees and therefore has an increased exposure to risk. 

The next step

Electrical contractor’s insurance is critical to protecting the financial health of your business. With the uncertainty of accidents, injury, or even death occurring on a jobsite, having insurance coverage in place can help safeguard you, your employees, and other stakeholders. It’s important to work with an insurance agent or broker who specializes in coverage for electrical contractors, in order to help you secure the coverage that suits your business needs. 

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