Electrical Contractors Insurance
Electrical contractors insurance is a tailored coverage that caters to the risks unique to your line of work as a:
Commercial electrical contractor
Residential electrical contractor
Maintenance electrical contractor
Don’t think that electrical contractor insurance is a policy that functions on its own. In truth, this insurance product is made out of different business insurance policies such as liability insurance, business property insurance, and more.
Electrician Liability Insurance
Electrician liability insurance, also called electrical contractors liability insurance, pertains to general liability policy that provides protection against personal injury claims or property damage claims. However, note that professional liability and public liability insurance policy can be considered liability insurance for electricians too. The following sections explain how these policies work.
General Liability Insurance for Electricians
As said earlier, general liability insurance provides protection when you cause personal injuries or property damage. But note that this type of electrical contractor liability insurance only applies if such are caused unintentionally. Here are some situations where you’ll find general liability insurance useful:
You were working on the wiring situated in the interior wall of a client’s house. While checking on you, the client touched a live wire and sustained burns
Employees were fixing the poorly installed wiring on a commercial building. For some reason, one of the wires suddenly flashed, caused a fire, and damaged the building’s ceiling
So how does this policy work? General liability insurance functions to:
Pay or reimburse the medical expenses of third parties who sustained injuries due to the electrical service you provided
Refund the value of the property that sustained damage or got destroyed due to the electrical service you provided
The insurance money you’ll get from general liability insurance is $1 million-$2 million. This is the standard policy limit set by most insurance companies.
However, note that you’ll find carriers selling a custom general liability insurance for electricians that provides $300,000 - $500,000 minimum coverage. Aside from this, you can also choose to add optional policies such as:
Products and completed operations coverage-If a client files a personal injury claim or property damage claim days, weeks, or months after you completed an electrical service, you can use products and completed operations coverage to cover administrative costs, settlements ordered by the court, attorney fees, and other legal expenses
Advertising injury coverage-Advertising injury coverage will cover costs if you’re sued for slander, libel, copyright infringement, and other types of advertising or reputational harm
Rented premises liability coverage-Rented premises liability coverage is an add-on to general liability insurance that will refund the owner if the commercial space you’re renting as an electrical contractor is destroyed or damaged by a fire
General liability insurance only covers personal injuries or property damage claims filed by third parties. Third parties, as used in the terms of the policy, pertain to clients, visitors, vendors, and other entities who don't have any direct relationship with your business. That said, general liability insurance doesn’t provide coverage if employees, shareholders, co-owners, and contractors file a personal injury claim or property damage claim.
Many opt to go for general liability insurance because it can be customized as an electrical service business grows. But what if you’re just starting out and only need the most basic coverage? General liability insurance is still recommended. However, if you want an alternative electrical company insurance, then go for a public liability policy.
Public Liability Insurance for Electrical Contractors
Public liability insurance covers personal injury claims and property damage claims filed against you by customers, visitors, and other third parties.
This is cheaper than general liability insurance but not because it doesn’t give a lot of coverage. Just like general liability, public liability insurance also gives $1 million-$2 million insurance money.
So what’s the reason why public liability insurance is less costly? This type of insurance is more affordable because it can’t be added with optional policies. While this is good budget-wise, there’s also a drawback since public liability insurance will be obsolete once you pick your pace as an electrical contractor.
Electrical Contractors Errors and Omissions Insurance
Your clients won’t only sue for personal injuries or property damage. Any economic losses or financial losses they sustain due to the issues with the service you provided are also a cause. Consider the following situations:
An employee installed wires hastily. As a result, a short circuit happened and a fire originated in a client’s building. The building sustained minor damage that was costly nonetheless. And so, the client in question decided to sue your company for negligence to recoup repair expenses
An engineer asked you to design the wiring for a building. However, the design you provided conflicted with the building’s plan. And so, the engineer had to spend money to reverse the damage done. He decided to sue and accused that your advice was erroneous
The policy that provides help in the above situations is errors and omissions insurance. Also called professional liability insurance or electrical contractor E&O insurance, this business insurance for electricians covers attorney fees, administrative costs, settlements and other legal expenses if a client sues you for committing or allegedly committing any of the following:
Errors and omissions insurance for electrical contractors is sold as a claims-made policy or occurrence policy.
Occurrence professional liability insurance provides coverage when you decide to file a claim on the time a covered peril happened or long after a covered peril occurred. What’s important is that the incident took place while the terms of occurrence professional liability insurance are active. Here are some examples for you to understand:
A client sued you for negligence on August 8. You decide to report the incident to the insurance company on the same date. Occurrence professional liability insurance provides coverage in this case
A client sued you for inaccurate advice on Friday. You only reported the incident to the insurance company 1 week later. Since it’s an occurrence policy, professional liability insurance still provides coverage
As compared to its occurrence counterpart, claims-made professional liability insurance is less trustworthy. It’s because it only provides coverage if you file a claim on the time a covered peril happened. Here’s an example:
A client accused you of committing misrepresentation on July 10. If you file a claim for the insurance on the same day, then coverage applies. However, if you decide to use the insurance days, weeks, or months later, then it’s highly possible for your claim to be rejected
The errors and omissions insurance for electrical contractors has a $1 million-$2 million policy limit. But you can also find insurance companies underwriting an electrical contractor's errors and omissions insurance having a $3 million-$5 million limit.
Umbrella Liability Insurance for Electrical Contractors
You can exhaust the limits of your professional liability insurance or general liability insurance. It’s also possible for a highly expensive claim to be filed, which both policies can’t fully cover.
Note that when both insurance have run out or can’t fully cover a claim, you’ll have to pay for the excess yourself.
Insurance companies sell umbrella liability insurance, which provides help if your general liability or professional liability insurance can’t fully cover the cost of a claim filed by someone against your business.
Umbrella liability insurance is an endorsement to the general liability or professional liability insurance of electrical contractors. It extends or supplements the limits of both policies.
For example, if a third party demands $2 million for his injuries and your general liability insurance only has $1 million, umbrella liability insurance will cover the excess so that you can fully settle the claim without using personal funds.
Umbrella liability insurance provides coverage in increments of $1 million. That said, the insurance money you can get from the policy can amount to $1 million, $2 million, $3 million, and so on.
