Electrician Insurance & Electrical Company Insurance for Contractors

Homepage > Business Insurance  >  Electrician Insurance & Electrical Company Insurance for Contractors

Self-employed electricians and large electrical contracting companies literally power the world. Without them, we would have no lights at night, no refrigeration for our food, no air-conditioning in the hot summer, no heat in the cold winter, and none of the other creature comforts that we’ve come to love.

If you own your own electrical business (meaning you don’t work as an hourly employee for another company), then you need to have electrical business insurance. In today’s post, we’re going to take an in-depth look at electrician insurance and electrical company insurance, why you need it, what type of coverage you need, and how much will business insurance for electricians cost you! Let's deep-dive!

Also read: Electrical Engineer Insurance: Cost & Quotes From $11

Electrician Liability Insurance: Why You Need It?

Electricity is not something to take lightly. One small error can result in a fire, devastating financial loss, and even death. That being said, general liability insurance policy for electricians and electrical companies is a vital aspect of your business that should not be overlooked.

Electrician liability insurance covers everything from simple accidents (like accidentally breaking the light in a client’s home) to worst-case scenarios (like electrical fires or someone getting electrocuted as a result of your business negligence). Without proper coverage, you could be held both personally and commercially liable for any or all damage caused by your business.

There are different kinds of liability insurance for electricians. However, the most common ones offered in electrician insurance are:

• General liability

• Professional liability

General Liability Insurance for Electricians  

While working, you might injure someone or damage property. If this happens, the concerned person can file a claim. In connection, general liability insurance will shoulder costs you’ll have to pay. 

In practice, general liability insurance provides money so that you can pay legal fees and settlement to personal injury claims and property damage claims. Some situations where this policy becomes useful are:

• You were working on a damaged circuit breaker. All of a sudden, the circuit breaker burst in flames. After the fire subsided, you discovered that the client’s interior paint got damaged. The client found out about this and requested you pay the cost needed to reverse the damage done

• You were working in a commercial building with a corded drill. A stranger walked by and tripped on the cord sustaining some minor injuries. The stranger then asked you to pay for his pain and suffering

General liability insurance can be added with products and completed operations coverage. Having products and completed operations might be advantageous. With it, you can cover legal fees and settlements if a client files a claim sometime after you finished a project.

So how much can you get from general liability insurance? The amount of money you can get is $1 million - $2 million

Professional Liability Insurance

Mistakes can happen at work sometimes, and if clients experience losses because of this, then trust that they’ll file a claim against you.

Get professional liability insurance. This one covers costs if you committed mistakes due to negligence or committed a violation of good faith or inaccurate advice.  Just like general liability, professional liability insurance gives you $1 million - $2 million. 

Professional liability insurance doesn’t cover personal injuries or property damage. What it does is help you reimburse clients if your error resulted in the client paying costs to reverse the damages incurred.  

Electrical Contractor Liability Insurance

The most common and basic insurance type to have for electrical contractors is electrical contractor liability insurance policy. It is essentially general liability insurance for electrical contractors. This policy is designed to protect you and your company from being “liable” for damages that are incurred while on the job. For example, if a light fixture falls on a client’s head and shatters, then your insurance company will pay for the client’s medical bills and repair the property damage by replacing their light fixture.

Typically, contractors purchase liability coverage in increments of $1 million. This means that you’re covered for up to $1 million worth of property and personal damage. As a result, smaller contractors may only need a minimum $1-2 million policy, while larger contractors may want to consider purchasing up to $10 million worth of coverage.

Electrical Contractor Liability Insurance Cost

So, just how much does electrical contractor liability insurance cost? The average general liability insurance policy for electrical contractors and contracting businesses cost $50 a month or $600 a year.

Electrical Contractors Insurance

If you own a larger commercial contracting business and employ several other electricians, then you’ll need to get your hands "dirty " and find an electrical contractors insurance company, since as a larger company, there’s a higher degree of risk that your business is taking on.

On any given day, you could have multiple employees completing a number of different electrical jobs around town. All it takes is for one of them to make a mistake, hurt someone, or damage someone’s property. These are just a few examples of what could go wrong. Running a business comes with many risks and it’s your responsibility as a business owner to make sure that you’re prepared for the worst.

Electrical contractors insurance covers your business by providing a safety net between your company and your clients. If a third-party individual gets hurt or a client’s property is damaged, your electrical contractor liability insurance coverage can cover the costs of medical bills and repairs. Conversely, if one of your employees is hurt on the job, your worker’s comp coverage can pay for their medical bills and compensate them for their time lost at work.

Workers comp and general liability insurance aren’t the only types of protection for your electrical service business. You’ll also need employer’s liability insurance, commercial fleet insurance, commercial property insurance, and business interruption insurance.

Employer’s Liability Insurance

Employees have needs and want. For example, most want timely wages and a safe work environment. If you fail to provide any of the two, then employees might file a claim and require compensation.

Employer’s liability insurance will help sort things out if employees file a claim against you. With this insurance policy, you can pay for attorney fees, other legal costs, and settlements. Typically, employer’s liability insurance is bundled together with workers compensation insurance. However, you can also find carriers offering it as stand-alone coverage.

Commercial Fleet Insurance

As an electrical contractor, does your business own vehicles that employees can use to go to different project sites and carry work equipment? If so, consider getting commercial fleet insurance.

So what is commercial fleet insurance? Commercial fleet insurance is a modified type of commercial auto insurance. Its function is still the same, that is to shoulder costs if business vehicles caused an accident, got damaged, or needed towing services. However, unlike commercial auto insurance which can only insure one vehicle, commercial fleet insurance insures 2 - 10 vehicles. And so, it’s very practical because there’s no need to purchase multiple commercial auto insurance policies. Not to mention, it’s cheaper too.

Commercial Property Insurance

The primary function of commercial property insurance is to cover your building. In practice, this policy helps you reconstruct or repair a building that was damaged or totaled by fire, vandalism, theft, and other named perils.

You protect electrical service equipment inside the building by adding equipment coverage to commercial property insurance. In case your business equipment got damaged or lost because of fire, theft, vandalism, and other named perils, equipment coverage shoulders repair or replacement costs.

Business Interruption Insurance

Business might get interrupted for some reason. But even so, this doesn’t excuse you from paying bills, loans, and employee wages.

Business interruption insurance is a helpful insurance policy. If you have this, the insurance company will provide money equal to a portion of or the full amount of your business’s annual revenue. You can then use the insurance money to pay employees, loans, taxes, and other operational costs.

Electrical Contractor Insurance Requirements

Depending on which state your business is in, you might need to get a specific amount of coverage before bidding for a project. For example, if you’re an electrical contractor in New York, you’ll need to purchase a general liability coverage having $1 million per occurrence limit.

Another thing, aside from insurance, you might need to get a surety bond too. A surety bond protects your clients. This ensures that the client can receive some money if ever you failed to finish the project or completed the project poorly.

As for other insurance policies we discussed above, they’re not really a requirement. However, it’s best if you get them too before accepting a project. By having comprehensive protection, you can provide services with more confidence which in turn brings the desired results.

Electrical Contractor Insurance Cost

Below, you’ll find a table outlining some of the average rates offered by the leading insurance companies on the market for larger electrical contracting businesses. The rates below are reflective of each carrier's $1 million general liability coverage. Keep in mind that these are just average rates obtained by surveying business owners across the country. Your own rates may differ considerably, depending on the factors discussed above and on our business insurance main page .

What Determines Electrical Contractor Insurance Cost?

How much you’ll pay for your electrical contractor insurance depends heavily on the amount of coverage you need, how many employees you have, the type of jobs you do (and the risk associated with them), and if you have any business assets that need to be insured. The more employees and assets that need to be covered, the higher your insurance premiums will be.

Another key factor in your overall electrical contractor insurance cost is if you’ve made previous insurance claims. If your contracting company has a good record and no major claims have been made over the past few years, then your rates will almost certainly be cheaper than if you recently made claims for an accident. This is why it always pays to follow safety regulations!

So how do you make premiums cheaper? Our first tip is for you to have a high deductible. By having a high deductible, your rates won’t become very expensive even if you decide to get hefty policy limits.

The second tip, ask for business experience discounts. Note that most carriers reduce the business insurance premiums of customers running a business that’s more than three or five years old.

Self-Employed Electrician Insurance

Perhaps you just work for yourself and do small freelance jobs around your neighborhood. If so, you’re probably thinking, “ Do I really need self-employed electrician insurance? ”

Even the safest, most skilled self-employed electricians should at least have a general liability insurance policy for electricians. Electricity, by nature, can be unpredictable. No matter how safe you think you’re being, you can never fully account for what could go wrong.

Since workers comp only works if there are employees, consider getting loss of income coverage. You’ll find this insurance handy as a self-employed electrician. Loss of income coverage gives you an allowance if you can’t work due to a work-related injury or disease.

But understand that loss of income coverage isn’t as comprehensive as workers compensation insurance. This is because the coverage won’t provide reimbursements for medical costs and after-hospital visits if you incurred injuries and need to stop working to heal.

Of course, don’t forget to insure your work equipment through a stand-alone equipment coverage. With equipment coverage ready and waiting, you can always repair or replace work tools that got damaged onsite or offsite.

Journeyman Electrician Insurance

Once you’ve gained the experience, skills and training required to work independently without supervision, yet before becoming a licensed master electrician, you’ll officially be a journeyman electrician. Once you’re a journeyman, then you’ll be able to work on any electrical system without direct supervision from a master.

As a journeyman, you’ll also be able to start your own LLC or sole proprietorship and start working for yourself as a self employed journeyman electrician. Before you go off and start completing jobs on your own, though, it’s critical to purchase journeyman electrician insurance to protect your fledgling business!

Journeyman electrician insurance will cover you from any mishaps involving running your own business.

Journeyman electrician insurance cost should be between $30 to $50 per month or $360 to $600 annually.

Electrician Insurance Cost

On electrical contractors liability insurance cost section, we discussed insurance policies for larger electrical contractors. What if you’re just a small electrical business or a self-employed electrician, though? In this case, you likely won’t need the same amount of coverage. For example, if you don’t have employees, then you wouldn’t need to pay extra for a comprehensive worker’s comp coverage plan.

How Much is Electrician Insurance?

Now that you know a little bit more about how electrician liability insurance works, you’re probably wondering how the pricing differs from the electrical contractors’ insurance discussed earlier. Since there isn’t as much risk involved on your end and you do not need to cover much, you’ll find that rates are more affordable. Here’s a table outlining some of the most popular electrician insurance providers and the average premium prices to expect.