What Type of Insurance Do You Need as an Electrician?

Electrician insurance can provide coverage for liability, equipment and other types of commercial losses. For example, if a piece of equipment falls on a customer’s foot and breaks, electrician insurance can pay for the customer’s medical bills and your equipment’s repair costs.

Keep reading to see what coverage options are available to electricians.

Key Takeaways Without insurance, electricians will have to pay for claims and lawsuit settlements entirely out of pocket. General liability, commercial property and errors and omissions coverage are commonly purchased by electricians. Premiums will consider the coverage options, limits, business location and whether you employ workers. Workers’ compensation is mandated if you employ your state’s minimum number of workers.

Do Electricians Need Insurance?

Electricians typically need some kind of business insurance to protect themselves and their company from potential liabilities and losses. For example, if electrical contractors are working on a job and accidentally cause damage to a home or commercial property, general liability coverage would help cover the cost of repairs. Without insurance, the electrician would be responsible for paying these expenses out of pocket.

Workers’ compensation is legally required if your business employs your state’s minimum number of workers.

For example, electricians in Arkansas must maintain workers’ compensation insurance if they employ at least three employees.^[1] In California, coverage is required if you employ just one worker.^[2]

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What Types of Insurance Do Electricians Need?

Any claim made against you for harming someone in some way or damaging another person's property can drain your business. The following is a list of insurance coverages we suggest any electrician should purchase.

General Liability Insurance

General liability insurance helps electricians by protecting them from claims of injury or property damage. It also covers the legal fees and any settlements or judgments that may arise from such claims.

For instance, if a customer is injured while an electrician is working on their property, general liability insurance for electricians would cover the cost of medical treatment and any legal costs that may result from a lawsuit. This coverage can help prevent electricians from incurring significant financial losses in the event of an accident or injury. Additionally, general liability coverage can also protect against advertising injuries, such as defamation or libel.

Commercial Property Insurance

Commercial property insurance covers business assets and equipment from losses caused by events such as fire, theft and damage. If an electrician's business location were to be damaged by a covered peril, commercial property insurance would help pay the cost of repairs or replacement of any damaged or destroyed equipment, tools and inventory.

Business Interruption Insurance

Business interruption insurance offers financial support if an electrician’s business operations are disrupted due to a covered loss. For example, if an electrician's business location is damaged by a tree falling on the office, business interruption insurance would help cover the lost income and expenses incurred if the business had to be temporarily shut down, such as:

• Rent and utilities
• Temporary relocation costs
• Lost revenue
• Payroll

Business Owners Policy

A business owners policy (BOP) combines general liability insurance, business property insurance and usually business interruption insurance. BOPs are great coverage solutions for small businesses and mid-sized businesses since they bundle multiple types of essential coverage.

Workers Compensation

Required in most states, workers' compensation insurance gives financial support in the event that an employee is injured or becomes ill as a result of their job duties. Expenses like medical bills, lost wages and other costs associated with the injury or illness would be covered.

Additional Coverage To Consider for Electricians

The above coverages are a great starting place for electrical contractors. However, there are additional forms of insurance that can provide additional protection.

Commercial Auto Insurance

Commercial auto coverage provides coverage for car accidents in a company car for you and your employees. Similar to a personal auto policy, a commercial policy will cover liability expenses when you are the at-fault driver and you can pay extra for first-party benefits, like repairs to your own car. Coverage may include:

• Bodily injury and property damage liability covers the medical expenses and lost wages of anyone injured in an accident involving a company vehicle. It will also cover damages caused to other vehicles or property.
• Collision coverage will compensate you for damages to your company vehicle in the event of an accident, regardless of who is at fault.
• Comprehensive coverage covers damage to a company vehicle caused by non-collision-type events, such as theft, vandalism and natural disasters.
• Uninsured/underinsured motorist coverage protects you in the event you're involved in an accident that is caused by someone who does not have car insurance or by someone whose auto insurance is inadequate for covering your losses.
• Medical payment coverage or personal injury protection (PIP) provides financial support when you or your passengers suffer a car accident injury, regardless of who was at fault. Covered costs include medical bills and funeral expenses. PIP is required in some states.

Commercial Umbrella Insurance

Commercial umbrella insurance can help an electrical contractor by providing additional liability coverage above and beyond the limits of their primary liability insurance policies. For example, if your commercial auto coverage has a liability limit of $75,000, and you’re sued for $100,000, your umbrella coverage could help pick up the remaining $25,000.

Contractor’s Tools and Equipment Insurance

Contractor’s tools and equipment insurance covers the cost of repairs or replacement of tools and equipment that is damaged or lost due to events such as theft, vandalism, fire or natural disasters. Contractor's tools and equipment insurance can also provide coverage for portable electronic devices like laptops, tablets and smartphones.

Equipment Breakdown Insurance

Equipment breakdown insurance covers the cost of repairs or replacement of equipment that is damaged by events such as mechanical failure, power surges or operator error. Note: This coverage will not pay for losses caused by external events, like fire or theft. You will need contractor’s tools and equipment or commercial equipment insurance (see above).

Inland Marine Insurance

Inland marine insurance protects mobile or transportable property that is used for business purposes, such as goods in transit, equipment and other similar items against losses or damages that occur while the property is being transported over land or while temporarily stored.

An installation floater can be added to an inland marine policy, which covers the cost of repairs or replacement of damaged or lost property during the installation process.

Errors and Omissions Insurance

Errors and omissions (E&O) insurance, also called professional liability insurance, shields you from financial damages brought on by accusations of negligence or failure to perform your professional duties. An example would be if someone claims you used a foreign brand of power outlet instead of a domestic brand when working on their home. E&O insurance would pay for legal costs, settlements and judgments up to the policy's limits.

How Much Does Electrician Insurance Cost?

According to Next Insurance, their customers pay between $39 and $52 per month for general liability insurance. Over half of those customers pay between $39 and $52 monthly, on average.^[3]

The cost of electrical contractor insurance can vary depending on several factors, including the type and amount of coverage needed, the location of the business and the size and type of the electrician's operation.

How To Save on Insurance for Electricians

There are several ways that electricians can save on business insurance costs:

1. Bundle coverage: Purchasing different types of coverage from the same insurer, such as general liability, workers’ compensation and commercial property insurance, can often lead to a discount on the overall cost of insurance. BOPs are often a convenient and cost-effective way for small businesses to get multiple types of coverage.
2. Raise your deductible: Increasing your deductible (the amount you pay out of pocket before insurance kicks in) can lower your premium.
3. Shop around: Compare insurance quotes from multiple insurance providers to find the best coverage at the most affordable price.
4. Implement safety measures: Electricians who have taken steps to mitigate risk and have a good safety record may be eligible for discounts on their insurance.
5. Review your coverage: Review your coverage annually to ensure that you are not over-insured or under-insured and adjust your coverage accordingly.

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