Why is business insurance a must for electricians?
Electricians face many risks while on the job – from live wire injuries and damage to a client's home and personal property, to fires and more. You can avoid costly downtime and losses with electrician insurance from top providers.
Get the right insurance
6 insurance policies every electrician should consider
General liability insurance
A general liability insurance policy protects electricians against legal expenses related to client property damage and injuries. It's often required by commercial leases and contracts.
- Client bodily injuries
- Damaged customer property
- Advertising injury and copyright lawsuits
Business owner's policy
A BOP bundles commercial property insurance and general liability coverage at a discount. It's often the most cost-effective type of business insurance for electrical work businesses.
- Accidental client injuries
- Accidental damage to client property
- Libel, defamation, and copyright lawsuits
Workers' comp insurance
Most states require electrical companies with employees to carry workers' comp to help cover workplace injuries. In some states, even sole proprietors who work in construction must have this policy.
- Medical bills from work injuries
- Disability benefits
- Lawsuits from workplace accidents
Commercial auto insurance
Electricians with business-owned vehicles must carry commercial auto coverage to comply with state laws. It helps cover financial losses in an accident, including legal costs and property repairs.
- Auto accident injuries
- Auto accident property damage
- Vandalism of an electrician's vehicle
Contractor's tools and equipment
A type of inland marine insurance, contractor's tools and equipment insurance protects your equipment wherever you bring them. That includes in transit, stored off-site, or from one job site to the next.
- Equipment that is less than five years old
- Items valued at under $10,000
- Tools that travel to electrical projects
Professional liability insurance
Professional liability insurance covers legal fees related to a mistake, missed deadline, or other accusation of professional negligence. It's also called errors and omissions insurance (E&O).
- Project delays and budget overruns
- Wrong materials and other mistakes
- Breach of contract
Electrician insurance costs
Here's a quick look at the average costs of common electrical contractor insurance policies purchased by TechInsurance customers:
General liability: $57 per month
Business owner's policy (BOP): $78 per month
Workers' compensation: $217 per month
Factors that can influence electrical contractor insurance costs include:
- Types of electrical services offered
- Number of employees you have, including subcontractors
- Types of insurance purchased
- Policy limits, deductibles, and other coverage options (e.g., endorsements)
- Claims history
Start a free application to see how much insurance will cost for your business.
Hear from business owners like you who purchased insurance coverage.
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Common questions about business insurance for electrical contractors
Are electricians required to have a license, permit, or bond?
Similar to masons and HVAC contractors, electrical businesses are required to be licensed and carry certain types of insurance and bonds in most states. Even in states that don’t require licensure, you might still need a license at the local level to work as an electrician.
Typically, you'll work for about four years as an apprentice in the electrical trade under the supervision of a master electrician, before being able to take the licensing exam within your state.
Additionally, having the right permits shows you run a reputable business, and buying insurance and bonds reassures your customers they won’t be held liable for damages if something goes wrong.
Some state and local governments require specific insurance and bonds, like workers' compensation, commercial auto, or various types of surety bonds.
What types of coverage do independent electrical contractors need?
There are several important reasons for independent contractors, subcontractors, and self-employed electricians to carry insurance: signing a contract or lease, complying with the law, gaining client trust, and protecting your business from devastating losses.
Workers' comp coverage for construction contractors is usually required by state laws, even if they work alone, due to the high risk of injury. And most states require electricians with work vehicles to have a commercial auto policy. You may also be required to carry surety bonds and a general liability policy.
Even if not required at the state or local level, there are several policies sole proprietors and independent electrical contractors should carry for peace of mind. These include:
- General liability coverage insures you against common third-party business risks like customer injuries, customer property damage, and advertising injuries.
- Commercial auto insurance covers legal fees, medical expenses, and property damage to others if your work vehicle is involved in an accident.
- Workers' compensation insurance, which protects self-employed individuals if they suffer an on-the-job injury and are unable to work while they recover. Private health policies usually won't cover medical payments for work-related injuries or illnesses.
Be sure to check with your state, county, and local governments to ensure you meet any and all requirements and coverage limits for your business.
Are electricians required by law to carry commercial car insurance?
Outside of New Hampshire and Virginia, every other state requires commercial auto insurance for business-owned vehicles. If you use a personal vehicle for work, your private auto insurance policy likely won’t cover you in the event of a work-related accident.
Commercial auto insurance offers liability protection for you and your employees, if you get into an accident while driving a company vehicle. It covers any property damage or personal injuries caused by your business vehicle, as well as your legal expenses. It will also pay for any medical expenses for yourself or an employee in a work vehicle accident.
You'll need hired and non-owned auto (HNOA) insurance if you or your employees use any personal, leased, or rented vehicles for work. This is because your personal or commercial auto insurance policies won’t cover any accidents that happen in personal, leased, or rented vehicles during work-related activities.
Do electricians need professional indemnity insurance?
Professional indemnity insurance, which is sometimes called professional liability insurance, protects you from customer lawsuits over a claimed error, mistake, or negligence that negatively impacted them.
While not usually required, it's particularly useful for businesses that market and sell their industry expertise and knowledge, and protects against:
- Professional negligence
- Breach of contract
- Oversights and errors
- Breach of confidentiality
- Poor professional advice
- Missed deadlines and undelivered services
Human error is inevitable, and the out-of-pocket costs associated with legal action can be expensive. Having the right professional indemnity insurance policy can protect your business in the event of an unsatisfied customer lawsuit.
