Whether you’re hired to design an electrical system for a new building or fix an electrical problem in an old house, a lot can go wrong on the job site. For example, faulty wiring could result in property damage, or one of your employees might get hurt while performing their duties. That’s why you need electrician insurance.
Electrician insurance is also called electrical contractor insurance. Think of it as a form of small business insurance that you can tailor to meet the specific risks and needs for your electrician business.
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Who Needs Electrician Insurance?
An electrician’s work typically includes unique risks like live wires, active circuits and specialized equipment, which means electrician insurance is a necessity. It’s good for electrical contractors who perform tasks, such as:
- General electrical (including basic repairs or installations)
- Lighting
- High voltage
- Low voltage
- Fiber optic
- Electrical controls installation
What Does Electrician Insurance Cover?
Electrician insurance is a policy that contains several types of small business insurance that cover a business from a range of problems, including the cost of claims, damages and lawsuits. The coverage types you select vary depending on the specific needs of your business.
You can bundle three essential coverage types into what’s called a business owners policy (BOP). It’s usually cheaper to buy a BOP rather than purchasing each type separately. Here are the coverage types and what they cover:
Business liability insurance
General liability insurance is the foundation of your business insurance plan. It covers property damage and bodily injuries accidentally caused to others (not including your employees). For example, if faulty wiring sparks a fire causing both property damage and injuries, your liability insurance could pay for medical bills, court judgments, settlements and legal defense.
Commercial property insurance
This covers the physical location of your business and business equipment if they’re damaged due to a problem covered by your policy, such as a fire. Commercial property insurance covers both owned and leased equipment, including computers, office furniture, tools, inventory, supplies, business records and valuable papers.
Business interruption insurance
This coverage replaces lost income if you have to shut down temporarily due to a problem covered by your policy. For example, business interruption insurance covers problems like theft, wind damage, money lost due to damaged merchandise, lost earnings and additional expenses, such as temporarily moving to a new location. This coverage is also called “business income insurance.”
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Other Small Business Insurance Types
You can also round out your electrician insurance policy with additional coverage types beyond standard BOP insurance. It’s a good idea to speak with your insurance agent to make sure you only buy the coverage types that are necessary for your business.
Here are some common coverage types to consider.
Workers compensation insurance
In most states, you’re required to have workers compensation insurance, even if you have just one employee. Workers comp insurance covers medical care, lost wages and disability benefits if your employees get injured or ill while performing job-related duties.
Commercial auto insurance
This covers your cars, vans and trucks you use for business purposes, such as transporting materials to a job site. Your personal car insurance policy won’t cover business uses of a vehicle, so commercial auto insurance is usually a necessity.
Here are some examples of business use:
- Your vehicle is solely used for your electrician business
- You conduct a business service in your vehicle
- You haul electrical equipment and tools in your vehicle
- The vehicle is owned by your company
- Your employees drive your vehicle
- You transport goods or people in your car for work purposes
Here are common commercial auto insurance coverage types:
- Bodily injury liability. This covers bodily injuries to others accidentally caused by you or your employees.
- Property damage liability. This pays for property damage accidentally caused to others by you or your employees. For example, you accidentally hit your client’s car in their driveway.
- Medical payments and personal injury protection (PIP). This covers you and your passengers’ medical expenses no matter who caused the car accident.
- Collision insurance. This covers the cost to repair or replace your vehicle if you and your employees get into a car accident.
- Comprehensive insurance. This covers the cost to repair or replace your vehicle for problems like fire, floods, vandalism, falling objects and theft.
- Uninsured motorist (UM) coverage. This pays for medical expenses to you and your passengers if you are struck by someone who doesn’t have car insurance or someone who doesn’t have enough car insurance. You can add UM to pay for damage to your car from an uninsured driver in some states.
Hired & non-owned auto insurance
This covers property damage and injuries caused accidentally to someone else if you and your employees are using a personally owned or rented car for work purposes. For example, your employee drives to a job site to deliver a work contract.
Commercial umbrella insurance
This adds an extra layer of protection above your business liability insurance policy limits. For example, if you get sued for $1.3 million but only have $500,000 in business liability coverage, commercial umbrella insurance may cover the $800,000 shortfall.
Equipment breakdown insurance
This covers the cost to repair or replace your equipment if it unexpectedly breaks down. It also covers the time and labor to repair and replace your equipment. It doesn’t protect against normal wear and tear of equipment. This coverage is sometimes called “mechanical breakdown insurance” or “boiler and machinery insurance.”
Contractor’s tools and equipment insurance
This covers your tools and equipment if they’re lost, stolen or damaged. For example, someone steals your tools from a work site. This coverage may have certain limits. For example, contractor’s tools and equipment insurance from Insureon is limited to equipment less than five years old, mobile equipment and small tools.
Installation floater
This covers valuable equipment and materials—like copper wiring, electrical boxes and galvanized pipes—while they’re awaiting installation, in transit or being installed at the job site.
Errors and omissions insurance
If a client accuses you of not doing the job properly, this covers you whether the claim is true or not. For example, a client claims you did a poor job of wiring their home, errors and omissions insurance covers legal costs, court judgments and settlements. This coverage is also known as professional liability insurance.
Surety bond
In order to perform contract electrical work, you may be required to have a surety bond as a means of getting a business license or permit. This covers the cost of claims about incomplete or shoddy workmanship, as well as theft and fraud.
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Examples of Electrician Insurance Claims
Here’s a look at a few claims scenarios and the electrician insurance coverage type that would apply.
What’s Not Covered by Electrician Insurance?
Electrician insurance doesn’t cover several types of problems. Typical exclusions include:
- Earthquakes (you need to buy a separate earthquake insurance policy)
- Floods (you need to buy a separate flood insurance policy)
- War
- Radioactive fallouts
- Infectious diseases
- Intentional and fraudulent acts
- Government seizures
- Wrongful termination (unless you have employment practices liability insurance)
How Much Does Electrician Insurance Cost?
Several cost factors go into determining your electrician insurance costs, such as:
- Number of employees. The more workers you employ, the more you’ll pay for workers compensation insurance.
- Insurance coverage needs. The coverage limits you select to play a role in insurance cost. Generally, higher coverage amounts mean a higher premium.
- Prior claims history. Your insurer will consider your previous business claims history when setting rates.
- Other pricing factors. Your insurer might consider other pricing factors like your business assets, the location of your business, the business property owned and the size of your payroll.
Example of the cost of electrician insurance
Here’s a look at an example of how much electrician insurance costs, depending on what types of coverage you buy. Keep in mind, your costs will vary depending on cost factors like your insurance needs and the number of employees.
Ways to Save on Electricians Insurance
Here are strategies to save on your electricians insurance:
- Shop around. Not all insurers price their policies the same. The best way to save is to compare quotes from multiple small business insurance companies.
- Bundle business insurance. Buying a BOP that includes general liability insurance, commercial property insurance and business interruption insurance is usually a good way to save.
- Join a trade or industry association. You may be able to save on your workers comp rate by getting a group rate. For instance, you may be eligible for a discounted rate if you join a trade association with at least 300 members with others that share the same risks as your business.
- Implement a safety program. You may be eligible for savings if you implement a safety program. Make sure you document all training sessions and that your insurer knows about the program.
- Classify workers correctly. Have detailed, accurate job descriptions for your employees and make sure they do not perform duties outside of their classification. This can help you save on workers comp insurance. An insurance agent who is familiar with workers comp can help you select the right classifications.
- Increase your commercial car insurance deductible. The insurance deductible is the amount deducted from an insurance claims check. Generally, the higher your deductible, the less you’ll pay for insurance. That’s because your insurer will pay less if you have to make a claim. Make sure you can cover a higher deductible amount.
- Pay your annual premium up front. You can often get a discount if you pay your annual premium up front rather than monthly.
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Electrician Insurance FAQ
Do I need electrician insurance?
Some types of small business insurance are required by law, depending on your state. For example, most states require employers to have workers compensation insurance.
Even if you are a self-contractor and don’t have any employees, you’ll want to consider a business owners policy (BOP). A BOP is a bundle of essential coverage types, including general liability insurance, business interruption insurance and commercial property insurance. A BOP can help protect your business from financially devastating events, such as lawsuits and a fire that destroys your business property and interrupts your ability to work.
Does an electrician need commercial auto insurance?
If you use a vehicle for business purposes, such as transporting materials or driving to job sites, you’ll need a commercial auto insurance policy. Your personal car insurance policy won’t cover business use.
