25 December 2024

How to Find Insurance for Your Electrician Business

By Ronald Smith

Being an electrician comes with unique risks and potential hazards. That’s why having insurance for your business is not just a smart idea – it’s the law.

Insurance needs can vary for electricians. Some may keep all their tools and equipment in a vehicle, while others rent a commercial space for storage. Some may even have equipment spread across multiple job sites. And let’s not forget about the different situations with employees. It’s a lot to consider!

But fear not! I’m here to help you protect your business and save money on insurance. I’ve got all the information you need to make sure you have the right coverage for your electrician business.

How to Find Insurance for Your Electrician Business

Why Should Electricians Have Insurance?

Have you ever wondered why it’s so important for electricians to have insurance? Well, let me break it down for you in simple terms.

First things first, one of the main types of insurance that electricians need is liability insurance. This kind of insurance is here to protect the electrician in case they accidentally cause any damage to someone’s property or end up injuring them. So, imagine this: if an electrician messes up while installing electrical boxes, they could potentially damage someone’s home entertainment system. And that’s not all! The same mistake in another customer’s house could lead to bodily harm for the customer themselves. Yikes!

Now, here’s an important thing to note. In order for an electrician to be licensed as a business, they must have liability insurance coverage. So, if you come across an electrician who doesn’t have this type of insurance, think twice before hiring them. A savvy customer like you should always make sure the electrician is properly insured.

Lastly, if an electrician has any employees, they must also have worker’s compensation insurance for their business. This is a legal requirement, but it’s also a way to show that the electrician cares about their workers and wants to make sure they’re protected too.

What Does Business Electrician Insurance Cover?

When it comes to insurance for your business, there are different types of coverage you can choose from. The specific coverage you need will depend on the type of policy you have.

Now, let’s take a closer look at each type of insurance policy that is necessary for your business:

Business General Liability Insurance

General liability insurance is a basic requirement by law for businesses. It protects you in case you accidentally cause damage to someone’s property or harm them physically due to negligence. This insurance policy also covers any medical expenses that may be claimed by a customer.

As an electrician or any other contractor, general liability insurance is a must. It’s an essential part of small business insurance.

Commercial Property Insurance

If you’re an electrician who has a space to store your equipment, like an office furniture, you’ll need commercial property insurance. This type of insurance is important if you keep your business property on personal property, like a shed or garage at home. Your regular homeowner’s insurance probably won’t cover your business property, but you can consider adding a rider to expand your coverage.

Insurance for Interruptions to Your Business

As an electrician, I always make sure to include business interruption insurance in my general liability insurance. This coverage is important because it protects my business from unexpected events like windstorms or floods that can prevent me from working. It also covers interruptions caused by equipment theft and provides financial protection for both my equipment and lost wages. I highly recommend getting this additional policy to safeguard your business. Plus, you can often bundle it with your general liability insurance to make things simpler.

When you have employees, Workers Compensation insurance is a must-have.

If you have one or more employees in your business, it’s required by law to have Workers Compensation insurance. This type of insurance takes care of medical bills for employees in case they get injured while working. It’s an important way to protect your team and ensure everyone gets the care they need.

Don’t forget to cover your vehicles with Commercial Auto Insurance.

More Insurance Options for Electricians

When it comes to insurance for electricians, general liability insurance is the starting point. However, there are additional coverage options that an electrician may need. The great news is that these additional options can often be combined with general liability insurance, bundled in a Business Owner’s Policy, or BOP, for a discounted rate.

  • Equipment breakdown insurance – This insurance policy doesn’t cover normal wear and tear, but it does provide coverage for repairing or replacing equipment that breaks, as well as compensation for lost income.
  • Hired and non-owned auto insurance – If your business vehicle is getting repaired, it’s not a good idea to use your own vehicle, an employee’s vehicle, or a client’s car for business purposes. To avoid waiting for repairs to finish, you might need to temporarily rent a vehicle.
  • Contractor’s tool and equipment insurance – For electricians who leave their mobile equipment at a job site, this insurance is a must. It protects your business and valuable equipment from financial losses caused by damage or theft.
  • Installation floater – This type of insurance covers items that aren’t equipment. It includes coverage for supplies like copper wires, conduits, and electrical boxes.
  • Errors and omissions insurance is a type of business insurance that protects you in case a client sues you for mistakes or missing information in your work. This insurance covers things like property damage and medical expenses. If you’re sued, the insurance will provide money to pay for your legal defense and other legal costs. Sometimes, it’s also called professional liability insurance.
  • Surety bond is a requirement for contractors before they can get a business license and start providing services. It’s like a guarantee that the business will do the work they promised (performance bond). If you’re a small business owner, you should think about getting a surety bond from the Small Business Association. They offer this kind of service.

How Much Does Electrician Insurance Cost?

Did you know that you can save money on your electrician insurance costs by combining them under a BOP? A BOP, or Business Owners Policy, is a great way to get coverage for general liability, business interruption services, and commercial property.

Let’s start with some basic numbers to give you an idea:

  • General liability: $500
  • Commercial auto: $1500
  • Tools and equipment: $500
  • Worker’s compensation: $3,000

When it comes to finding the right insurance for your electrical contracting business, there are companies that specialize in business insurance policies. Let me introduce you to our top picks.

Best Places to Get Electrical Contractor Insurance

But before we dive into that, here’s a helpful tip: consider joining your local or state electricians association. By networking with its members, you may be able to get valuable insurance information.

1. State Farm

2. Biberk

Looking for quick and specific electrician insurance coverage? Well, Biberk has got you covered! It’s a popular choice among part-time contractors who need coverage for a specific period, even if it’s just for a day or two.

3. Progressive

Want affordable coverage? Look no further than Progressive! They offer great rates and even provide discounts when you combine general liability with commercial auto insurance. It’s a smart choice for any electrician!

4. Next

Attention small businesses and self-employed contractors! Next insurance is here to help. They offer a variety of options that cater specifically to your needs. Check them out!

5. The Hartford

When it comes to insurance coverage for businesses, The Hartford is a name you can rely on. With decades of experience under their belt, they’ve got your back!

6. Nationwide

Looking for some extra savings? Nationwide is the way to go! They offer discounts when you combine multiple business insurance policies. Now that’s a great deal!

Do Electricians Have to Carry Business Insurance?

Yes, you need business insurance if you want to become a licensed electrician.

Does electrical contractors’ insurance also cover employees?

No, it doesn’t. If you have employees, you need to get Worker’s Compensation insurance specifically for them. It’s a requirement by the law for any small business with employees.

How much liability insurance should an electrician have?

Most policies offer coverage from $500,000 to $1 million or more. As an electrician, you should consider the value of the properties where you’ll be working.

For instance, if you’re working on a shopping complex, a large factory, or a luxurious home, think about the potential property damage claims that could be made by the client, who might be involved in a multi-million dollar project.

When starting out as an electrician, I can choose how much liability coverage I want to have. If I need more coverage later on, I can always increase it. Let’s say I’m working on a house worth $100,000. But if that house were to be completely destroyed, the cost of rebuilding it with all the materials and labor could be much higher than its current value or assessment.

The cost of the insurance policy may change based on the deductible amount I choose. I can adjust the deductible and see how it affects my monthly cost. However, sometimes the increase in the monthly premium isn’t worth it. It’s usually better to go for the lowest deductible amount.

Do the Insurance Rules Differ Between States?

Yes, they do! And there are a few reasons for that. In some states, there is a maximum limit on the amount of liability a customer can claim. This can affect the costs of insurance in those states.