Electrical Contractor Insurance: Coverage Types & Costs

Do electricians need business insurance?

Yes. In fact, most states require electricians to provide proof of insurance as part of the professional licensing process. What types of insurance you need will depend on your state laws.

That said, we recommend all electricians purchase business insurance regardless of their state requirement since there is an elevated risk of injury and potential damage to property associated with the trade.

Whether working as a self-employed electrician or an electrical contractor for a large company, business insurance can help you avoid having to pay out-of-pocket for medical expenses, property damage, or lawsuits.

What type of insurance do electricians need?

At a minimum, electricians should aim to have coverage for their employees, their equipment, and liabilities relating to third parties they come into contact with.

However, each state has its own requirements regarding what types of business insurance electricians must have.

For example, in California, all electricians must have general liability insurance with minimum coverage limits of $1 million per occurrence and $2 million of aggregate. Additionally, most states require all electricians with one or more employees to have workers’ compensation insurance.

Consider having the following types of business insurance coverage at a minimum:

1. General liability insurance:
   Electrician liability insurance protects against losses associated with property damage and bodily injuries to third parties. For example, if you visit a client’s home for electrical work and accidentally damage their property, your general liability plan could cover the cost of fixing or replacing their damaged property.
2. Inland marine insurance:
   Also known as equipment and small tools insurance, inland marine insurance covers equipment and tools used at a job site or when in transit. For example if your car is broken into and your tools are stolen, inland marine insurance can cover the cost to replace them.
3. Workers’ compensation insurance:
   Workers’ comp covers medical expenses and lost wages for employees who develop illnesses or sustain serious injuries on the job. For example, if one of your employees sustains a severe burn while handling electrical wires, your insurance can cover medical expenses and lost wages. Some states, like California, allow the business owners to be added to the workers’ comp plan or even offer coverage to sole proprietors.

If you need help deciding which is the best business insurance for you, you can also speak to an insurance professional over the phone for personalized assistance and guidance.

Other types of insurance electricians may need

While general liability, workers’ comp, and inland marine cover the bulk of needs for small electrician businesses, some companies may need extra coverage.

Other important types of coverage electrician’s may need include:

• Errors and omissions (E&O) insurance
• Commercial property insurance
• Commercial auto insurance

Errors and omissions (E&O) insurance

Errors and omissions (E&O) insurance, also known as professional liability insurance, protects you against financial losses caused by negligence, malpractice, and mistakes.

For example, imagine one of your employees makes a mistake with their electrical work because they misread a set of blueprints. E&O insurance would cover the financial losses associated with that error, such as for legal fees and settlements.

Commercial property insurance

If you have expensive assets, consider purchasing commercial property insurance, which protects against losses associated with fire, wind, hail, vandalism, burglary, smoke, and civil disobedience. This type of electrical contractor insurance covers equipment, tools, furniture, and other objects.

Commercial auto insurance

As your small business grows, you may need to add more vehicles to your fleet. If one of your full-time electrical contractors gets into an accident while driving to the job site, for example, a good commercial auto insurance policy will cover medical bills as well as collision damage. This type of insurance policy also pays for property damage caused by you or one of your employees.

What isn’t covered by electrician insurance?

Electrical contractors insurance doesn’t cover the following:

Why is it important to have electrician insurance?

The table below provides a few examples of why it’s so important for electrical contractors to have comprehensive insurance.

How much does insurance cost for electricians?

For a comprehensive insurance policy, we found the cost of electrician insurance to be around $384 per month.

To give you a better idea of how much electrician insurance costs, we got quotes for different types of coverage using the online comparison tool from Simply Business.

For this quote, we assume that you own or rent a location in the Los Angeles area, have an annual revenue of $500,000, and have four employees. Keep in mind that this quote is for illustrative purposes only. Your costs will vary depending on various factors.

Factors involved in determining the cost of electrical contractor insurance include:

• Size of payroll: 
  It costs more to insure a business with dozens of employees than it does to insure a one-person operation.
• Location: 
  If you do electrical work in high-risk areas, your insurance company may charge more for a policy.
• Building size: 
  It may cost millions of dollars to repair a large commercial building after a fire or natural disaster. Insurance companies charge more to account for this increased risk.
• Claims history: 
  You’ll pay more if you have multiple insurance claims on your record.
• Coverage limits: 
  If you choose a policy with high limits, you’ll pay more than you’d pay for a basic policy.

How do I get electrician insurance?

Before you provide any electrical services, follow these steps to get small business insurance:

1. Use our online comparison tool to request quotes from multiple insurance providers.
2. Compare quotes based on price and coverage details.
3. Choose the policy that offers the right balance of coverage for your business.
4. Pay the first month’s premium to activate your policy.
5. Contact your insurance agent if you have any questions.

Tips for saving money on electrician insurance

Here are a few tips for saving money on electrical contractor insurance.

• Bundle coverage: 
  It usually costs less to purchase a bundle than it does to buy separate policies. Think of it as a bulk discount on insurance for contractors.
• Limit risk: 
  Your insurer may charge less if you can prove that you’ve taken steps to mitigate risk. For example, you may save on commercial auto coverage by implementing a seatbelt policy, prohibiting employees from using mobile devices while driving, and providing driver training to all new employees.
• Research group rates: 
  If you belong to a trade association or another large organization, you may qualify for a discount on your insurance.
• Compare providers: 
  Some companies charge more than others for the exact same coverage. Compare insurers carefully to determine which one offers the best coverage at the lowest cost.