You’ve got a lot on your plate. Whether you’re an independent electrical contractor or running a small crew, your value is in your hands: running new wires, troubleshooting a short, or pulling a clean homerun through the studs. That’s your expertise.
What you don’t have time for is spending hours trying to figure out the difference between general liability and workers’ compensation insurance, or wondering if your tools are covered if the van gets broken into. Your job is electricity; our job is protection.
As an insurance and business writer, my expertise is in cutting through the jargon and clearly explaining the essential coverage every electrical contractor needs. So let’s get started.
What Electrical Contractor Insurance Really Means
Insurance options for electricians are not one-size-fits-all. There are different policies and coverages that kick in depending on the situation at hand. If you have, say, employees and company vehicles, those create different insurance needs.
What Does Electrical Contractor Insurance Cover?
Electrical contractors should consider a few notable insurance policies, ranging from coverages every electrician should have to some that depend on the individual situation.
General liability insurance
Every electrical contractor needs liability insurance: accidents can happen to any electrician, regardless of business size and scope. One contractor I knew, a one-man shop, worked small business and residential jobs. On one project, a client tripped over some power cords and needed medical attention. General liability policies generally cover the cost of such occurrences.
Workers’ compensation insurance
If you have employees, they can get injured on the job as well. A fall from a ladder can cause a worker injuries that keep him off the job for a while. Workers’ compensation coverage typically takes over at that point, paying medical expenses and potentially providing income to the injured party while they’re unable to work.
Tools and equipment coverage
You invest a lot of money in tools, and you can’t do your job without them. While theft is a common peril for electricians, specialized policies can protect your tools against theft and damage.
Professional liability insurance
This is sometimes known as errors and omissions insurance. Say you are a subcontractor initially wiring a property and an oversight causes you to reconfigure a panel box, causing delays for the general contractor (GC). Professional liability insurance could cover any financial harm to the GC.
Other Helpful Coverages
Business owner’s policy
Known as a BOP, this policy covers a number of situations under one policy. It provides the general liability coverage addressed above, but also typically adds property coverage to protect against damage to commercial property, and business interruption insurance to help cover lost income.
Cyber liability insurance
The electrical contractors I know perform administrative work on computers. Their accounts receivable and payable functions are often linked to their bank accounts. If a hacker tapped into those accounts, cyber liability insurance could help make them whole.
Why Coverage Matters
Almost every project has its pitfalls. Some might be minor and others more serious. Sooner or later, you’ll run into a situation that can threaten your financial well-being.
Meanwhile, insurance is typically required before you can even set foot on the jobsite. Further, general contractors, municipalities, and homeowners will likely require a certificate of insurance before awarding you the bid. So having the right insurance program in place will not only help you obtain work, but it will also put GCs and clients at ease while you’re on the job.
How Much Does Electrician Insurance Cost?
A number of factors determine the cost of electrician insurance. Costs might vary from one geographic location to another, or hinge on the size of your payroll or the volume of your sales. At any rate, the cost of insurance will likely be much less than significant damage or a large claim against your business.
Common Misunderstandings
“My homeowner’s insurance has me covered.”
That’s false: Homeowners’ policies do not cover claims incurred during business operations.
“I’ll spring for the lowest cost policy.”
Think again: Some policies might not cover certain situations, and you may not be prepared to pay out of company coffers.
“Now that I have insurance, I don’t need to worry about it anymore.”
Remember this: Discussing your insurance needs at each annual renewal will help match the necessary coverage amounts with the growth of your business.
Take the Next Step
You don’t need a lot of fancy language or insurance-industry insight to figure out how to protect your business. You just need to partner with professionals who can put a simple plan in place and help you execute it. Get started with a free quote today.