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Electrical work is critically important, but it can also be a dangerous business. Mistakes in electrical work can cause fires, serious injuries to employees or other people, and even death. Securing a broad range of insurance policies can financially protect your company from these risks and a host of other liabilities.
What insurance coverage do I need as an electrician?
There are many types of insurance coverage to consider, but these policies are particularly relevant for electricians:
General Liability Insurance
General liability insurance covers accidental damage or injury to third parties and third-party property—a key concern for electricians, who perform work at many locations where injury or damage could occur. No matter how careful your employees are, accidents are common, and there’s always a chance that they could unintentionally damage someone else’s property or cause an injury.
Electricians often work with existing electrical systems or machinery, and the chance for property damage is high. Electricians are also commonly working from ladders or with overhead wiring, which can present a danger of falling objects that may injure passersby. If this happens and your company is sued for damages, general liability insurance can provide funds to cover legal fees, judgments, settlements, and medical payments.
A critical part of general liability insurance for electricians is products and completed operations coverage. This covers property damage or injuries that take place away from your business’s premises and are caused by your work after it has been completed. If improperly installed electrical work leads to a third party getting hurt, the damages could be extensive.
- Bodily injury: You are working at a client’s home installing wiring for recessed lighting in the ceiling. As you are wiring up one light, you lose your grip and drop the light fixture. It just so happens to fall on your client’s foot, and she must be rushed to the emergency room. Your general liability insurance would the medical fees and any damages if the client sues.
- Property damage: One of your ladders falls against your client’s window, shattering it. Your general liability insurance would cover the damages.
- Products and completed operations: One of your employees improperly wires a new circuit breaker for a client. A week after installation, a fire breaks out, causing significant damage to the client’s building. Your client sues for damages. General liability insurance would cover the lawsuit and any resulting settlement.
Commercial Property Insurance
If your business property is destroyed or damaged by a covered peril, commercial property insurance will provide funds to cover the loss. Electricians may store electrical wire and cable, which can be difficult to extinguish if a fire starts, and they may also store valuable equipment or tools. If a disaster strikes, it can be expensive and difficult to recover from the loss without insurance coverage. Commercial property insurance can help provide funds to replace or repair damaged business property if it’s damaged by common perils including windstorms, hail, fire, vandalism, explosion, and water damage.
Commercial property insurance covers the following:
- Buildings belonging to or leased by your company
- Contents of the building, including equipment, tools, and supplies
- Property of others while it is under your care, custody, or control
- A fire breaks out in your storage area and destroys a large amount of wiring, cable, and other equipment and inventory. Your commercial property insurance would cover the loss.
Workers’ Compensation Insurance
Working as an electrician can be dangerous—employees could fall from heights, be injured while working underground in a trench or tunnel, or be electrocuted by a live wire, among other serious risks. For these reasons, obtaining sufficient workers’ compensation coverage is particularly critical for electrical contractors.
In the event of a work-related injury or illness, workers’ comp will provide funds for employees’ medical expenses and a portion of lost income if they are unable to earn their usual wages. In some cases, physical rehabilitation costs are covered as well. Workers’ comp also provides financial benefits to surviving dependents if an employee dies in a work-related accident.
Since regulations vary from state to state, it’s important to check your local workers’ comp laws to ensure that your business is in compliance. Failure to secure adequate coverage can result in heavy fines and penalties for your business.
- One of your employees receives an electrical shock while working. The shock injures his arms. Workers’ compensation insurance would provide coverage for the employee’s medical bills, rehabilitation expenses, and a portion of his lost income while he is unable to work.
Commercial Auto Insurance
Electricians typically rely on vehicles to visit clients’ homes, businesses, or worksites. If your company owns vehicles titled under the business’s name, or if your employees use their own vehicles for work purposes, commercial auto insurance is a key coverage and is legally required in most states. This coverage can pay for any third-party bodily injury, property damage, or pollution cleanup that occurs if one of your employees causes an accident while driving a company vehicle. In addition, commercial auto insurance can cover the value of your vehicles if they’re damaged by perils such as collision, theft, or falling objects.
It’s important to be aware that your company could be held liable if employees are at fault in an accident while driving their personal vehicles for work purposes. Hired and non-owned auto insurance can be added to your commercial auto insurance policy or purchased separately to cover these incidents.
- While backing your work van out of a tight spot, you accidentally hit a parked car. Your commercial auto insurance would cover the damage to both vehicles.
Inland Marine Insurance
Electricians often transport specialized tools, equipment, and materials from location to location, exposing them to additional risks. Theft is a common concern since copper, wiring, and cable have high resale values, and mobile equipment such as cherry pickers could be damaged while on a job site. These items could be costly and difficult to replace or repair. Inland marine insurance is a form of property insurance that will cover your property that does not stay in a fixed location and is not covered by a commercial property policy.
An installation floater is a common type of inland marine insurance that is specifically designed to cover materials and equipment for installation projects. You can purchase this coverage for a specific project or to cover multiple projects over a period of time. Your installation floater will cover materials, supplies, and equipment while work is in progress.
- A severe storm overturns and damages your cherry picker while it is stored at a client’s location. Your inland marine insurance would cover the cost of repairs.
Contractors Errors and Omissions
Contractors errors and omissions (E&O) insurance provides coverage for your completed work if it is damaged due to your negligence, errors, or omissions. While the products and completed operations portion of general liability insurance will cover you if your work causes bodily injury or damage to other property, it doesn’t cover damage to your work itself. In the event that your company is held liable, E&O would cover the cost to repair or redo faulty work, as well as any legal defense against those claims.
- You install wiring in a client’s new office building. One of your electricians accidentally crosses some wires, leading to an explosion that destroys all of the newly installed wiring. Contractors E&O would cover the costs of redoing the work and any damages if your business is sued.
- For smaller businesses, a business owner’s policy (BOP) could help provide a wide range of coverage in a convenient package. A business owner’s policy combines the major property and liability risks that small businesses face, including general liability, commercial property, business income, and extra expense coverage.
- Business income coverage will reimburse you for lost income and operating expenses if your business is forced to close due to a covered peril, such as fire, storm damage, or other property damage.
- Pollution liability insurance covers third-party bodily injury, property damage, cleanup costs, and legal defense costs that result from pollutants released by your company. Environmental concerns may arise for electricians if they must dispose of old capacitors or other electronics.
- Employment practices liability insurance protects your business against lawsuits by prospective, current, or former employees accusing your business of wrongful treatment such as discrimination, harassment, or other employment-related issues.
Pricing and Quotes
Pricing for electrical contractors insurance will vary based on the type of insurance coverage and the risk profile of your business. Insurers consider factors such as:
- Business size
- Number of employees
- Claims history
Businesses with higher risks will have higher premiums than those deemed lower risk. For example, an electrician with a history of frequent claims will face higher premiums. Premiums also rise as you increase the limits of insurance. Different insurance companies have different models for rating risks, so it is worth comparing pricing across different insurers.
In order to get an accurate estimate on pricing, it’s best to get a quote from a reputable insurance company. Below we’ve highlighted a few of our trusted partners who offer coverage for electricians:
|Provider||General Liability||Professional Liability||Business Owner's Policy|
Working as an electrician exposes you to many sources of risk and liability. Accidental injuries or property damage caused by your work could lead to costly lawsuits and settlements. It’s a good idea to invest in insurance coverage to protect your company from the financial consequences of unexpected disasters. Having a broad range of coverage can give you, your employees, and your clients peace of mind, knowing that your company would be able to continue operating even after major setbacks.