How Does Electrical Contractors Insurance Work?Posted on Dec 17, 2020
Insurance for self-employed electricians is a priority. Because of the various exposures electricians face, it’s important they have an insurance policy that’s customized with both general and specialized coverage.
To run an electrical business smoothly, it’s essential you understand the importance of electrical contracting insurance, the risks electricians face, and the different types of coverage options, so you know which coverages you require.
What Is Electrical Contractor Insurance?
Electrical contractor insurance is essentially made to protect you (the electrician) and your company from injuries caused or sustained throughout a day on the job and damage due to negligent work. It also covers theft of and damage to the company property.
Why You Require Electrical Contractor Insurance
If you’re looking to protect you, your company, staff, and other individuals and properties they’re interacting with, you’ll want to be covered with electrical contractor insurance. It allows you and your company to obtain various types of coverage you’ll require in one policy.
What Types of Insurance Should An Electrical Contractor Have?
1. Professional Liability
This insurance is protection for your business from claims of negligence related to a professional service, such as giving incorrect advice, an omission, or failing to deliver a service. It provides coverage, including legal defense, for claims that do not involve physical injury or property damage but are a financial loss to a third person that arose out of giving bad advice.
2. Business Owners Policy
The business owner’s policy is a policy that provides coverage for most business owners’ needs. It will include protection for loss of:
- Business property and equipment
- Income loss
- Supplies and inventory
- General liability
3. Workers’ Compensation
Workers’ comp protects you and your employees if they’re injured while working. It’s made to cover employees’ lost wages and medical bills while they’re disabled because of injury. As electrical contractors, a big concern is safety and health concerns on the job, therefore this type of coverage is critical and is required by law when a business has even one employee.
4. General Liability
As a stand-alone policy, commercial general liability insurance covers claims for physical injury to people or property damage arising from your operations.
For example, if a customer were to come into your office and slips or falls on your property, it’s this coverage that will protect you. General liability might also be required if you’re working on specific larger projects that demand the owner is added as an additional insured in the event of a problem with the job site.
5. Commercial Property
Electrical contractors invest a lot of money into signs, buildings, and tools. Business personal property insurance covers these types of items in the case of loss to:
- Other covered incidents
6. Commercial Auto
You likely have a pickup truck or van to transport your materials and equipment to your project locations. You’ll want to have sufficient commercial auto insurance coverage.
What is the Cost of Electrical Contractor Insurance?
The cost of electrical contractor insurance will depend on a few factors, which include:
- The business location
- The business size
- Gross receipts/sales and payroll from the business
A self-employed electrical contractor who works out in a remote location may only have to pay a few hundred dollars each year, whereas larger companies covering big cities like NYC, for example, may pay over a million yearly.
However, it’s usually expected to be in the low thousands at least since there is a significant amount of risk associated with this field of work and with electricity itself.
Additional Optional Add-Ons
Along with the primary components of an electrical contractor insurance policy, there are other additional coverages you might want to consider, including.
- Installation Floater Insurance: This coverage will cover materials that, if damaged, stolen, or lost before installation or in transit, will become part of the property.
- Health Insurance: Depending on your situation, you have various options available to you. If you’re self-employed, you might wish to buy an individual marketplace policy or a business policy that will cover you and any staff members. If you’re not covered throughout the year, you could face steep fines.
- Life Insurance: Life insurance pays designated beneficiaries in the unfortunate event of a worker’s death while on the job, which with electrical work, is a real daily risk.
- Business Interruption Insurance: Whether you face a natural disaster that totals your physical property or a serious illness that leaves you incapacitated for a substantial period of time, business interruption insurance will help you cope with the financial setbacks.
- Commercial Umbrella Policies: These policies will fill gaps that aren’t covered with standard insurance lines. This is an ideal option to consider if you are looking for peace of mind that every potential incident is covered.
Contact Otterstedt for Your Electrical Contractor Insurance Needs
Of course, all electrical contractors are different and unique, meaning your insurance requirements will be as well. Working with a reliable, independent insurance agency, like Otterstedt Insurance Agency, can help you obtain the right electrical contractor’s insurance coverage.
If you’re one person contractor, you’ll obviously need less coverage than if you rely on a full staff. Electricians who work from greater heights or who specialize in high-voltage work may require more specialized policies.
Either way, you can speak with one of our agents who can conduct comparison shopping to find the right combination of coverages for your unique needs.