TLTR: This article explores insurance for electricians, the types of coverage that complement it, and explains the factors that affect its cost.
If you’re an electrician you’re involved in one of the most injury-prone professions. According to the Electrical Safety Foundation (ESFI), 166 fatal and 1,900 non-fatal electrical injuries occurred in the U.S. in 2019. Serious accidents can and do happen, and financial backup in the form of insurance is clearly vital for any electrician.
Let’s explore how insurance for electricians can assist you.
What is Electrician Insurance?
Electrician insurance is a type of business insurance for electrical contractors. The policy is also known as electrical contractor insurance.
If you work with electrical systems handling electrical equipment in commercial and residential sites, you’re at risk for certain injuries, especially electrocution.
Being an electrician means that you deal with potential hazards that arise from:
- Handling live wires
- Active circuits
- Electrical faults
- Handling specialized equipment
- Portable electrical equipment (Power drills, nail guns, etc.)
Besides the unique personal risks that you face in your daily working life as an electrician, there are additional risks associated with many businesses in general. Property damage, accidents due to distracted driving, and theft of equipment are just a few examples. Electrician insurance covers you in all these areas.
What Is Included in Insurance for Electrician?
Electrician insurance is a bundle of different policies that covers you depending on the risks you face. There isn’t one universal package for this insurance coverage since every electrician’s needs vary for various reasons.
Generally, electrician insurance includes the following:
Business Owners Policy (BOP)
A great place to start for any business would be with a business owners policy (BOP). It offers a custom insurance package, depending on your needs and requirements.
As per the Insurance Information Institute, a business with less than 100 employees that generates less than $5 million annually and operates in a low-risk industry is typically eligible for a BOP.
You can combine the various other coverage types with a BOP for your electrician insurance. By default, a standard business owners policy includes general liability, commercial property, and professional liability coverage. So, if you create an insurance plan for yourself set around a BOP, it will help your electrician business according to your needs.
General Liability Insurance
General liability insurance protects your business from claims related to bodily injuries or property damage. For example, if a client is injured while an employee is performing electrical work at their home, the policy will cover the relevant expenses.
General liability insurance can also protect against claims arising from slander and libel. However, it does not cover you or your business if you face a lawsuit due to a mistake in your electrical services. That’s where professional liability insurance comes into play.
Professional Liability Insurance
Sometimes the services that you provide to your clients can be compromised due to employee negligence, faulty equipment, or simply human error. Clients may see these circumstances as an opportunity to sue you. And such lawsuits can be expensive.
For example, let’s say your business and employees oversaw the electrical work and wiring set up at a client’s residence. Some of your employees made a mistake with the wiring, and it resulted in a short circuit, which led to a part of the client’s property catching fire. After learning the details of the accident, the client decides to sue you for damages.
If you don’t have the proper coverage in such a situation, you’ll face quite a financial battle that could destroy your business. You need to purchase professional liability insurance to cover the costs of the lawsuit.
Workers’ Compensation Insurance
According to Cornell’s Law Institute, workers compensation insurance is required by most U.S. states. This insurance covers work-related injuries or illnesses and offers relevant benefits to employees. This policy covers:
- Employee medical bills
- Lost income while they recover
- Employer liability for work-related injuries
- Legal cost in case of a lawsuit by an employee or their family
This coverage is beneficial if you work with a group of employees. It depends on the business location, employee payroll, and the risks your employees face in the work environment. Insurance companies can give you a better rate or discounts on your premiums if you operate in a less risky location.
Commercial Property Insurance
Commercial property insurance is essential for any business that operates in a physical location. This coverage protects the business property and the associated equipment from loss due to risks from fire, storms, water, natural disasters, theft, and more. This applies to your business whether you own or lease the business property. For example, if your business location is damaged due to a sudden flood in your area, this insurance policy will cover the costs of repairing the loss.
Speaking of the damage from natural disasters, according to a study by the National Real Estate Investor, Hurricane Irma in 2017 is ranked as the fifth costliest storm in U.S. history, which resulted in $50 billion worth of property damage.
NOTE: This policy also protects rented tools, equipment and inventory that is within the business premises.
Commercial Auto Insurance
If your electrician business uses company-owned cars, then commercial auto insurance will cover it against potential risks. Having a commercial auto policy with your electrician insurance will certainly insure your business from any automobile-related mishaps. The coverage includes…
- Property damage: if your business vehicle damages third-party property
- Medical expenses: if you injure another individual in an accident while running a business errand with a company-owned car
- Legal fees: if the party involved in an accident with your business vehicle decides to press charges
Inland Marine Insurance
If you’re transporting your equipment from your business premises to a work site and an accident occurs, your commercial auto policy will not cover the damage. In such cases, inland marine insurance protects your gear.
The policy covers your equipment from damage, theft, and loss while it’s in transit from one location to another. It also covers the cost of damage and repair if an employee mishandles the equipment. For example, let’s say an employee loads some equipment for transport but fails to properly secure the harness inside the truck. While in transit, the equipment falls over and sustains some damage. Inland marine insurance will cover the replacement or repair costs in such situations.
Additional Coverage to Consider While Getting Insurance For Electrician
There is additional coverage you can consider besides what’s mentioned above. You can opt for these based on your business needs and mode of operations. But before you decide on these policies, make sure you assess your current situation and have a proper consultation with an insurance agent.
Cyber Liability Insurance
In today’s digital world, many business-related tasks occur online. It’s common for many businesses to store their client information, employee information, bank credentials, as well as other confidential data on their office computers.
In case of a data breach, vital information for your business, clients and employees can be at risk. In such situations, cyber liability insurance assists your business in paying for the damages caused by the attack.
According to a report by Bloomberg, Uber paid $100,000 to hackers to delete data from 57 million customers in order to cover up a breach. Cyber liability policy in such cases would certainly create an invaluable fallback for a business.
Business Interruption Insurance (BII)
Some situations which can directly affect your business are beyond your control. A heavy thunderstorm can strike in your area and destroy much of the area due to flash flooding. That could put an end to your business either temporarily, if not permanently. When your business isn’t operational, you can lose your income stream and be unable to cover business expenses.
According to Allianz, business interruption and its related risks ranks first on the list of global risks faced by businesses today. So, having a BII policy is vital if you wish to avoid losses due to unforeseen natural disasters.
Business interruption insurance assists in covering for the lost income during the time your business is closed. However, your eligibility for it does depend on:
- Nature of the business
- Previous claims history
- Business location
- Income and physical loss
- Covered perils
- Duration of business shutdown
Employment Practices Liability Insurance
With any business, it’s possible you could have a serious dispute with your employees due to specific workplace issues. A report by EEOC shows that 67,448 charges of workplace discrimination were reported in 2020. Thus, such issues can lead to a lawsuit directed towards you by a resentful employee.
In order to protect yourself from the legal costs of such claims, employee practices liability insurance (EPLI) is necessary.
This policy is designed to protect employers from claims associated with:
- Wrongful termination
- Sexual harassment
- Workplace harassment
- Ethnic discrimination
How Much Does Insurance For Electrician Cost?
Standard electrician insurance includes a business owner’s policy paired with general liability insurance, worker’s compensation insurance, as well as professional liability insurance. It also consists of coverage for damages and fees up to $1 million. The average cost for electrician insurance is around $100 per month. But the price depends on a few factors, such as:
- Business location
- Policy limits
- Business risks
- Equipment value
- Number of employees
- Years of operation
- Business size in terms of annual sales
- Previous claims filed against the business
Keep in mind that there can be additional factors that affect the cost. Of course, it’s always best to consult with an insurance agent regarding expenses and other details. With proper research and the right agent, you can get a good discount on your electrical company insurance.
Note: You might need a separate electric car insurance if you drive an electric vehicle for your business. But keep in mind that electric vehicle insurance rates are higher than your average car insurance. According to a study by Bankrate, people who own an electric vehicle tend to pay around $486 to $748 in 6-month premiums.
Acquiring insurance for your electrician business is vital, as you and your employees face countless occupational hazards with every job. For this reason, electrician insurance will provide you with the necessary financial safety net in times of peril.
And since there are many components to it, always research, overview your business situation, compare various quotes, and consult with a reliable insurance agent.
Contact your local insurance agent to get the necessary coverage for your electrician business.
Did you find this article helpful? Let us know your thought in the comments below.
Frequently Asked Questions
Do I need a BOP if I run my electrician business from my home?
Even if you already have homeowners insurance, it will not cover business-related risks and loss if you run your electrician business from home. With a BOP, you will certainly be covered for:
- Damages to electrical inventory and equipment stored on your property
- Clients who may be injured on your property
- Workplace injuries to employees on your property
Will my auto insurance cover my employees and me if my business uses rental vehicles?
Your commercial auto insurance or personal car insurance will not cover you if your business uses rental vehicle(s). In this case, non-owned auto insurance will protect you and your business in such cases. The coverage will help you pay for accident damages, third-party injuries, as well as potential lawsuits.
January 27th, 2023 · 7 mins read
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