Electrician Liability Insurance: Cost & Coverage
Nancy Fernandez is a Credit Card and Insurance Expert at Fit Small Business, specializing in business credit cards and business insurance.
Electrician insurance refers to policies that protect against financial loss resulting from property damage, workplace injuries, income loss, and vehicle accidents in work trucks. Electricians may need multiple policies to provide full coverage but can save by using a business owner’s policy (BOP). Electrical contractors usually pay an annual average of $500 to $1,006 for a BOP.
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How Electrician Liability Insurance Works
Electricians can’t just buy one policy to provide coverage for all potential risks. However, many providers offer bundled coverage which allows electricians to group policies to save money. Electricians interested in saving on coverage for property damage and general liability can purchase a BOP as well as supplementary coverage specific to their trade.
A BOP includes commercial liability insurance, which pays for claims arising from an electrician injuring someone or damaging someone’s property. BOPs also include coverage if an electrician’s own property is damaged. Sometimes, it includes business interruption insurance in case an electrician becomes temporarily unable to work.
When you start looking for electrical liability insurance, it is important that you thoroughly research coverage options. If you get sued for a covered occurrence, your electrician liability insurance can cover costs up to your policy limit related to the investigation, defense, and settlement of damage awards.
Pro tip: To make sure you get your liability insurance at the best price, make sure to compare multiple policies. Ideally, try to get at least three different quotes. This can be done either online or through a reliable insurance broker that can help you find the right coverage.
Common Coverages Under Electrician Liability Insurance
When buying electrician insurance, the size of your business, policy limits, and deductibles affect costs. Median premiums for business owner’s policies run from $500 to $1,006 for $2 million in coverage. Electricians typically pay $200 to $354 annually for surety bonds with policy limits determined by project costs, and around $250 to $950 per month for workers’ compensation. Auto insurance adds $3,840 to $4,200 per year in costs for $1 million in coverage, and builder’s risk insurance runs between $1,000 and $4,000.
Electrician Liability Insurance Costs & Deductibles by Insurance Type
Insurance Type | Monthly Premium Cost | Deductible |
|---|---|---|
General Liability Insurance | $175 to $670 | $500 |
BOP* | $500 to $1,006 | $500 |
Surety Bonds* | $200 to $354 | $0 |
Workers’ Compensation | $250 to $950 | $0 |
Commercial Auto Insurance | $320 to $350 | $500 |
Builder’s Risk | $1,000 to $4,000 | Varies based on project cost |
* Annual premium rates
The cost of your policy will be affected by:
- Your experience and credentials: If you’re fully licensed and certified and have been in business for many years with no history of problems, your costs will be lower than if you’re just starting out or if you have a history of past claims.
- The number of employees: The more people who work for you, the higher the cost you can expect to pay for workers’ compensation insurance coverage.
- The number of vehicles in your fleet: If you have several work trucks driven by multiple employees, your commercial auto insurance costs will be much higher.
- The value of the equipment and tools you own: When you have very expensive specialized equipment to cover, your BOP will come at a higher cost due to the need for added property damage coverage.
If you’re a one-man shop that does small projects and is covered by the general contractor’s builder’s risk policy, self-employed electrician liability insurance costs are low. If you’re a major electrical contractor with a team of employees and a fleet of work trucks, costs are much higher.
Common Coverages Under Electrician Liability Insurance
Electricians need coverage for risks their work presents to others and for potential loss to their business. Electrician liability insurance and permit bonds protect against loss to others. Property coverage and workers’ compensation insurance protect against damage to equipment and employee injury. Auto insurance provides both coverage for work vehicles and coverage if an accident injures others. Many insurers allow additional endorsements or add-ons to a BOP to provide the additional coverages electricians need.
Most Common Types of Electrician Liability Insurance
Type of Insurance | What It Covers |
|---|---|
General Liability Insurance | Protects businesses from losses that are incurred from third-party claims for either bodily injury or property damage |
BOP | General liability, property damage, and income loss due to business interruption |
Surety Bonds | Expenses associated with a failure to comply with state and local laws |
Workers’ Compensation | Medical bills, lost wages, and disability benefits in case of an on-the-job injury |
Commercial Auto Insurance | Damage to work vehicles or injuries resulting from on-the-job accidents |
Builder’s Risk Insurance | Damage to equipment on construction sites or to work-in-progress on construction sites |
General Liability Insurance
Every electrician needs a commercial general liability policy due to risks associated with electrical work. You could be sued for damaging someone’s property, your own equipment could be damaged, or your business could be forced to stop operating due to disaster.
When either property damage or injury is a result of faulty work, the losses you caused would be covered by your general liability policy. However, if no one was harmed and you’re sued for not fulfilling work as defined in your contract, then this is a breach of contract claim, which is something that isn’t covered by general liability insurance.
BOP
While a commercial general liability policy can help cover risks associated with an electrician’s line of work, a BOP groups three important coverage types together, providing wider coverage for less money.
The three types of coverage you’ll get with a BOP include:
- A general liability policy: This covers damage to someone else’s property or injury you cause to others. For example, if your faulty wiring causes a fire, your policy will cover injuries to property owners and the cost of restoring the structure.
- A property damage policy: Covers damage to your own property like equipment. For instance, if your tools are stolen from your office or damaged by vandalism, they’d be covered.
- Business interruption insurance: Covers income loss in the event you are unable to conduct business due to a disaster like fire or natural disaster. If your trucks and equipment are destroyed by a fire and you can’t work for two months, you’ll be covered for lost profits and operating expenses.
A BOP provides all three types of coverage bundled into one policy for significant cost savings.
Pro tip: Both general liability insurance and business owner’s policies have two policy limits: a per-occurrence limit and a per-policy limit. The former caps the maximum amount paid per claim, while the latter caps the total paid per policy.
Surety Bonds
Surety bonds are a type of insurance you may need to buy, but these bonds don’t protect you; they protect the people you’re working for. If you work for the government or certain property owners, you’ll be required to buy surety bonds to act as a guarantee that you’ll perform appropriate work.
There are different kinds of surety bonds, including completion bonds, which guarantee you’ll complete work as contracted, as well as license and permit bonds, which guarantee you’ll obtain permits and comply with other building codes. If you don’t fulfill your obligations, the surety bond pays the property owner for losses and tries to collect from you to recoup the payout.
Workers’ Compensation Insurance
If you have employees, there’s a significant risk of on-the-job injuries or workplace fatalities. In fact, according to the Occupational Safety and Health Administration (OSHA), electrical injuries are one of the top four causes of all fatal construction accidents. Workers’ compensation insurance protects against the risks of an on-the-job injury or death.
In case of injury, workers’ compensation coverage pays for:
- Medical costs incurred in treating on-the-job injuries
- Lost wages if workers miss time at work
- Temporary or permanent disability benefits for total or partial disability
- Death benefits to surviving dependents after a workplace fatality
Workers’ compensation insurance is required in most states, with limited exceptions. For example, Texas doesn’t require workers’ compensation coverage, while other states require coverage only if you have a certain number of workers―more than three is common.
Commercial Auto Insurance
Commercial auto insurance provides coverage for all work vehicles you own. It also provides coverage for injuries and property damage caused by an employee involved in an on-the-job auto accident. Employees are considered agents of your company, and you can be liable for losses if they cause an accident while driving for work.
Builder’s Risk Insurance
Your property damage policy may limit coverage for damage to tools and machinery which are on your property. If you sustain damage while on a construction site, you may need builder’s risk insurance to be fully covered. It also provides coverage if something goes wrong with your work product before a job is complete—for example, when a storm or fire destroys the wiring you installed.
Bottom Line
Electricians need to ensure that they have appropriate electrician liability insurance coverage in case claims are made against them or in case damage to their equipment or other property occurs. Having the proper coverage is essential to be eligible for certain jobs, and it can protect you from financial disaster.
If you’re an electrician, you should be sure that your policy protects you from potential lawsuits and disasters. The Hartford is an industry-leading insurer that offers policies specifically designed to help electricians. Visit The Harford today to get a quote in minutes.
