Electrical business insurance: What it covers and what it costs

What types of business insurance does an electrical contractor need?

There are a variety of insurance policies that cover electrical businesses, including:

General liability insurance for electricians

General liability insurance covers claims of bodily injury, property damage and advertising injury. This policy will cover a settlement or judgment as well as your legal fees and court costs.

Workers’ compensation insurance

Workers’ compensation insurance covers an employee’s medical treatment and partial lost wages if they get sick or injured at work. This policy is required in most states for electrical businesses that have at least one employee on the payroll.

Commercial auto insurance

Commercial auto insurance covers an employee's liabilities if they cause an accident while driving a business-owned or leased vehicle or work truck. Like personal car insurance, business auto insurance is a legal requirement in nearly every state with mandatory minimum coverage amounts.

Contractor tools and equipment insurance

Contractor tools and equipment insurance pays to replace or repair movable tools that are damaged, stolen or lost. Some insurance policies also cover tools and equipment rented for specific electrical projects.

Professional liability insurance

Professional liability insurance, also called errors and omissions (E&O) insurance, covers claims of negligence, business errors, misrepresentation, copyright infringement and poor business advice. It pays for a settlement or judgment and legal expenses.

How much does electrician insurance cost?

Here’s the average cost of electrician insurance by policy type, based on rate data from Insureon.

Factors that affect electrician insurance premiums

The cost of electrician insurance depends on a variety of factors, including:

• Location
• Number of employees
• Revenue
• Claims history
• Policy type
• Coverage limits
• Deductibles
• Insurance company

Small business insurance companies that serve electrical contractors

There are many reputable insurance carriers that sell coverage to electricians, including:

• The Hartford. Electricians can purchase several insurance policies through The Hartford, including general liability insurance, workers’ compensation insurance, hired and non-owned insurance and business income insurance
• Hiscox. Hiscox sells insurance to electricians across the country. A standard policy covers your business for work performed anywhere in the world, not just in the U.S. Hiscox offers free quotes online or over the phone.
• NEXT. Electricians can save up to 10% for bundling multiple insurance policies, like general liability insurance and professional liability insurance. Coverage is available to electrical companies as well as self-employed electricians.
• Progressive Commerical. Progressive insures electricians that need standard coverage, like commercial auto insurance or a business owner’s policy, which combines general liability insurance and commercial property insurance at a discounted rate.

How to compare electrician insurance companies to get the best coverage

There are dozens of insurance companies that sell coverage for electrical businesses. However, not all insurers are created equal. To find the best electrical business insurance carrier, it’s important to compare multiple companies. Follow these steps to find the best insurance company for your business:

1. Coverage options. Every electrical business has different insurance requirements. When comparing companies, look at the coverage options available and choose an insurer that offers the types and amounts of coverage you need based on your potential risks.
2. Third-party ratings. These can help you better understand an insurer’s customer service reputation and overall client satisfaction. It’s a good idea to check company ratings from reputable organizations like J.D. Power and the National Association of Insurance Commissioners (NAIC).
3. Financial strength. Choose an insurance company that has an excellent or superior financial strength rating from AM Best. Financially stable insurers are able to meet policyholder obligations and pay claims. Companies that aren’t financially strong are at a higher risk of bankruptcy and may have a harder time paying claims.
4. Online tools. If you prefer to handle your insurance needs online, look for companies that offer online tools such as policy management, claims handling, live chat and risk-management resources.
5. Cost. Before you purchase business insurance, get personalized rate quotes from a few different carriers. This will help you find the cheapest premium for the type and amount of coverage you want.

How to get the best coverage for your electrical business

Use these strategies to get the best insurance coverage for your business:

1. Consider your unique risks. Think about the risks that your business faces based on your industry, services, location and number of employees. Purchase policies that cover the potential risks you face, and choose coverage limits that offer adequate financial protection.
2. Find out what coverages are required. Your business might be required to carry certain types of insurance to satisfy local laws, client requirements, or contractual agreements. Make sure to provide certificates of insurance to relevant stakeholders, like your landlord.
3. Read the fine print of your policy. Every commercial insurance policy has different exclusions. It’s important to understand what is and isn’t covered. You might need to purchase other policies or add endorsements to fill gaps in your basic coverage.
4. Compare quotes. The cost of business insurance depends on many factors, and some policy types are more expensive than others. Before you purchase any insurance policy, compare quotes from at least a few different insurance companies to find the best coverage at the most affordable rate.

What our expert says

Q: What’s one of the big benefits of having the right small business insurance?

Brian White Vice President of Product Strategy at specialty insurer AmTrust Financial

"The right insurance policies enable stability and peace of mind, allowing business owners to focus on what they are most passionate about and do best – growing and running their business – without fearing how these unexpected events could impact them financially."