Electrician Insurance: Best Providers & Guide for Contractors

Why Do Electricians Need Insurance?

Growing your electrical business is an uphill battle that requires constant momentum and progress toward your goal. With the effort required, you want to ensure that progress is protected, and there’s no greater risk to your growth than the pitfalls of not having insurance. 

Insurance is vital for financial protection, as well as protecting your workforce and any other incidents that may set you back. Whether you’re just starting out or looking for additional coverage to grow your electrical services, insurance is a need-to-have in the electrical industry.

Business owner Brian Quinn and COO Vicki Gibiault, from Best Quality Electric, know the need for insurance in the electric industry well.

“In our trade specifically, you're dealing with live electrical power, it's dangerous,” Gibiault told us. “The crew does it all day every day, so they don't really understand that you're messing with people's lives.” 

Speaking to the risks of electrical work, Quinn emphasized, “We’ve had it all happen. One of our guys got stung by a bee in his eye, the silliest of things, but guys cut their hands, you're working around electric live parts, ladders, drills, tools.”

Insuring electrical work matters to customers as well. Knowing an electrician has protection should any unforeseen events occur, such as an accident, injury, or property damage, makes a difference.  

While you should prioritize insurance needs that match the speciality of your company, you’ll still want to find insurance policies that cover:

• Accidental injuries

• Property damage

• Workplace compensation

• Company transport and equipment

• Unintentional faulty workmanship

• Legal fees

In total, you want the right electrician liability insurance to cover any potential losses, accidents, workers’ comp, and legal liability from workplace incidents. To help you figure out the type of insurance coverage that fits your business, we’ll define the most common electrical contractor insurance plans.

Why is it Important to Have a Range of Insurance Coverages?

The amount of risks in electrical work is no secret. You run the risks of causing damage to your company, crew, and even your customers if work isn’t done right. Even the most careful businesses run into occasional hazards that can be entirely beyond their control. 

Investing in a range of coverage is about being prepared for every caution. As your business grows, so do the risks and potential pitfalls. You may expand your services and find your crews in new situations they aren’t trained for, taking on new markets or regions and dealing with environmental hazards you haven’t seen before. Expanding your electrical business without broad coverage is essentially like driving blind. 

Brian Quinn spoke to us about his own experience with unforeseen incidents.

“We had a technician that rolled his car while he was picking up material from my shop,” he said. “This accident happened en route to the job site. So it became a very gray area.”

While the incident was on company time, it took place in the technician's personal vehicle. This presented a challenge of how liable the company was as well as helping get the crew member assistance for his injuries. Without widespread coverage, the risks of leaving your crews and business unprotected to unforeseen incidents is greatly increased. 

“We happen to have an insurance now that is a $4 million insurance,” Quinn added. “That covers me for up to 15 employees using their own personal vehicles. If Vicki was to go to the bank to make a deposit or something and get into a car accident, God forbid, now she's covered under this policy.” 

Some of the most popular electrical contractors insurance policies include:

• Commercial general liability coverage

• Workers’ compensation

• Commercial auto

• Business owner’s policy

• Surety bonds

• Umbrella insurance policy

• Equipment, inland marine coverage

Some of the Best Electrician Insurance Companies to Consider

When beginning your search for the best coverage to choose, why not begin at the top and work your way down?

Below are some companies that offer electrician insurance that you can consider for your electrical business:

1. The Hartford Insurance

The Hartford Insurance is a leader in property and casualty insurance, group benefits and mutual funds. They’re recognized for their customer service excellence, sustainability practices, and focus on ethics.

Best for: Hartford is a top overall provider, offering coverage in a variety of policies for both small and larger companies. Their coverages range from professional liability, to workers’ comp, to auto insurance and more. 

Pros: Policies for small-, mid-, and large-size businesses make them a great choice for businesses needing to scale. 

Cons: They received below-average scores from J.D. Power and limit customers from purchasing coverage online.

2. NEXT

NEXT Insurance touts itself as a one-stop shop for all your insurance needs. They offer protection for your business from accidents, injuries, legal fees and damaged vehicles.

Best for: NEXT is great for businesses looking for Business Owners Policies (BOPs), with up to a $2 million aggregate limit for general liability insurance, and a $3 million aggregate limit for commercial property insurance.

Pros: NEXT allows users to get quotes online and even offers bundling discounts for their variety of coverages. 

Cons: Unfortunately, BOPs aren’t offered in every state and they don’t offer builder’s risk coverage.

3. Insureon

Insureon is a top independent marketplace for online delivery of small-business insurance. They focus on helping business owners compare quotes from top-rated providers, buy policies, and manage coverage online.

Best for: Insureon offers top coverage for electrician contractor businesses, representing a number of electrician companies and offering a range of coverages in all 50 states.

Pros: Their policies specializing in small businesses are perfect for electrician contractors needing focused coverage. They also provide quotes and allow customers to purchase coverage online.

Cons: Their $1 million revenue limit for a BOP makes them a weaker choice for larger businesses. 

4. Nationwide

Nationwide is a Fortune 100 company that offers a full range of insurance and financial services across the country. Including car, motorcycle, homeowners, pet, farm, life and commercial insurance.

Best for: Nationwide covers a large range of protection policies without specializing too heavily in one or the other. What makes this provider stand out is their exceptional customer satisfaction and service.

Pros: Nationwide touts a high J.D. Power rating for customer satisfaction  and has received an A+ (Superior) financial-strength grade rating.

Cons: While their 24/7 customer service is great, it’s almost required as a lot of their coverage limits for policies aren’t disclosed online, and they also don’t sell policies in every state.

5. Farmers Insurance

Farmers Insurance makes up one of the country's largest insurers of vehicles, homes and small businesses while also providing a diverse range of other insurance and financial services products.

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Best for: Farmers Insurance sells a wide range of the essential types of insurance an electrician business can benefit from. These include BOPs, general liability insurance, workers’ compensation, business personal property insurance, commercial auto insurance, builder’s risk insurance, and equipment and tools coverage.

Pros: They provide a nice selection of policies specialized for electricians and their policies have high coverage limits.

Cons: Farmers Insurance doesn’t allow for online quotes or purchases of coverage. Beyond that, they offer no professional liability coverage, and their BOP revenue limits are relatively low.

What Types of Insurance Does an Electrician Need?

When deciding which coverage best protects your business, it’s important to understand the different types of insurance for electricians.

Commercial General Liability Insurance

Electrical contractor general liability insurance covers accidental injuries and property damage related to your work as an electrical contractor.

In many places, proof of general liability insurance is required to obtain an electrical contractor license, or when signing a commercial lease or a client contract.

Electrical contractor liability insurance is essential because it protects your business if your company’s electrical work causes damage on a customer’s property or injures customers.

Some examples of what liability insurance for electrical contractors covers include:

• Repair costs for property damage

• Physical injury to a customer leading to a lawsuit

• Electrical installation problems

Workers’ Compensation Insurance

A workers’ compensation insurance policy pays the medical bills and payroll costs of employees injured while working for your electrical contracting company.

Many states require workers’ compensation insurance for electrical businesses with employees. 

Workers’ compensation insurance ensures your injured employees get medical care and compensation for lost wages if they are injured on the job, and usually protects employers from lawsuits. 

In 2020, nonfatal work injuries and illnesses for electrical and wiring contractors in the private industry numbered 7,800, according to the most recent numbers from the U.S. Bureau of Labor Statistics.

Overall, the construction industry has the highest rate of fatal work injuries of any industry sector, according to recent data from the agency. 

In electrical work, ergonomic injuries caused by repetitive motions or poor lifting practices rank as the No. 1 cause of worker injury, responsible for more workers’ comp claims than other hazards, which include falls, motor vehicle accidents, and electrocution, according to data provided by the Independent Electrical Contractors to the Occupational Safety and Health Administration.

Each state differs on workers’ compensation requirements for employees or for those who hire subcontractors. To find out your state’s requirements, visit your state’s workers’ compensation commission website. 

Commercial Auto Insurance

Electrical service company technicians often travel in company vehicles, driving from one job site to the next.

If your employee is at fault in a collision, it could be costly for your company, especially if it involves injury to another motorist.

Most states require registered vehicles to carry liability insurance.

Just as you protect your personal vehicles with insurance, it’s necessary to have commercial auto insurance to protect your company’s vehicles and provide protection if you or your employees are in an accident.

Commercial auto insurance can protect your company-owned vehicles from:

• Collision damage to another driver’s vehicle

• Property damage in an accident

• Medical expenses arising from a third-party injury

• Theft or vandalism

Commercial Property Insurance

Property insurance for electrical contracting companies protects your commercial property investment, including office space and any tools or equipment stored on the company’s property. 

A commercial property insurance policy typically covers the cost of the building (if owned by the business) and its contents in the event of disasters, such as fire or vandalism.

Business Owner’s Policy (BOP)

One option for small- to medium-sized companies is a Business Owner’s Policy, or BOP.

This policy typically bundles commercial general liability insurance to cover personal injury or damage caused while on the job, and commercial property insurance, which covers repairs and equipment losses at the company’s office and other property used for the business.

To be eligible for most business owner’s policies, your electrical company must:

• Employ fewer than 100 people

• Make less than $1 million in annual revenue

Since a BOP is generally a cheaper option than individual policies, it provides an affordable and flexible option for small-business owners as they look to grow their companies.

Some BOPs also include business interruption coverage to provide electrical contractor business owners with financial assistance if forced to close or relocate for repairs after a covered disaster.

Electrical Contractors Insurance Policies for Additional Liability Risks

Just as it’s crucial to protect your company’s physical investment, it’s critical to protect the quality of your company’s work.

While your company’s commercial general liability coverage protects against damages involving other people’s property, business owners should consider adding professional liability insurance or an errors and omissions policy to cover any unintentional mistakes or mishaps related to a job.

Professional electrician liability insurance can cover legal fees and judgments related to:

• Work errors or mistakes

• Negligence, whether actual or alleged

• Incomplete work

• Inaccurate advice

• Misrepresentation of services or skills

Mistakes occur, even by experienced professionals.

The last thing you want to happen is for one mistake to damage your company beyond repair.

Professional electrician liability insurance covers legal fees and judgments awarded against your company in the event your company faces a lawsuit claiming unsatisfactory work. 

Policy coverage is limited to the company’s owners and employees, so work performed by subcontractors is usually not covered.

Professional electrical contractor liability insurance coverage also does not reimburse non-financial losses or losses caused by intentional or dishonest acts, such as purposely using subpar materials.

If your company is found liable for mistakes that cause damage after a job finishes, an errors and omissions insurance policy covers the cost to repair or redo the faulty work, as well as any legal defense against those claims.

E&O policies primarily used to be for larger general contractors or big businesses.

But, with consumers demanding more from home service companies and a rise in civil lawsuits, insurance providers started introducing more affordable E&O policies to protect small-business owners.

Umbrella Liability Insurance

If a civil suit judgment or other incidents exceed your electrical contractor liability insurance or business owner policies’ limits, an umbrella liability insurance policy gives you assurance that your electrical contracting company can cover the additional costs.

In essence, umbrella liability is a backup policy to provide extra coverage and protection for your company. 

An umbrella liability policy typically provides extra coverage for general liability insurance, commercial auto liability insurance, and employers’ liability insurance, a component that’s often included in workers’ compensation.

Umbrella liability policies do not cover claims related to commercial property insurance or professional liability insurance.

Equipment, Inland Marine Insurance

Tools and equipment are necessities in the electrical contracting industry. It’s important to have protection for stolen tools or equipment damaged in an accident.

Equipment insurance can be added to your electrical contractor liability insurance or business owner’s policy.

It generally offers coverage for small tools, mobile equipment, and equipment less than five years old, but does not cover damage from general use and wear.

More expensive equipment may require inland marine insurance, especially if your company ships high-value products or equipment.

An installation floater is a type of inland marine insurance that covers materials in transit until installed or put to use.

>> Related: 25 Essential Electrician Tools

Surety Bonds

Not technically insurance for your electrical company, a surety bond provides a level of insurance for your customers because it ensures the work is done to professional standards. Many municipalities and states require a minimal surety bond for electrical contractors seeking a contractor license or permit.

A surety bond involves three parties: the obligee, which is the entity requiring the bond; the surety, which is the bonding company that issues the bond and guarantees the work; and the principal, or the electrical contractor.

It’s different from electrician insurance because you repay the surety company for successful customer claims.

Bonds guarantee your work, giving homeowners and business owners the confidence you’ll do the job right. If not, they know they can get reimbursed if they prove they paid for illegal or incomplete work.

What are Electrical Contractor Insurance Requirements?

Electrical contractor licensing requirements vary by state and municipality. In many places, obtaining an electrical contractor license requires proof of general liability insurance or bodily injury insurance, and some require a bond or additional insurance policies.

Texas, for example, requires electrical contractors to obtain a $300,000 general liability policy per occurrence and $600,000 aggregate, or the maximum amount the policy covers in its lifetime, and $300,000 aggregate for products and completed operations. 

It’s important to check in the areas where you perform services to make sure you have all of the necessary licenses, permits, and insurance requirements in place, so you won’t face any legal problems along the way.

How Much Does Electrical Insurance Cost?

The average cost of electrical contractor business insurance varies because business risk factors and specific policy limits determine business policy rates.

Your electrician insurance cost depends on: 

• Location and size of service area

• Company revenue 

• Number of employees

• Technical and business experience 

• Types of electrical insurance policies you invest in

Because you work on a customer’s property in a high-risk profession, your electrical contractor liability insurance and electrical business insurance will be higher than other industries.

Ask your insurance agent for a free quote on a customized insurance policy for electrical contractors.

How much does electrical contractor liability insurance cost?

A typical policy provides up to $1 million to cover a claim and up to $2 million total during the policy lifetime, and costs between $47 and $69 per month, according to one insurance agency and brokerage firm.

Average commercial auto insurance premiums cost between $1,672 to $4,377 annually with a $500 deductible, while contractor tools and equipment coverage costs about $490 annually, according to an insurance holding agency.

Your electrician business might be able to save by bundling some of your electrical contractors insurance into one plan.

When electrical contractors use a business owner’s policy, they pay an average of $500 to $1,006 per year, with a $500 deductible.

Workers’ compensation rates are based on every $100 of your business payroll but vary depending on the state your business is in, risk factors of the industry, and claims history, according to insurance companies.

How Electrical Software Gives You Added Protection

In addition to having electrical contractors insurance, it’s essential to keep track of every aspect of your company, from call tracking to inventory of materials and tools.

ServiceTitan Electrical Contractor Software connects your office with the field and allows for real-time updates, wherever your team is located.

Track jobs and revenue, sort transactions and compile stats to streamline your company’s efficiency and give you the data you need to know and grow. That data could also prove important if your company ever needs to file an insurance claim.

Field monitoring software can take that protection even a step further. Customized dashboards and scorecards can keep you notified with real-time updates on your in-field technicians. Tools like this help you keep your teams sharp, efficient, and safe. Even in worst-case scenarios, the real-time notification can help you get ahead of any in-field incidents or possible accidents.

Our contractor management tools are designed to track everything you require to run your business and the expenses that go with it. Keeping your business covered for any incident requires complete accuracy. You need to know where and how your inventory is doing at all times, including equipment, transport, and other resources. Our inventory manager allows you to stay tapped into every warehouse and even set up templates that can notify you when it’s time to replenish inventory. 

What Is Not Covered By Electrical Contractor Insurance?

While electrical contractor insurance covers most problems that an electrical business will encounter, certain situations are not covered by the average business insurance policy and may require additional coverage.

Typical exclusions include:

• Earthquakes

• Floods

• War

• Radioactive fallouts

• Government seizures

How to Choose the Right Electrician Insurance Policy and Insurance Provider

Whether you’re just starting out and need basic, minimum coverage, or you’re following your company’s growth plan and need additional levels of protection, it’s important to find the right policy and insurance provider.

As with any financial commitment, it’s imperative to do research before you buy.

Before you choose an insurance provider, get referrals and check reviews or complaints.

To determine if an insurance provider is right for you:

• Find out if they are experienced with electrical contractors insurance. 

• Check the financial strength of the provider’s insurance companies.

• Shop around to compare prices and benefits.

A qualified insurance agent will conduct an analysis to help you determine what electrical contractors insurance policies you need and the amount of coverage to adequately protect your company.

Once you know your insurance needs and invest in financial protection, you’ll be ready to take the next step in your company’s growth.