Setting up an electrician or general contractor business isn't very expensive. Once you have the equipment you need, your ongoing expenses will be low. To prevent financial issues, you should take out a good insurance policy that covers potential problems such as a lawsuit or property damage. Although the chance of these disasters is low, they can cost you hundreds of thousands of dollars and therefore ruin your business.
As part of a comprehensive policy, you will need general liability insurance, professional liability insurance, and property insurance. Most contractors don't have to pay more than $1,000-2,000 per year, but it depends on the location of the business, the value of the assets, and the professional's claims history.
General Liability
One of the most important types of insurance is general liability. Because electricians and general contractors frequently visit people at home, this policy should never be skipped. It protects you against lawsuits filed by customers or members of the public. Most commonly, contractors get sued because they cause damage to their customer's property or because of an accident.
For example, someone might slip and fall as a result of your presence in their home. If they're injured, they can ask for compensation. General liability insurance will pay for the person's medical bills, their loss of income, and your legal fees associated with the case. You can expect to pay between $30 and $100 per month for general liability insurance.
Professional Liability
Professional liability is more directly related to your work than general liability, and it covers issues related to your professional performance. If you make a mistake while at work or act in a negligent manner, your insurance policy will pay for the damage. For instance, an electrician might fail to spot an error with a customer's electrical system, and the home could get damaged as a result.
In this case, the customer has the right to file a lawsuit and ask the electrician to pay for the damage, since the issue should have been spotted and fixed. Professional liability insurance protects contractors in such situations. This policy might also cost $30 to $100 per year. In some cases, you can get specific electrician or contractor insurance, which includes both professional and general liability.
Property Insurance
Contractors almost always visit customers at their homes, so they have to have a van or truck and portable equipment. These items can cost a lot of money, especially if they are bought new. Property insurance can protect you from financial losses if something happens to your possessions, for example if they get damaged in a natural disaster, burned during a fire, stolen, or vandalized.
Usually, commercial vehicle insurance costs around $100-200. You might have to pay more if you also want to have your business equipment insured. Because every contractor has a different amount of equipment, it's hard to estimate the total cost of property insurance.
Is There Comprehensive Insurance for an Electrician?
As you can see, you'll need various types of insurance if you want to be fully protected. Setting up and managing several policies can be a hassle, especially since most insurance companies change their prices on a regular basis. In some areas, there are comprehensive policies available so you don't have to deal with multiple companies. For many contractors, purchasing such a policy is a good idea because it is more cost-effective and less time-consuming.
How Else Can I Reduce My Premium?
Aside from selecting one company for all your insurance needs, there are also other ways to reduce your ongoing costs. First, you should make sure that your policies only cover issues relevant to your business. For example, there's no need to get workers' compensation insurance if you don't yet have any employees. Before you sign up to a policy, check that there are no costly add-ons you don't need.
Next, you can negotiate with insurance companies. If you find a better deal, you can let your company know, and they might lower their price to get you to stay on as a customer. Additionally, you should check how you can demonstrate that you are a responsible person. In some cases, taking defensive driving classes or securing your property with alarms can reduce your premium because you'll be considered less risky by the insurer.
What Else Do I Need?
As you start picking up an increasing number of customers, you'll require more than just a good insurance policy. You'll also need software to help you manage your schedule, write quotes and invoices, process payments, and market your company to homeowners and businesses in your area. Just like with insurance, it's best to select home service software that can perform all these tasks instead of purchasing a separate program for each of them.
ServiceBox is a great choice for small to medium-sized businesses because it's versatile and easy to use. You can start for as little as $20 per user per month, so it won't break the bank. Because there is a convenient mobile app, you can write quotes, update your schedule, and send bills while you're on the go. What's more, the program is compatible with accounting software, so you won't have to enter any data manually.
Every electrician and general contractor needs to take out a comprehensive insurance policy that protects them from expensive lawsuits and property damage. The cost of insurance for an electrician depends on various factors, including their geographical location, their claims history, and the value of their assets. Get in touch with us at ServiceBox to find out more about setting up and running a successful electrician or general contractor business.
