02Insurance for Electricians: What Does an Insurance Policy Cover?
There isn't a single insurance policy that works for every electrician. Instead, most providers allow you to customize your insurance to fit your individual needs. Almost every contractor and small business owner needs general liability insurance, which covers them if they are sued by a customer or member of the public. They might also benefit from vehicle and equipment insurance and personal accident and sickness insurance.
There are other policies specific to certain kinds of small companies. Workers' compensation is only necessary if you employ others to work for you, and property insurance is a good idea for anyone who runs their business from a physical location like an office.
General Liability Insurance
General liability insurance is the most important policy because it protects you from lawsuits filed by customers and members of the public. If you accidentally damage someone's property or hurt someone while at their home, they can sue you. You might have to pay for the damage, their medical bills, their loss of income, their emotional pain and suffering, and the legal fees related to your case.
Normally, liability lawsuits cost five to six figures, but if the person is severely injured, you might have to pay $1 million or more. This could ruin your business and even cause bankruptcy. Your general liability insurance pays your legal bills and any compensation the plaintiff is awarded. It might cost you $40-50 per month, but this expense is well worth it.
Vehicle and Equipment Insurance
Electricians need a car or van to drive from one job to the next. Since vehicle insurance is a legal requirement in most areas of the country, you'll have to take out a policy. Depending on your financial situation, you might choose basic insurance, which only covers personal injuries and damage done to other cars, or comprehensive insurance, which also covers the repair and replacement of your own vehicle.
Most electricians get their equipment insured because it might cost them thousands of dollars to replace it. If you're not sure whether you need equipment insurance, think about what would happen if all your electrical tools got damaged or stolen. Would you be able to replace them without any trouble? If so, you don't need a policy, but if not, getting insurance is crucial.
Workers' Compensation
General liability insurance protects you from lawsuits filed by customers and members of the public, but not by your employees. Workers can sue you if they get injured on the job, or if their working conditions aren't adequate.
Even if you're a considerate employer, there's no guarantee that you won't face a lawsuit. In most areas of the country, workers' compensation is a legal requirement, so you have to take out a policy if you have one or more employees.
Personal Accident and Sickness Insurance
What would happen if you got sick or had an accident and couldn't work for a week, a month, or even six months? Would you still be able to cover all your company's bills and your family's cost of living? For most people, the answer is "no."
Personal accident and sickness insurance kicks in when the policyholder is unwell and unable to work. It might help you to cover the cost of your emergency room visit, medical bills, and lost wages. Each policy is different, so it's important to review the fine print before signing up with an insurance company.
Property Insurance
Many independent contractors and small electrical companies don't have their own office or shop. Instead, they run their company from their van, which contains all the tools they need. In this case, vehicle insurance is enough, and the electrician doesn't have to take out property insurance.
As your company grows, you might no longer be able to run your business from home or from your car. Instead, you'll need to rent or buy an office, where your admin employees work. Getting this property insured is crucial. On average, small businesses pay between $60 and $70 per month for commercial property insurance.
Do I Need to Get Insurance?
If you run your own small electrical company, or you're an independent contractor, you'll need to get general liability insurance, vehicle and equipment insurance, and personal accident and sickness insurance. You might also need property insurance if you run your company from a physical location and workers' compensation if you have employees.
But what about electricians who are employed by another business? Do they need insurance, or does the company pay for this? Most electrical businesses already have policies and benefits in place, so you'll be covered if you make a mistake or you get sick and can't work for a while. However, it's still a good idea to speak to your employer. Some things, like your personal tools or vehicle, might not be covered, even if you use them for work.
What Else Do I Need?
To run a successful business, you'll need to remain organized. The best way to prevent mistakes and keep track of your schedule is to purchase home service software. A program like ServiceBox shows you everyone's schedule at a glance and allows you to assign new tasks to your employees. It also helps you to create quotes, work orders, and invoices. Because there are templates, you're much less likely to make a mistake that costs you money.
Home service programs also integrate with your accounting software, so you save time during tax season. Insurance for electricians is important because it protects them from lawsuits, property damage, and the financial impact of a personal accident or sickness. If you're self-employed or a contractor, speak to an insurance agent about your needs. Then, call us at ServiceBox to find out more about home service software and how it can simplify your life.
