What Kinds of Insurance Do You Need to Cover Your Electrical Business?
When you own an electrical business, it is important to take out policies that will cover you in the event of an accident that incurs a lawsuit. There are also numerous policies available to cover significant losses that you might suffer, such as damage to your commercial vehicle. Having the right insurance can help you avoid major financial setbacks that would otherwise jeopardize the business you worked so hard to build.
Many insurance companies offer business packages, which are essentially bundles of policies that business owners typically use. As an electrician, you should look at both general business insurance and policies that are specific to the needs of your field.
When you perform work as an electrician, you run the risk of being sued by third parties for mistakes or accidents that occur on your watch. There are several types of policies that can act as a financial safety net for you.
Commercial General Liability Insurance
This type of coverage is also sometimes referred to as business liability insurance, and it is standard for most business owner policies. It protects you in the event that your business is accused of causing third-party damage. “Third-party” usually refers to your customers.
Both personal and property injuries are covered by commercial liability policies, provided the accident meets certain conditions and occurs within the course of normal business operations. Intentional acts and professional errors are not covered.
What It Covers
Commercial general liability insurance covers harm done to your customers or other individuals who are not your employees. This includes:
- Physical injuries
- Reputational harm, such as libel or slander
- Advertising injury, such as copywrite infringement
What It Doesn't Cover
Commercial liability insurance does not cover damages incurred by your employees. For that type of coverage, you will need to take out a Workers' Compensation Policy. Damage to your property is also outside the scope of this type of policy, however, it can be covered with commercial property insurance.
Professional Liability Insurance
Professional liability insurance covers you for damages caused by errors you might make on the job. For example, if faulty wiring causes a fire in a building that you worked on, this type of coverage could save you a small fortune if you are held legally responsible. It also covers you against claims that you provided incomplete or unsatisfactory work. This type of policy is sometimes referred to as “errors and omissions” insurance.
Umbrella Liability Insurance
Umbrella liability insurance acts as an extension of general liability insurance. It covers some situations that are typically omitted from general policies. To find out if this type of policy is right for you, you should speak with an agent from the insurance company providing your coverage.
Cyber Liability Insurance
If you keep employee and customer information on the computer you use to do business, you run the risk of compromising their data if it is hacked. Cyber liability insurance is your safeguard against financial fallout from this situation.
Insurance Policies That Protect Your Property
Running a business as an electrician requires a great investment in specialized equipment on top of the basic things that all business owners need. Unforeseen circumstances such as a storm, a car accident, or a robbery can leave you unable to do business and out thousands of dollars. Fortunately, there are several kinds of commercial insurance policies designed to protect your property from theft, loss, and damage.
Commercial Property Insurance
Commercial property insurance covers damages to property that you own or rent for your business. It can include:
- The building where your business is located
- Specialized equipment
With this type of policy, you can submit a claim if you lose business property to a fire or if someone breaks into your location and commits theft. It often includes business interruption insurance, which will cover you if you cannot maintain your operations for a period of time as a result of such an issue.
Commercial Auto Insurance
Electricians who use vehicles to get to and from jobs and to transport parts and testing equipment need to take out a commercial auto policy. Most states actually require you to have some type of insurance on your work vehicle. Even if you use your own vehicle for your business, your personal auto insurance policy won't cover you for damages incurred to or from work. Commercial auto policies are available for cars and specialized vehicles like pick-up trucks and cargo vans.
Contractor's Tools and Equipment Insurance
In the event that your commercial property insurance does not cover all of your specialized tools and equipment or the way you use them, you might want to look into contractor's tools and equipment insurance. It is actually a type of inland marine insurance, which typically covers the transportation of special equipment.
Other Types of Insurance You May Need
Workers' Compensation Insurance
Workers' compensation insurance is one of the most important kinds of insurance for you to have. In fact, most states require employers to carry it. A workers' compensation policy will provide coverage if one of your employees is injured or killed on the job, and you are held responsible for the damages.
Electrical work can be hazardous, and personal injury claims tend to be costly. Worksite accidents often result in hefty medical bills, lost wages, and even reduced earning capacity, so it is essential to have this type of insurance if you have employees working under you.
Key Person Insurance
Another type of policy that may be beneficial to you as an employer, although not required, is key person insurance. This special type of life insurance protects you in the event that a critical person in the company suffers a fatality. It makes your business a beneficiary of that person.
In a commercial context, life insurance can be worth having if you intend to pass your business on to your offspring. Getting a life insurance policy is one way to make a contingency plan for your business and your family in case you pass unexpectedly.
Frequently Asked Questions About Insurance for Electrician Businesses
How Much Insurance Do I Really Need?
There are many types of policies available, and you will need to review your business assets, structure, and risks in order to determine which ones would benefit you. The policies that are essential and, in some cases, required for all electricians are:
- Commercial general liability insurance
- Commercial auto insurance
- Workers' compensation if you have employees
- Commercial property insurance to protect your most valuable assets
How Much Can I Expect to Spend on Insurance for Electrician Businesses?
Rates for policies vary according to the value of what you are insuring, your location, and the insurer. General liability insurance can cost around $540 per year for a policy that has a limit of $1 million per occurrence. The median premium electricians pay for workers' compensation policies is around $275 per month. Professional liability insurance can cost around $90 per month.
How Can I Save Money on Insurance?
Some insurance companies will allow you to bundle several policies together and give you a discount when you do so. For example, commercial property insurance can sometimes be bundled with general liability insurance and several other policies in a Business Owner's Policy (BOP).
The Bottom Line: Get Coverage for Common Accidents and Costly Incidents
When you set out to make sure your business is properly insured, you should have the following situations in mind:
- You or an employee is shocked and injured while at work
- You get into a car accident while driving a vehicle for commercial purposes
- Some of your tools are stolen from a job site
- Your wiring leads to an electrical fire down the road
- You or an employee working under you damages someone else's property
Having the right coverage means being able to go to work with peace of mind. It is worth it to thoroughly analyze your business operations and match your policies to your needs. Speaking with an insurance agent can help clarify what different policies cover and which ones would benefit you.
Protect Yourself and Your Business
When you have built up the expertise and the know-how to run a business as an electrician, it is important to protect your livelihood. Finding the right insurance policies can take some research, but it is both well worth it and necessary. Servicebox provides business software solutions to a number of industries, including plumbing, fire safety, general contracting, and electrical work.
For more resources on how to run your business, check out Servicebox.