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Electrical Contractor Insurance Requirements

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If you work as an electrical contractor, then you know how dangerous electrical work can be. You also may or may not be aware of how important it is to hold electrical contractor insurance.

Electrical contractor insurance is designed to protect not only yourself, but also the company you work for, as well as the client. There are many different types of electrical contractor insurance, but most types fit under the umbrella of electrical contractor liability insurance.

Essentially, this insurance is to protect against negligent work and any injuries that occur generally while on the job working as an electrical contractor.

Do Electrical Contractors Need Insurance?

You most likely know that electricians not only run the risk of being electrocuted, but electricians also often work in spaces that can cause fires which will in turn damage property.

Whether it is damage to your own body or the property that you are working on, electrical contractor insurance is incredibly important to keep yourself protected. Depending on which state you live in, electrician insurance can be mandatory. This varies on state and local laws but is almost always mandatory in metropolitan cities.

What are the Insurance Requirements for Electrical Contractors?

Depending on where you operate or work as an electrician, the requirements will vary from state to state. Not only will the requirements vary regarding insurance, but they also vary regarding whether or not you even need a license to operate.

For example, in California, you must have a license, but before you apply, you must hold at least four years of experience at a journeyman level in order to bid on any projects worth $500 or more. On the other hand, in Illinois, no state licensing is required, but all licensing is done at the municipal level. This means that where you perform your job determines the licensing you require.

Despite different regulations for all states regarding licensing, most states do come together regarding one insurance requirement, and that is Worker’s Compensation insurance. This insurance covers medical diagnoses for employees who are injured on the job, as well as covers employee’s medical treatment or income losses.

What Are the Basic Coverages for Electricians?

When working as an electrical contractor, there are a few typical insurance needs. These will protect you in the event of damage that could happen to the property you are working on, injuries to you or other personnel, or even if theft occurs.

General liability

Most businesses hold General Liability coverage, and that is because it covers any injuries to third parties on the job site. General Liability also covers damage to client property. This type of insurance is limited, and it typically does not pay for work that is lost in an accident.

Professional indemnity

Professional Indemnity insurance for electrical contractors is extremely important. This type of insurance is usually reserved for professionals who give advice or offer professional services to any other business.

This type of insurance will cover you if you accidentally supply poor advice. Specifically, this insurance will cover financial loss by a client due to your advice.


Commercial Property insurance is coverage for if you work out of an office space or job site. There are customizable options in which you can purchase coverage for tools and equipment as well.

Worker’s Compensation

As stated earlier, Worker’s Compensation insurance is generally purchased and used by businesses to protect your employees if they become injured or sick at work. Worker’s Compensation insurance will pay the number of benefits that are required in your state. It is typically mandatory to hold this form of insurance.

Commercial Auto insurance

If you plan to be driving a commercial vehicle, or even if you plan to hire an employee to do so, then you will need Commercial Auto insurance. This insurance covers you for damage to company vehicles caused by road accidents, theft, damage, or vandalism.

Electrical Contractor Insurance Cost
Most of the time an electrical contractor’s insurance company will offer you a package deal for the coverage you are looking for. The cost of these packages varies depending on a few factors:

  1. The size of your business
  2. Where you are located
  3. Gross income
  4. Number of employees on the payroll

If you happen to be a one-man show in the countryside of Montana, you will most likely be spending a few hundred dollars per year. If you are looking to insure a huge electrical contracting company in Los Angeles then you might be looking at upwards of $700,000. On average, you should expect to pay under $5,000 annually. The reason the cost is somewhat expensive is due to the risks that are involved with electrical work.

Insurance Cost Breakdown

  • General Liability: Median premium of $540 per year which includes a policy limit of $1 million per occurrence.
  • Worker’s Compensation: Median premium is under $3,275 annually. This greatly varies based on state.
  • Commercial Auto insurance: Median cost per year is around $1,700 with a generic policy limit of $1 million.
  • Professional Liability insurance: Median cost per year is around $1,060, with a policy limit of $500,000 per occurrence, and a deductible of $1,750.

Tips for Getting the Best Deal on Electrician Insurance

If you are looking to save money on insurance, the best way to do so is to purchase a business owner’s policy. This policy bundles General Liability insurance along with Commercial Property insurance. The catch is that you typically get both at a very discounted rate, and are able to protect your property and other risks at the same time.

Comparing policies from multiple insurance companies is also a great way to make sure you get the best coverage for the best price. Whether you are working with an insurance agent, or shopping around on your own, always look at quotes from multiple insurance companies to ensure you’re getting a deal that’s right for you.

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