For electricians and electrical contractors, securing appropriate insurance coverage is crucial to safeguard your business against the specific risks inherent in electrical work. Electrical tasks, even those that seem routine, come with hazards that could lead to significant financial losses if accidents occur. For instance, a short circuit can cause extensive property damage, electric shock can result in serious injuries, and equipment malfunctions can lead to project delays. Adequate insurance policies provide a necessary shield against these risks that could jeopardize your business.
This detailed guide will discuss the critical insurance policies necessary for electricians, the anticipated costs, and strategies to minimize insurance expenses. This guide is based on our study of more than 1,000 electrician insurance quotes from leading providers across all 50 states.
To provide comprehensive understanding, we’ve prepared detailed guides for electricians, including topics like General Liability Insurance for Electricians and Workers Compensation Insurance for Electricians. We also have authored guides for electricians in all 50 states, complete with local insurance rate information.
Make sure to look into all the different kinds of electricians that need insurance coverage.
What Insurance Do Electricians Need?
- Sole Proprietors / Self-employed: At minimum, consider general liability. There are no national minimum requirements for Electrical Contractor General Liability Insurance. However policy limits of $1,000,000 single claim $2,000,000 aggregate will be sufficient in 95% cases. As a general rule sole proprietors with no employees are not required to purchase Workers’ Compensation Insurance. As a result, most sole proprietors do not carry coverage. The most important reason you may choose to have coverage is that if you are injured on the job, a sole proprietor Workers’ Comp Insurance policy can help pay for medical expenses and replacement wages while you recover.
- Small Businesses (less than 5 employees): All of the above, plus workers’ compensation, tool and equipment insurance, commercial auto if you use a vehicle for work, and property insurance if you own or lease a building.
- Medium to Large Businesses (5+ employees): All of the above, plus umbrella insurance, employment practices liability insurance, cyber insurance, and potentially errors & omissions insurance if you’re designing electrical systems.
Similarly as your business grows and you offer more complex or higher-risk services, your clients might require higher limits or additional policies such as professional liability insurance. While specific requirements differ by state, here are the primary insurance policies carpenters need:
General Liability Insurance for Electricians:
Electricians Liability Insurance, also known as General Liability Insurance, protects electricians from claims of injury or damage to others. Coverage includes bodily injury, property damage, personal and advertising injury, products and completed operations, damage to premises rented to you, and medical payments, along with legal defense fees. It’s important to note that this insurance covers third-party claims, not employees. Workers’ Compensation insurance is required for employee coverage.
- Liability Limits for Electricians: Typically, $1 million per occurrence and $2 million aggregate. Experts recommend a minimum of $1 million for adequate protection. Upgrading from $500k to $1M coverage usually slightly increases premiums but provides significantly better defense.
- Liability Premiums for Electricians: Ranges from 0.6% to 1.5% of annual revenue.
- Premium Examples by State and Revenue: Premiums vary based on state and revenue levels. For example, in California, premiums for $1M revenue can range from $7,900 to $13,500, while in Texas, they range from $6,100 to $11,300.
Key Factors Influencing Liability Premiums for Electricians:
- Revenue: Higher revenue implies more work and higher risk, leading to increased premiums.
- Policy Limits: Higher limits for specific projects or contracts may raise costs.
- Claims History: A history of frequent claims can result in higher premiums, similar to auto insurance.
- Location: States with stricter regulations may have higher insurance costs.
- Services Offered: Different electrical services have varying risks, affecting the insurance premium.
Here are average General Liability premiums for electricians by state and revenues:
| State | $150K Revenue | $500K Revenue | $1M Revenue |
| California | $3,100 | $4,900 | $10,700 |
| Texas | $1,900 | $5,000 | $9,500 |
| Florida | $2,300 | $5,700 | $8,300 |
| New York | $4,700 | $14,100 | $27,500 |
| Pennsylvania | $2,200 | $6,300 | $12,300 |
| Illinois | $2,100 | $6,700 | $12,600 |
| Ohio | $1,200 | $3,400 | $6,600 |
| Georgia | $1,700 | $4,400 | $8,500 |
| North Carolina | $1,100 | $2,800 | $5,600 |
| Michigan | $1,400 | $3,800 | $7,400 |
Here are favorable General Liability premiums for electricians as well as potential savings calculated off the average premiums above:
| State | $150K Revenue | $500K Revenue | $1M Revenue | |||
| Favorable Rate | Implied Savings | Favorable Rate | Implied Savings | Favorable Rate | Implied Savings | |
| California | $1,700 | 45% | $3,800 | 22% | $7,900 | 26% |
| Texas | $1,300 | 32% | $3,700 | 26% | $6,100 | 36% |
| Florida | $1,800 | 22% | $4,600 | 19% | $6,700 | 19% |
| New York | $2,700 | 43% | $8,300 | 41% | $18,900 | 31% |
| Pennsylvania | $1,200 | 45% | $4,000 | 37% | $9,000 | 27% |
| Illinois | $1,800 | 14% | $4,900 | 27% | $8,000 | 37% |
| Ohio | $700 | 42% | $2,400 | 29% | $4,200 | 36% |
| Georgia | $1,000 | 41% | $2,300 | 48% | $5,000 | 41% |
| North Carolina | $600 | 45% | $1,200 | 57% | $2,400 | 57% |
| Michigan | $800 | 43% | $2,800 | 26% | $5,600 | 24% |
Workers’ Compensation Insurance for Electricians
Workers’ Compensation Insurance is essential for electricians, providing coverage for employee injuries or illnesses related to work. The premiums are based on job risk, classified by the National Council on Compensation Insurance (NCCI) into class codes. Electrical contractors often fall under code 5190, with rates usually between $1.80 to $3.90 per $100 of employee payroll annually.
WC Limits for Electricians: These are often unlimited but can vary according to state regulations.
WC Rates for Electricians: Between $1.80 and $3.90 per $100 of payroll.
Key Factors Affecting WC Premiums for Electricians:
- Class Codes: Group employees by job type and risk; higher risk means higher premiums. Electricians commonly use code 5190.
- State Regulations: States dictate workers’ compensation laws, influencing benefits and baseline rates. Geographic differences in living and healthcare costs also affect premiums.
- Experience Modifier: Reflects your safety record, starting at 1.0 and adjusting based on claims history. More incidents result in higher modifiers and premiums.
- Payroll Size: Calculated as (payroll / $100) * rate * experience modifier, with larger payrolls leading to higher premiums.
This insurance is typically mandatory if you have employees. It covers employee medical expenses, rehabilitation, lost wages, and even death benefits in case of job-related injuries or illnesses. For employers, it also provides legal coverage and compensation in case of employee lawsuits related to occupational injuries or illnesses.
Most and least expensive states for Electrician Workers Compensation Insurance:
| State | Premium per $100K Payroll |
| New York | $6,550 |
| New Jersey | $4,980 |
| Florida | $4,130 |
| Hawaii | $3,970 |
| South Carolina | $3,940 |
| State | Premium per $100K Payroll |
| Oregon | $1,160 |
| West Virginia | $1,300 |
| Arkansas | $1,330 |
| North Dakota | $1,350 |
| Indiana | $1,370 |
Commercial Auto Insurance for Electricians
Commercial Auto Insurance is crucial for electricians, covering vehicles used for business in case of accidents. The typical premium ranges between $1,500 to $3,500 per vehicle annually.
Typical Policy Limits: Generally set at $100k/$300k/$100k. States have minimum requirements, but higher limits up to $1M are often recommended for comprehensive protection. Additional coverage may be necessary for valuable equipment transported in business vehicles.
Factors Affecting Premiums:
- Number of Vehicles: More vehicles increase accident risks, leading to higher premiums.
- Vehicle Type: Larger vehicles, like vans and trucks, have higher damage potential, thus higher premiums.
- Driver Records: Drivers with past accidents or violations can increase premiums.
If your business owns vehicles, this insurance protects against damages involving your business vehicles and includes liability coverage for physical damage and bodily injury. It’s specialized for vehicles used for business, covering situations not included in personal auto policies. This is essential even if you use personal vehicles for work, as personal auto insurance typically doesn’t cover incidents during business use. Contractors using personal vehicles for work must be aware that personal auto policies won’t cover accidents or damages incurred during work-related activities. Without commercial auto insurance, you could be financially liable in the event of a work-related vehicle accident.
Surety Bonds for Electricians
While not insurance, surety bonds provide a layer of protection against defective workmanship or materials for a specific time after project completion. They differ from insurance in that if a claim is made against the bond, and the surety company pays out, they will seek reimbursement from you for any amounts paid due to the claim. This makes them an essential aspect of maintaining professional integrity and financial responsibility in the electrical field. Many states require electricians to have a surety bond for licensing. The cost of these bonds is a fraction of the bond amount, usually between 1% and 5%, with typical bond amounts ranging from $5,000 to $25,000.
Typical Bond Amount: Varies by state. For instance, California mandates a $25,000 bond, whereas Texas doesn’t have a statewide requirement, though many local jurisdictions do. It’s crucial to check with your local licensing authority for accurate bond requirements.
Cost Factors:
- Bond Amount: Higher bond amounts lead to higher costs.
- Credit Score: Lower credit scores can result in higher premiums due to perceived higher risk.
| Bond Amount | Excellent Credit | Good Credit | Bad Credit |
| $5,000 | $100 – $150 | $150 – $200 | $200 – $400 |
| $10,000 | $100 – $300 | $300 – $500 | $500 – $1,000 |
| $15,000 | $150 – $400 | $400 – $750 | $750 – $1,500 |
| $20,000 | $180 – $500 | $500 – $1,000 | $1,000 – $2,000 |
| $25,000 | $200 – $500 | $500 – $1,200 | $1,200 – $2,500 |
Additional Insurance Electricians Should Consider
Beyond the essential policies detailed above, here are additional insurance types electricians may need as their business grows:
Inland Marine (Equipment) Insurance for Electricians
Tools & Equipment Insurance is essential for electricians, safeguarding your tools and equipment while in transit or on job sites. This insurance typically costs between $250 to $750 annually.
Typical Policy Limits: Usually set at a $5,000 total limit. Policies often include per-item and per-occurrence limits within the total policy. For instance, a policy might offer a $5,000 total limit with a $500 per-item limit. It’s important to align your coverage limit with the value of your items to avoid overpaying on premiums or facing inadequate coverage for damages. High-value items exceeding $10,000 require inland marine insurance.
Determining Factors for Premiums:
- Equipment Value: More expensive tools and equipment lead to higher potential payouts and thus, higher premiums.
- Risk Environment: Using tools in high-risk locations or areas with high crime rates can increase premiums.
Inland Marine Insurance (Tools & Equipment) is a specific type of coverage for tools, equipment, and certain movable properties. It is vital when working off-site, as commercial property policies may not cover these items. This insurance typically covers portable or transportable property and is broader than standard property policies, ensuring comprehensive protection for business property, including contractors’ tools and equipment, and the property of others.
Commercial Property Insurance
Commercial Property Insurance is vital for electricians, covering damage to buildings, offices, warehouses, and other business properties from vandalism, fire, theft, storms, and other risks. Annual premiums typically range from $500 to $2,000 or more.
Typical Policy Limits: Based on the value of the property.
Typical Premium: $500 to $2,000 per year.
Factors Influencing Premiums:
- Property Value: Higher property values lead to higher premiums due to increased potential payouts.
- Location: Properties in areas with higher risks of natural disasters or crime tend to have higher premiums.
- Construction Type: Properties constructed with fire-resistant materials may be eligible for premium discounts.
Commercial Property Insurance is essential if you own your office building or possess significant business assets. It’s applicable for any commercial building and provides broad protection against a range of hazards, including natural disasters, fire, and theft. This insurance not only secures the building itself but also covers contents like documents, inventory, furniture, and equipment. It’s a key safeguard for maintaining the financial stability of your electrical business.
Umbrella Liability Insurance
Umbrella Insurance provides electricians with additional liability coverage beyond the limits of other policies. For an extra $1 million in coverage, the annual premium typically ranges from $600 to $1,200, with higher-risk businesses possibly paying more.
Typical Policy Limits: $1 million, with larger companies often opting for $2 million or more.
Typical Premium: $600 to $1,200+ annually.
Factors Affecting Umbrella Insurance Costs:
- Business Size: Larger businesses with more significant risks and claims potential usually face higher premiums.
- Services Performed: Specialized or high-risk tasks, such as major construction projects, can increase insurance costs.
- Location: Local regulations, risk levels, and living costs can influence premiums.
- Claims History: A history of frequent claims can lead to increased umbrella insurance premiums.
Commercial Umbrella Insurance is crucial for electricians, covering catastrophic losses that exceed the liability limits of general liability, commercial auto, or commercial property policies. Given that most standard liability policies cap at $1 million, umbrella insurance is a prudent investment to protect against scenarios where damages exceed this amount.
Employment Practices Liability Insurance
Employment Practices Liability Insurance (EPLI) is essential for electricians, providing defense against lawsuits related to employment issues like discrimination, wrongful termination, and sexual harassment. Annual premiums for electrical companies typically range from $800 to $3,000+, influenced by factors such as team size and risk exposure.
Typical Policy Limits: Ranges from $500,000 to $1 million.
Typical Premium: $800 to $3,000+ annually.
Factors Impacting EPLI Premiums:
- Number of Employees: Larger teams increase the likelihood of employment-related claims.
- Revenue: Higher revenues usually mean larger payrolls and heightened risks.
- Claims History: A history of EPLI claims can lead to increased premiums.
- Industry Risk: Electrical services are considered lower-risk compared to industries like finance.
- State Laws: Variations in state employment laws, such as wrongful termination policies, can affect insurance costs.
EPLI covers claims from employees, job applicants, and ex-employees who allege legal rights violations, including issues like age discrimination and wrongful termination. The likelihood of EPLI claims can increase during periods of high unemployment, especially for businesses undergoing downsizing. Policies often extend to third-party claims, which involve non-employees like customers. It’s important to note that EPLI does not cover intentional misconduct, criminal acts, punitive damages, or civil fines. Securing EPLI coverage before any claims or lawsuits arise is vital for mitigating risks.
Cyber Liability Insurance
Cyber Liability Insurance is critical for electricians using technology in their operations. It safeguards against data breaches, hacking, and electronic theft. Annual premiums for small to mid-sized electrical firms typically range from $400 to $1,500+.
Typical Policy Limits: Between $100,000 to $1 million.
Typical Premium: $400 to $1,500+ annually.
Key Factors Affecting Cyber Insurance Costs:
- Revenue: Businesses with higher revenue, holding more customer data, are more attractive targets for hackers, leading to higher premiums.
- IT Infrastructure: The robustness of your cybersecurity measures, such as firewalls and encryption, affects premium rates.
- Data Sensitivity: Handling sensitive client data, like Social Security numbers, can increase insurance costs.
- Industry Risk: Electrical services generally face lower cyber risks compared to industries like healthcare.
Cyber Insurance covers liability for breaches involving customer data, essential for protecting client payment details and personal information. It offers two main types of coverage: first-party, for breaches affecting your systems, and third-party, for liability if a client’s system is breached. The policy typically includes business interruption, computer fraud, cyber extortion, funds transfer loss, and data loss or destruction. As reliance on technology grows, cyber liability insurance is an increasingly important safeguard for electricians.
Professional Liability Insurance (Errors & Omissions)
Errors and Omissions (E&O) insurance shields contractors from financial losses due to mistakes, oversights, or accusations of negligence. Unlike general liability insurance, which covers bodily injury or property damage claims, E&O insurance defends against lawsuits involving financial losses. Consider an electrician who incorrectly wired a building, leading to hefty repair costs for the general contractor. E&O insurance would typically protect the electrician, covering legal fees, settlements, and judgments. Also known as professional liability insurance, E&O is a valuable tool contractors can use to shift risk. While it’s not usually legally required, many construction professionals opt for an E&O policy to guard against potential financial losses stemming from negligence.
Total Cost of Electrician Insurance Programs
Your insurance costs will grow as your business expands. Key factors like team size, years in business, and revenue influence your coverage needs and premiums. Fledgling businesses with few employees and equipment have modest insurance requirements. But as you undertake more complex projects, hire staff, accumulate assets, and produce more revenue, your policies and premiums will expand.
A major factor is your claims history. The longer you function without claims, the more affordable your insurance. On the other hand, frequent claims result in higher premiums. Keep this in mind when evaluating your insurance needs.
Here’s a summary of sample electrical firms, typical insurance policies, and illustrative premiums. Remember every business is unique, so consult an insurance broker familiar with your precise risks. There are carriers specializing in contractors. Collaborating with a broker provides access to suitable carriers, enabling a tailored insurance program. We strongly recommend partnering with an expert who can access appropriate markets and construct an insurance portfolio protecting your electrical company.
| Busineess Type: | Coverages Included: | Total Cost of Insurance: |
| Electrical Contractor Owner/Operator $150K Revenue | General Liability (GL) || $1M per occurrence / $2M total Commercial Auto || $100K/$300K/$100K Surety Bond || $10K Tools & Equipment || $5K | $4,000 |
| Electrician Business 2 Employees $500K Revenue | General Liability (GL) || $1M per occurrence / $2M total Workers’ Compensation || *Required Commercial Auto || $100K/$300K/$100K Surety Bond || $25K Inland Marine || $15K Commercial Property || *Varies Umbrella || $1M | $12,000 |
| Electrician Business 5 Employees $1M Revenue | General Liability (GL) || $1M per occurrence / $2M total Workers’ Compensation || *Required Commercial Auto || $100K/$300K/$100K Surety Bond || $25K Inland Marine || $25K Commercial Property || *Varies Umbrella || $1M | $22,000 |
Get Electrician Insurance from ContractorNerd
Working with ContractorNerd’s extensive network of insurance experts offers invaluable benefits for electricians and electrical contractors seeking to secure comprehensive and cost-effective insurance coverage. By leveraging our deep understanding of the electrical industry’s unique risks and needs, we provide tailored insurance solutions that comprehensively protect your business.
Our exhaustive research, encompassing over 1,000 insurance quotes from leading providers across all 50 states, demonstrates that we offer the most relevant and competitive options available. Whether you are a sole proprietor, run a small business, or manage a larger enterprise, our guides and personalized services cover every aspect of electrician insurance, from General Liability to Workers’ Compensation, and beyond.
With ContractorNerd, you gain access to a network of top-rated carriers, combined with expert advice and rapid quote services, all designed to streamline your insurance experience. We are committed to equipping your electrical contracting business with the right insurance coverage, providing peace of mind and a solid foundation for your business’s continued success and growth. Contact us at ContractorNerd today to discover the optimal insurance strategy for your unique business needs and ensure your enterprise is safeguarded against any unforeseen risks.