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Five of the Most Common Insurance Types for Electrical Businesses

March 4, 2022

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In any line of business, risks are a part of success. Everything depends on how prepared you are in neutralizing these threats. In an electrical business, property or personal damage is bound to happen sooner or later. There could be times when you find yourself stuck between the property damage, accident of a company vehicle, or accident to personnel at your site all at once—in such cases, the cost involved is always expensive.

Insurance can come in handy at times like this, and there are dozens of insurance policies available in the market. Choosing the right type of insurance is a challenging task. Business insurances are designed to protect the business owner’s assets financially and legally. Here’s all you need to know about different types of insurance policies for electrical businesses.

Types of insurances for electrical businesses

It doesn’t matter if you are running the business in a town or a city, as a self-employed contractor, a small electrical business, or a large-scale electrical business; you need to invest in insurance policies to stay protected.

Listed below are some of the must-have insurance policies any electrical contractor or electrical business needs to invest in:

  1. General liability insurance
  2. Professional liability insurance (E and O)
  3. Commercial property insurance
  4. Workers’ compensation insurance (for the people you hire)
  5. Commercial auto insurance

Listed below are some nice-to-have policies that you can consider investing in:

  1. Life insurance
  2. Business interruption insurance
  3. Equipment insurance
  4. Cyber insurance

Essential insurance policies

Electrical businesses definitely need to invest in a group of insurance policies to cover their risks and protect their assets. Regardless of the size, the electrical contractor or business insurance costs depend on their business operations, the policies they buy, and how much coverage they need. Electrical contractors’ insurance costs may typically range from $350 to $7,000 per year, depending on the coverage opted.

General liability insurance

General liability insurance or electrician liability insurance is always taken by general contractors or carpenters, as their risks are higher. This insurance helps pay the charges related to third-party injuries and property damage.

Do clients frequently visit you on your premises? Do you work on-site at your client’s place? If your answer is yes, you need a general liability insurance policy. Accidents tend to happen no matter how much care you take.

What will happen if a client visiting your place trips and falls accidentally on your property and needs hospital treatment? Imagine an instance where your employee who was doing wiring work at a client’s place trips and falls. Let’s assume that you damaged a priceless artifact in your client’s place while working and are being sued for it.

In such instances, can you bear the costs for all damages? Can you manage the legal charges? If not, general liability insurance is your best choice. Ideally, general liability insurance covers costs like:

  • Damage to client’s property
  • Injury to someone at the workplace
  • Personal injury
  • Medical payments
  • Repairs or replacement costs
  • Legal fees

While businesses don’t have a compulsion to subscribe to this insurance policy, continuing without this can be quite risky.

Professional liability insurance

Professional liability insurance (errors and omissions) covers the penalty against any mistake or negligence in your work. If a client is pressing legal charges against you for faulty wiring, this insurance policy will protect you in a lawsuit.

Let’s say the house caught fire due to a wiring issue that you did a few months ago, and the client is about to sue you for the same; this insurance protects you from the lawsuit. The best aspect of this insurance is that you can claim your legal electricians’ insurance, even when the chances for that claim are slim to none.

Commercial property insurance

As the name suggests, this insurance policy protects businesses against any company property damage – tools, fire accidents, storms, theft, and vandalism. Commercial property insurance gives complete coverage for your building along with everything in it, like furniture and equipment, exterior signs, fence, landscaping, and inventory.

Workers’ compensation insurance

Workers’ compensation insurance is one of the mandatory insurance policies in most states. The rules apply even if you have only one employee working for you. Stakes are high when it comes to penalties on the same.

Although your employees take additional care at work, accidents happen and injuries are a part of the job. This policy covers all the medical expenses and employees’ lost wages if and when they are injured at work.

Commercial auto insurance

Commercial auto insurance covers the damage of your vehicle or damage done to other vehicles. This applies to personal vehicles you drive for work or your business vehicle.

Other insurance policies to consider

While these policies are not mandatory, here are some you might want to consider for a better coverage from all electrical business-related risks.

Life insurance

This policy can be taken if you are running the business in partnership, or a loss of an employee can bring a major block in your business.

Business interruption insurance

This insurance ensures that your business keeps running, or your employee is paid their monthly wages even when a natural disaster occurs. It even covers your employees’ serious illness which affects them for a prolonged time.

Equipment insurance

This insurance comes in handy when you are about to replace your damaged equipment. Have you ever been in a situation where you couldn’t replace vital equipment because you were in a cash crunch? Then, this insurance policy is for you!

Cyber insurance

Because your website can fall prey to a scam exposing your business transactions, this insurance doesn’t just give you the financial support to recover from a cyber-attack; it provides 24/7 technical support as well.


Taking the right insurance policy doesn’t just help you run the business peacefully, but they also take the financial burden off your shoulders. For an electrician – vehicle, equipment, and general liability insurance policies are essential. If you wish, you can also invest in other suggested insurance policies.

Did we cover all critical electrical business insurance policies? Have we missed out on something? Drop a comment and let us know!

If you are an electrical business enthusiast, keep an eye out for our electrical business blogs.


Picture of Shivasankari Bhuvaneswaran
Shivasankari Bhuvaneswaran

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