How much does insurance cost for electrical contractors?

Electrical businesses spend an average of $57 per month, or $684 per year, for general liability insurance.

You might need a general liability policy in order to sign a lease, become a licensed electrician, or work with some clients.

General liability coverage protects your small business from common risks involving third parties, such as customer property damage or bodily injury. Copyright infringement, defamation, and other advertising injuries are also covered by this policy.

Most policies include product liability insurance, also called products-completed operations insurance, which covers harm caused by a defective product or a completed service. For example, if an electrician's faulty wiring causes a fire, this policy would pay for any damage to the client's home or business.

Below is the average general liability insurance policy for electrical contractors who buy from TechInsurance:

Premium: $57 per month
Policy limits: $1 million per occurrence; $2 million aggregate
Deductible: $250

General liability insurance costs are based on several factors, including the type of electrical work you do, policy limits, the size and location of your business, and any subcontractors or additional insured endorsements you may have.

On average, electricians pay $78 per month, or $937 per year, for a business owner's policy (BOP).

A BOP combines your general liability and commercial property insurance coverage together at a discount. It protects your small business against both property and liability risks, such as stolen business property, a fire at your office, or an accident that harms a client.

This is the average business owner's policy for electrical contractors who buy from TechInsurance:

Premium: $78 per month
Policy limits: $1 million per occurrence; $2 million aggregate
Deductible: $1,000

Many insurance companies include business interruption insurance, also called business income insurance, in their business owner's policies, or you can add it as an endorsement. This policy pays for lost profits and day-to-day operating expenses if a fire, storm, or other incident forces your business to close temporarily.

Electrical companies that qualify for a BOP usually are small in size (less than 100 employees) and low-risk. Learn more about business owner's policy eligibility.

The cost of a business owner's policy mostly depends on the value of your business property. Other factors include the size of your business, your location, the policy limits you choose, and your business revenue.

Electrical companies spend an average of $217 per month, or $2,602 annually, for workers' compensation insurance. To comply with state laws and avoid penalties, businesses with one or more employees typically must buy this type of coverage.

Workers' comp coverage pays for medical bills and disability benefits when you or an employee suffers a work-related injury or illness. For example, if a worker suffers an electrical shock or falls off a ladder, a workers' comp policy would pay for their emergency room visit, pain medication, and physical therapy.

Workers' compensation coverage usually includes employer's liability insurance, which provides financial protection when a workplace injury leads to a lawsuit.

Some states require sole proprietors and independent contractors in the construction industry to obtain workers' comp even if they work alone. It's highly recommended for self-employed electricians, since most health insurance plans can deny claims for injuries that occur on the job.

The cost of workers' comp is based on several factors, primarily the number of employees you have and their occupational risks. Your claims history and the states where your employees are based can also affect your premium.

Electrical contracting businesses spend an average of $140 per month, or $1,682 per year, for commercial auto insurance. Almost every state requires this type of insurance for businesses that own a vehicle.

If your company vehicle is involved in an accident, a commercial auto policy would help pay for any damages, including medical expenses, property repairs, and legal fees. You can also buy comprehensive coverage to gain protection against theft, vandalism, and storm damage.

To protect personal, rented, and leased vehicles used for business purposes, you'd need hired and non-owned auto insurance (HNOA) instead.

The cost of commercial auto insurance depends on many factors, including your employees' driving records, your policy limits, the number of vehicles you own, and the coverage options you choose.

Electricians pay an average of $41 per month, or $494 yearly, for contractor’s tools and equipment insurance.

Tools and equipment insurance is a type of inland marine insurance, which covers business property that's in transit, stored off-site, or used at jobsites.

This policy covers tools and equipment that are stolen, damaged, or destroyed, such as multimeters, voltage testers, pliers, and ladders. However, it doesn't pay for normal wear and tear. It's designed to protect gear that is on-the-go, covering items that are less than five years old and valued at under $10,000.

The cost of tools and equipment coverage depends mostly on the value of your tools and equipment. Another important factor is whether you choose to insure them for their actual cash value (the value of the used item) or their replacement cost (the cost of a brand-new replacement).

On average, construction businesses and contractors pay $65 per month, or $785 per year, for professional liability insurance.

Also called errors and omissions insurance (E&O), professional liability insurance covers financial losses related to mistakes, missed deadlines, and other instances of professional negligence. This includes attorney's fees and other legal expenses if a client decides to sue over unsatisfactory work.

For example, if an electrician's work isn't up to code, this policy would pay for the cost of replacing the faulty wiring.

This is the average professional liability policy for contractors who purchase from TechInsurance:

Premium: $65 per month
Policy limits: $1 million per occurrence; $1 million aggregate
Deductible: $1,250

The cost of professional liability insurance is determined by several factors, including the coverage limits and deductible you choose, business size, the type of electrical work you do, and your claims history.

Small businesses that offer electrical services pay an average of $65 per month, or $775 yearly, for commercial umbrella insurance.

This policy boosts the coverage of your underlying electrician's liability insurance, such as general liability, commercial auto, or employer's liability insurance. When the underlying policy reaches its limit on an insurance claim, your umbrella policy activates to help provide any additional coverage that is needed.

Umbrella insurance is typically available in $1 million increments. It can help you fulfill contractual requirements for higher limits. However, you need to have another liability policy in place before you can buy this coverage.

The cost of commercial umbrella insurance depends mostly on the amount of coverage you buy. The same factors that affect the cost of the underlying policies can also influence your premium.

The average cost of a surety bond for an electrician is $4 per month, or $50 annually.

Surety bonds protect your clients by reimbursing them in the event that your business is unable to fulfill the terms of a contract or agreement. For this reason, you may be required to obtain a surety bond in order to sign a client contract.

Some states require electricians to have a surety bond as part of their legal requirements for a contractor's license. The bond guarantees that your work will comply with electrical codes and other regulations.

As with a fidelity bond, the cost of a surety bond is a small percentage of the total bond amount. Unlike insurance, you'll need to repay the company that issued the bond in the event of a claim.