Think of insurance like automobiles. There is a wide range of options from a basic Kia to a fully tricked out Lamborghini. You need to decide what is right for you. The agents at Contractors Liability can discuss with you the various options and get the right policy for a particular situation.
Electrical Contractor Insurance Cost
- The number of employees you have. The more employees you have the more the insurance will cost.
- The type of work you perform. Some work is inherently more dangerous. It is perfectly logical that a contractor who does mainly high voltage work would be charged more for Electrician’s Insurance than a contractor who just does residential work.
- Contractual requirements. Certain jobs especially when you are being hired as a subcontractor for a large project will require you to have increased policy limits and additional coverages. This fact should not worry you too much as these costs should be built into your bid. It is important you are aware of this before you bid. The insurance requirements are often overlooked in the bidding process. If you fail to account for these costs, a profitable job may turn into a break-even job. You can find out these costs upfront to add in these costs to your bid.
- Amount of work performed. The more in sales you have the higher your premium will be. The work you perform (increased sales) means more opportunities for something to go wrong. As a result of the possibility of more things going wrong, your premium will increase.
- Types of Coverage. There are many additional policies and coverages that can be added to basic Electrician’s General Liability Insurance. These include workers compensation, commercial auto, inland marine insurance and Surety Bonds.
What are the different types of policies offered for Insurance for Electrical Contractors?
General Liability Insurance for Electricians
This is the most basic insurance coverage. It protects you from claims arising from your work. There are generally two types of claims. The first is damage you do to someone’s property in the course of your work. For example, a circuit is installed improperly and causes a fire. You would be covered in this example.
The other coverage is injuries to people from your work. An example of this is if you were installing exteriors lights and you dropped a fixture on someone below. You would have coverage under your Electrical General Liability Insurance policy.
The other main benefit of this policy is that they generally contain a duty to defend. What this means in its simplest terms is that if a third party files a lawsuit against claiming you damaged their property or person the insurance company will hire a lawyer to defend you against such claims. More importantly, the cost of the lawyers is in most cases covered under your insurance policy with no cost to you other than your deductible.
This needed if you use your vehicle to transport work supplies like parts, testing equipment, and other tools. Coverage is available for a variety of vehicles including cargo vans and pickup trucks. Do not make the mistake of only having personal liability coverage on your work vehicle. If you have a claim there is good possibility it would be denied if the insurance company finds out you were using a vehicle for commercial purposes.
This insurance is required by law in most States if you have employees. This covers your workers if they are injured on the job. As a side note, the general liability insurance does not offer your employees coverage if they are injured on the job. The cost of this insurance, for the most part, is based on the following:
- Workers compensation insurance is based on how much payroll you have. The greater the amount of payroll the larger the worker’s compensation premium.
- Type of Work. Workers Compensation insurers classify different types of work into different class codes. These class codes dictate what percentage the total payroll will be multiplied by to determine the premium. So, for example, something low risk as an office worker. The percentage might only be 1% of payroll. So if the total payroll was $100,000 the premium would be $1,000 for the year. In some occupations like roofing the percentage can be 75%, So if there was $100,000 the premium would be $75,000. Workers Compensation Insurance for electricians is generally around 20% of payroll.
- Experience Modification. This takes into account your claim history. The basic Experience Modification is 1. If you have a claims-free history you experience modification will be less than one. If you have a poor claim and safety history your experience modification will be greater than one. To help you visualize this I will use the example from above. Electrician A has a good safety history so her experience modification is .8. So for a $100,000 in payroll, she will pay $16,000 for a year. ($100,000 X 20%=$20,000 X .8=$16,000).
\Electrician B with bad safety record has experience modification of 1.2. So he will pay $24,000 a year for the same coverage.
($100,000 X 20%=$20,000 X 1.2=$24,000).
If all your tools where stolen or destroyed you would be in a pickle. No tools mean no way to make money. No money means no way to buy new tools. Inland Marine Insurance for electricians covers your tools if they are lost or destroyed.
Not really insurance but generally lumped together. There are four Basic Types:
Electrician’s License Bond
Electricians may sometimes be required to be licensed or registered. In these instances, the government entity may require a bond to be posted.
Electrician’s Permit Bond
Electrician’s when obtaining a permit may be required to provide a bond to the City before they will issue a permit for a project.
Electrician’s Payment and Performance Bonds.
If you are doing a project for a GC or a Government entity they may require a bond to ensure the work is completed. These types of bonds are based on credit. If your credit score is above 700 and the job is under $400,000 they can be obtained with just a one-page application and signature.
Employee Dishonesty Bond for Electricians
This is a great way to market. Everyone has seen the ads and trucks stating Joe’s Electrical is licensed bonded and insured. This bond covers your clients in the event one of your employees steals anything from the work site. For smaller contractors, I suggest they laminate the bond and show it to their clients when they are presenting their estimates. This goes a long way in some clients eyes and may even get you the job even though your estimate is not the lowest.
Contractors Liability can quote your electrical business today! We understand your insurance requirements and can explain the various options. We are happy to answer your questions and more.