Electrical work can be a fairly risky business, with a higher potential for injuries and property damage than many other professions experience. As a result, property and liability claims are fairly common, and having adequate insurance coverage to meet these risks is critical. In this guide, we’ll explain what types of insurance coverage electricians and electrical contractors need, the differences between policy types, how much insurance costs, and what to look for when shopping for electrician insurance. We also highlight some of the top carriers for policies for electrical contractors, including the three below:
- NEXT offers the best electrician insurance for small business
- Affordable policies with discounts of up to 25%
- Provides an easy online shopping experience that has all the essential forms of coverage
Get a NEXT Quote
- State Farm is our top pick for electrician insurance
- Its electrician-specific BOP is an excellent choice for most businesses
- Receives some of the best customer satisfaction scores in the industry
Get a State Farm Quote
- Travelers is a great choice for large electrical contractors
- Offers several specialized coverage options that are unavailable elsewhere
- The company has received excellent customer and financial strength ratings
Get a Travelers Quote
- Why electricians need insurance
- What insurance electricians need
- Additional insurance policies for electricians
- Insurance requirements for electrical contractors
- Insurance cost for electricians
- How to buy electrician insurance
- Comparing electrician insurance providers
- The best insurance companies for electricians
- Frequently asked questions
Why Electricians Need Insurance
Every business faces risks. From fires, floods, and other property damage on-site to accidents affecting employees or customers, operating any enterprise involves potential legal and financial challenges.
Of these threats, one of the most significant is small business liability claims. Employees, customers, subcontractors, rival businesses, and other parties can all bring legal claims against your business for injuries they have experienced. According to a study by the U.S. Small Business Administration, between 36% and 53% of small businesses are involved in litigation each year. Even if your business isn’t in the wrong, you can lose a lot of time and money dealing with claims. The same SBA study estimated that legal defense costs for a typical lawsuit can range from $3,000 to $150,000.
Construction and building trades are particularly risky industries, especially for liability claims. The work inherently carries a higher risk of causing physical injury or property damage. Contractual arrangements between construction businesses and their customers or subcontractors can easily become a source of dispute. Valuable tools and equipment can be lost, stolen, or damaged at building sites. For these reasons, contractors and construction businesses should always carry insurance coverage to minimize financial risks.
Electricians are among the industry specializations that can benefit most from having insurance policies in place. Electrical work is especially risky, with substantial exposure to the sources of property and liability claims. Below are some statistics that illustrate the liability risks faced by electrical contractors:
- Fire departments respond to approximately 32,000 home electrical fires per year causing $1.2 billion in direct damage. Wiring and related equipment account for more than half of electrical fires, civilian fire deaths and injuries, and property damage stemming from home electrical fires.
- Approximately 46 workers per week suffer injuries related to electrical systems. These figures do not include other injuries that could happen when doing electrical work, like falls.
- 126 workers per year experience fatal injuries from exposure to electricity on the job.
Beyond being a wise idea to protect your business from these risks and the associated financial losses, insurance for electricians may be necessary for other reasons too. State regulatory bodies may require electricians to carry certain levels and types of coverage as a condition of licensure. Even if they don’t, many customers may require electricians to have coverage to win jobs.
What Insurance Do Electricians Need?
No one commercial insurance product will address every type of risk exposure that electrical contractors face. Liability claims and other insurable events can come from many causes both directly related to electricians’ work and not.
Most leading insurers offer a variety of commercial coverages and can guide business owners to select the products needed to provide comprehensive coverage. Working with an insurance professional during the shopping process is the best way to choose the appropriate coverage for your business. However, the products described below are some of the most important insurance products to have for electrical contractors.
Electrician Liability Insurance (General Liability Insurance)
The term electrician liability insurance simply refers to general liability insurance, which is the starting place for most businesses obtaining commercial insurance coverage. General liability policies most commonly cover bodily injury, property damage, and advertising injuries that others experience on an insured’s premises or as a result of the insured’s usual business operations. Notably, these policies do not cover claims affecting the insured’s employees and may not cover claims arising from the services or products the insured provides.
The core components of a general liability policy are coverage for property damage and bodily injury; personal and advertising injury; and medical expenses. The first component covers legal fees and damages for claims where a policyholder’s negligence leads to another party’s physical, mental, or emotional injury or damage to their property. The second extends coverage in cases where the personal or intellectual rights of another party have been violated through the actions of the policyholder. The third provides payment for medical bills if someone is injured on the policyholder’s premises or as a result of their business operations, regardless of negligence.
Say you cut holes in the wrong place while installing a new electrical system at a customer’s house. The customer could potentially make a property damage claim for the cost to fix the hole that would be covered under a general liability policy. Alternatively, if one of your workers is up on a ladder to install a light fixture and drops it, hitting a passerby, your business could face a bodily injury claim that may be covered under a general liability policy.
Commercial Property Insurance
Any business with a physical base of operations should have a commercial property insurance policy. Commercial property policies cover offices, storage spaces, and related structures, along with physical assets like furniture, inventory, and business equipment, when they are damaged as a result of perils established in the policy.
Commercial property policies can commonly be obtained as part of a business owner’s policy, which also includes general liability coverage. However, commercial property insurance can also be purchased as a standalone product. Regardless of how you buy the policy, it’s important to understand which of your structures and property will be covered, what perils can be the source of a claim, and whether your property is valued based on replacement cost or actual cash value.
Property damage related to electrical work can be common. With that in mind, it’s important to distinguish between commercial property coverage—which protects your business’s property from perils—and the property coverage that would be included in liability insurance—which provides others compensation for property damage that you may have caused. For example, if there was an electrical fire in your business’s offices, your commercial property policy could compensate you for the costs you bear for any damage or loss. On the other hand, if you caused an electrical fire in someone else’s building, the other building’s owner could be compensated for the damage through your liability policy.
Errors & Omissions Insurance
As the name suggests, errors and omissions insurance covers claims arising from mistakes and oversights committed by a policyholder. Also sometimes referred to as professional liability insurance or E&O insurance, this is important coverage for contractors because it protects policyholders if a customer alleges that the work performed caused some form of damage.
E&O policies cover claims arising from professional negligence and mistakes that occur while performing a service. These policies may also cover misrepresentations and inaccurate advice. Errors and omissions policies designed specifically for contractors also frequently cover claims related to faulty workmanship and defective materials, while many other professional liability policies do not.
Say one of your team members miswired a circuit for the refrigerator in a restaurant kitchen, causing the refrigerator to stop working and the restaurant to close. The restaurant could bring a claim, seeking to be compensated for the costs of fixing the circuit and repairing the refrigerator—along with money lost because of spoiled food and lost income while the restaurant was closed. An E&O policy could help address these costs.
Commercial Auto Insurance
Most work for electrical jobs is done on-site, which means that electrical contractors travel frequently to jobs in the field. Commercial auto insurance policies provide coverage for the business use of vehicles.
Commercial vehicle insurance policies cover several different potential costs for incidents related to the use of vehicles. It is a legal requirement in most places to carry a minimum amount of coverage for bodily injury and property damage to other parties. Policies also usually compensate policyholders for the repair or replacement of vehicles that are physically damaged, along with costs related to medical expenses or personal injuries experienced by covered drivers and passengers as the result of an accident. If one of your business’s electricians was driving a company vehicle to a job site and rear-ended another car, the policy could pay to repair both the company vehicle and the car that was hit, along with any medical payments associated with the accident.
If your business uses large trucks or other specialized vehicles, you may also want to look at commercial truck insurance coverage.
Workers’ Compensation Insurance
Injuries to workers are very common in construction, including for electrical contractors. Workers’ compensation insurance, also referred to as workers’ comp or workman’s compensation, provides payment to employees who are injured on the job.
These policies can pay for workers’ medical expenses, rehabilitation costs, and lost wages arising from work-related illness and injury. Workers’ comp can also provide payments to an employee’s dependents if the employee dies as a result of their illness or injury. These policies additionally protect employers from lawsuits from employees affected by illness or injury. It is important to keep in mind that these policies typically cover only employees and are unlikely to extend to business owners and the business’s contractors.
There are many situations where a workers’ comp policy might come into play because of the heightened risk of injury or death in electrical work. For example, if an employee suffered a bad shock at a job site because an outlet was wired improperly, a workers’ comp policy could pay for any associated medical costs and the workers’ lost wages from time off.
Tools & Equipment Coverage
Working in contracting means moving supplies, tools, and valuable equipment from one job site to another. Transporting tools and other mobile equipment introduces the possibility of valuable resources being lost, damaged, or stolen—which in turn can lead to delays on projects and costly investments for repairs and replacements. However, the property damage coverage included in a commercial property or general liability policy frequently does not extend to property that is moved between locations. For that reason, contractors can purchase a form of inland marine insurance known as tools and equipment coverage.
Tools and equipment insurance can cover items from simple hand tools to expensive specialized machinery. Eligible incidents to be covered include theft, damage, or vandalism during the use, transportation, or storage of equipment. Coverage typically includes payment for repair and replacement of tools, along with costs from lost income or project delays related to losses. For example, if an electrician left some testers at a job site and the tools were stolen while he was out at lunch, the tools and equipment policy could cover the cost of replacing them.
Additional Insurance Policies for Electricians
The forms of insurance coverage described above are the most common forms of insurance that an electrical contracting business is likely to encounter. Having each of the coverages above is advisable, and, in the case of products like workers’ comp, potentially required to run a business. However, there are additionally other specialized insurance products that may sometimes be useful or even necessary for electricians to carry. We detail these forms of coverage below.
Surety bonds are an arrangement where a surety or guarantor agrees to compensate one party (the obligee) when another party (the principal) is unable to fulfill their obligation to the first. The surety can then seek repayment from the principal who obtained the bond. Surety bonds are often a requirement for government bids but are also a good signal to potential clients, subcontractors, and others that any financial obligations they are owed will be met.
A common example in construction is a performance bond, where the surety may compensate a client if the contractor is unable to complete a project satisfactorily. The surety would pay the client in full for losses associated with the project not being complete, and then the contractor would have to pay back the surety for that amount.
Surety bonds are not technically insurance, but similar to insurance, they can provide compensation for parties who have experienced some sort of injury. The main difference, however, is that the principal of a surety bond holds far more risk than an insurance policyholder. This is because a business could be forced to repay the total amount paid out under a surety bond, while under an insurance policy, a business might only need to pay for premiums and their deductible to obtain coverage.
Business Interruption Insurance
Many events that require insurance coverage can be extremely disruptive to a business, often rendering a company unable to operate or forcing them to work out temporary arrangements. A fire that destroys the main office or the theft of a key vehicle or piece of equipment is challenging not just for the cost and hassle of repairs or replacement but for the potential lost business that results.
Business interruption insurance is a form of coverage that provides financial assistance if a loss forces a business to close temporarily. Most commonly, interruption insurance may cover regular costs like mortgage or rent, taxes, and payroll during a loss. If a business incurs additional costs related to the loss—such as needing to relocate, finding a temporary space, or training employees to use new equipment—policies may cover that as well. And perhaps most importantly, policyholders may be eligible to receive payment for estimated revenues lost as a result of a closure.
Business interruption insurance typically is not sold as a standalone coverage because eligibility is often related to losses under other policy types. Instead, interruption insurance is usually included in a BOP or as an endorsement for other types of property or liability coverage.
Commercial Umbrella Insurance
For larger electrical contracting businesses with high levels of risk exposure, standard coverage limits on liability policies may not be sufficient to cover the cost of claims in full for the policyholder. For example, if a business is sued for a professional liability claim and loses a $2.5 million judgment, but their policy has a limit of $2 million, the business would still be on the hook for the remaining $500,000.
Commercial umbrella policies increase coverage limits for policyholders on their existing liability insurance policies. This coverage can add between $1 million and $15 million to the aggregate limits for liability claims across many of a business’s liability policies. Umbrella policies may also be broader in coverage than the underlying liability policies, such as having a greater geographic coverage area.
These policies can be purchased if a business holds other liability coverages like general liability, professional liability, employment practices liability, or the liability portions of a commercial auto policy. However, it is important to note that the coverage under an umbrella policy may not have the same terms as an underlying policy, so it is important to review the language of an umbrella policy to understand what additional coverage is available.
Electrician Insurance Requirements
Insurance is not just a good idea for many electrician businesses—it is often a requirement by law. Because of the risks associated with electrical work, the profession frequently has regulatory requirements imposed by state governments that involve insurance.
Most commonly, carrying a certain amount of liability insurance is a requirement of licensure for electricians in certain states. This helps signal to potential clients and the public at large that there can be recourse if an electrician’s work causes damage or injury.
Requirements to carry insurance can be imposed on electrical contractors in other ways too. Liability insurance or bonds are sometimes a requirement to bid on government construction contracts to minimize financial risks when public dollars are involved. Other forms of coverage, like workers’ compensation insurance, may be a requirement for all businesses in a state, regardless of whether they work in the electrical or contracting fields.
The best way to find information about what insurance policies you’re required to carry as an electrician is to contact your state insurance department and any licensing bodies in the jurisdictions where you operate. It’s also worth noting that prospective clients and customers may have additional requirements above what a regulatory body might require. Just because your coverage meets the minimums to operate in your jurisdiction does not mean that you won’t need to obtain additional coverage. You should review bidding information and contract terms to make sure you have the right coverage for your work.
Below are the forms of insurance that are most often required for electricians and some information about when and why those policies may be required by law.
Workers’ Compensation Insurance
Every state has requirements for employers to carry workers’ compensation insurance with the notable exception of Texas. These requirements can vary by the number of employees a company has: some states require any business with employees to hold workers’ compensation policies, while others may only require it for businesses with a certain number of employees.
In sum, unless you are operating without employees, your business will likely need to obtain workers’ compensation coverage, and your state’s insurance and/or labor departments can provide more details about minimum coverage. Having a policy in place not only supports your workers and minimizes the risk of lawsuits against your business but also ensures that you will avoid fines and criminal penalties—including jail time in certain jurisdictions.
General Liability/Errors & Omissions
Most states don’t require businesses to carry general liability insurance policies, but coverage may be required as a condition of electrician licensing in many jurisdictions. In addition to completing exams or a certain number of training hours, many states require an electrician to show proof of liability insurance to get licensed and legally operate in that location. In addition to differences by jurisdiction, requirements can vary within a state for apprentice, journeyman, or master electricians and electrical contractors.
E&O policies can also be required for some jurisdictions and occupations as a condition for licensure or operation. This is more common for professional fields that involve advising clients, like law or real estate, but could apply to electricians and other construction-related fields in some locations. It is more likely that electricians will encounter E&O requirements in a contract agreement than in industry laws or regulations, but it is worth checking in your jurisdiction to make sure that you have the appropriate types and amounts of liability coverage.
Like proof of liability insurance, state and local authorities may require an electrician to have a surety bond or a statement of bonding ability to get licensed as an electrician or pull a permit for projects. The latter is not technically a surety bond but rather a confirmation from a surety bond provider that the electrical contractor would be able to acquire a performance bond sufficient for the work they may be contracted to do.
The federal government and many state and local jurisdictions also impose surety bond requirements for public construction projects so that taxpayer dollars are not put at risk if a contractor fails to perform as promised. If you plan to bid on public jobs, you should make sure to understand what the bonding requirements are for procurement in the states or localities where you work. Subcontractors on public jobs may not be required by law to hold bonds, but prime contractors who are subject to such requirements often try to minimize their own risk by requiring subs to obtain performance bonds as well. This means that you should also discuss bonding requirements with any other contractors if you plan to serve as a subcontractor on a project.
In almost every state, any vehicle on the road must have a minimum amount of auto insurance. This is true of both personal vehicles and commercial vehicles, whether they are owned by the business or personally owned but used for business purposes. Insufficient auto coverage could lead to tickets, fines, or other penalties—in addition to greater legal liability risks in the event of a car accident.
State requirements for commercial auto insurance typically set a minimum liability limit for personal injury per person and per accident and property damage per accident. Minimum legal limits may be higher depending on the type of vehicles to be insured, and contractors often fall in the more expensive category because they travel more frequently and frequently have larger and more specialized vehicles.
Types of Electricians Insurance Summed Up
|Is It Required?
|Third-party claims of bodily injury or property damage
|Sometimes, for licensing and certain contracts
|Errors and omissions
|Third-party claims of professional mistakes
|Sometimes, for licensing and certain contracts
|Insurance for your business vehicles
|Payments related to employees injured on the job
|Tools and equipment
|Theft or damage to your tools and equipment
|Property damage to your business property
|Sometimes, for satisfying a mortgage or lease agreement
|Contractor license bond
|Sometimes, for licensing and certain contracts
|Loss of income
|Losses in excess of policy limits
|Claims of mismanagement
Electrician Insurance Costs & Premiums
With the number of different coverages that electricians should be carrying, it’s hard to avoid the fact that the cost of insurance can add up to be quite expensive. These policies can protect electrician businesses from much larger financial or legal risks when things go wrong, but insurance costs can be a major overhead expense. For that reason, any electrician business owner needs to make sure that they purchase good coverage at a fair price.
Whether shopping for policies as a new business or reevaluating your existing coverage, you should go into the shopping process knowing what to expect in terms of costs and what factors contribute to the amount you pay. We will dive into all of this below.
How Much Does Insurance for Electricians Cost?
The actual costs you pay for electricians insurance will always depend on factors specific to your business and coverage needs, which we detail more below. Suffice it to say that the costs for a one-man shop with a limited amount of work or property to cover will be much lower than for a large, complex operation. This difference could amount to thousands of dollars in premiums each year. Because costs are so tied to the type of business being insured, the best way to get accurate information about your insurance costs is to obtain quotes from different insurance providers.
However, many insurers and other industry experts provide general information online about what different policies cost, which allows you to get a sense of what your total needs might look like. In the table below, you can find a range of costs for different policy types and amounts of coverage.
|$300K-$1M per occurrence
|Errors and omissions
|$250K-$2M per occurrence
|$1,000-$3,000 per vehicle
|$100K-$1M per accident/disease
|$1-$2 per $100 of payroll
|Tools and equipment
|$3K-$10K per occurrence
$3K-$5K per item
|Dependent on amount of property insured
|$400 to $1,500
Factors Affecting the Cost of Electricians Insurance
The premiums that a policyholder pays toward insurance coverage are a reflection of how risky the insurer believes the policyholder to be. Insurance carriers set higher rates for companies that have more risk exposure because it is more likely that they will have to pay out costs associated with a covered claim. Less risky businesses can usually get away with paying less for coverage.
One of the key cost factors working against electricians and other businesses in construction or building trades is the industry itself. Due to the nature of the work, injuries or property damage are more common than in most fields, leading to frequent workers’ comp and liability claims. Travel to job sites requires commercial auto coverage, and tools and equipment may be at greater risk of loss or theft on location. According to research from insurer Swiss Re, construction and related companies pay the most for insurance out of any industry.
Electricians can’t change the impact that industry has on insurance policies, but other factors that affect the cost of electricians insurance may be more specific to individual businesses. Below are some of the key elements that affect your electrician insurance premiums.
Growth is a sign of a successful business, but having a larger operation also increases the likelihood of a variety of claims. This means that larger electrical contracting businesses should expect to pay more for insurance coverage.
A larger workload of projects increases the exposure to liability claims from customers or third parties. A growing employee headcount will impact workers’ comp and increase potential exposure to employment practices or employee benefit liability claims. For coverages like commercial property, commercial auto, or tools and equipment, larger businesses will have more property and inventory that could be subject to a loss. Essentially, when there is more business to insure, the costs will be higher.
While many claims are not the fault of the policyholder, the number of claims filed against a business over time is often a factor in how insurance companies set their rates. In some cases, a track record of claims is an indication that the business is riskier to insure, and carriers adjust premiums accordingly.
E&O liability claims may be especially concerning for insurers because this could indicate that the company is generally negligent or sloppy in its work. Similarly, a company with numerous auto accidents may see increased premiums as a result. A high volume of workers’ comp or employment practices liability claims can suggest that worker safety and HR practices are consistent problems that could produce future claims.
Conversely, a limited history of claims can work in policyholders’ favor. Some insurers offer discounts or lower premiums for policies after certain periods without a claim.
Where your business operates is another primary factor in the cost of insurance. One reason is differences in state law: certain states require minimum amounts of coverage for policies like workers’ comp or auto insurance, but these amounts vary. States that have higher minimums will also likely come with higher premiums. Differences between states can also affect the costs associated with liability policies. This is because state courts may have different rules around statutes of limitations for liability suits or how much can be awarded in damages in a lawsuit. States that make it easier to sue or that don’t limit damages may have more expensive liability policies.
A business’s location also affects how likely an insurer believes claims are to occur. This is especially important for property and auto insurance. For example, commercial property costs might be impacted by weather conditions or crime rates in an area, while auto insurance rates might be impacted by whether a company operates in a high-traffic area.
Policy Limits & Deductibles
One way that companies can save on the cost of insurance policies is by taking on more risk themselves in the form of lower amounts of coverage or higher deductibles. Higher deductibles mean that the policyholder will pay more toward a claim upfront before coverage kicks in, while a lower limit means that the policyholder will take on greater costs above what the insurer is willing to pay. Because this reduces what the insurer might have to pay out for claims, policyholders can get lower rates with these adjustments. For electricians who want to carry less direct risk, purchasing higher policy limits or opting for a lower deductible will usually come with higher premiums.
Finding the Best Electrician Insurance
With so many requirements and considerations for different policies to keep in mind, shopping for electrician insurance can be a hassle. But carefully considering different providers is important and worth taking the time to do right. Choosing the wrong insurance carrier could leave you paying far more for your policies than you might with a competitor, or you might wind up with policies that leave you underinsured or have conditions and exclusions that make it difficult to get claims covered.
This section of our guide to electrician insurance will give you tips for finding the right insurance company and policies to meet your business’s needs.
How to Buy Electricians Insurance: Individual or Bundled Policies?
As the sections above make clear, there is a wide variety of insurance policies available to electricians to cover the risks that they might face. Finding the right coverage for each of these policies can mean hours of research and consultations, complicated arrangements with multiple insurers providing different types of coverage, and high costs for a comprehensive set of policies.
Increasingly, insurers are addressing this problem by creating packages of insurance policies that are specifically tailored to the needs of electrical contractors. These bundles are available through both established insurance giants like Travelers and newer brands like NEXT and THREE.
There are pros and cons to both shopping for individual policies and choosing a bundle. Here is how each option stacks up on different factors:
- Simplicity: Shopping for individual policies is a time-consuming endeavor. You usually need to look for different types of coverage across different providers to know what the best coverage or prices look like. Choosing a bundle allows shoppers to obtain most of the key coverages they need in one policy or collection of policies. This approach is also easier for managing the policies over time.
- Cost: One of the most common ways to save in the insurance industry is through multi-policy discounts. Most major insurers will offer savings to policyholders who obtain multiple forms of insurance from that carrier, which means that people who opt for a bundle typically can access cost savings. Multi-line discounts of 10 to 15% are fairly typical. However, in some cases, the combined cost of a bundled policy may still exceed what you could pay for individual policies, especially if the bundle includes more coverage for certain lines than your business needs.
- Customized Coverage: Providers of bundled policies may do some tailoring based on factors like the size of your business or the jurisdiction where you operate, but these policies tend to be more geared toward general coverage needs within your industry. With individual policies, you may have more flexibility to “right-size” your insurance coverage by adjusting your limits and adding endorsements or other terms to meet your specific requirements. If you value having policies that are more precisely designed for your specific risks, shopping for individual policies may be the way to go.
Comparing Electrician Insurance Providers
The commercial insurance market has many providers in it, each offering its own pros and cons for coverage. When shopping for electricians insurance, you should evaluate a handful of providers to make sure that you are getting quality coverage and great customer service at a reasonable price. Here are some of the key considerations to keep in mind when looking for insurance as an electrician.
Available Policy Types & Limits
One of the first questions to ask when considering an insurer is the types of policies they have available. Because electrical contractors may need a collection of different policies to cover all of their risks, you may find that you need to look at multiple insurance companies to obtain the right coverage. Online research or conversations with an insurance agent or broker can give you information about what different carriers offer.
Almost every business insurance company provides products like general liability and commercial property insurance, and many more will have policies like workers’ comp or commercial auto. But as coverage becomes more specialized to the industry, the options available might become more limited. For example, if you need surety bonds or contractors’ E&O coverage, you may have a smaller pool of insurers to choose from.
Another related consideration is how much insurance you’re able to obtain on each policy. Carriers might offer a standard policy limit or recommend a certain amount of insurance coverage based on the characteristics of your business. However, the ability to purchase additional coverage or to obtain higher limits per occurrence is important for providing peace of mind and allowing your business to take on more risk as it grows.
With the number of different coverage types that electricians need, the cost of insurance can add up quickly. Shoppers are always looking for good value from insurance providers to help manage those costs.
As discussed previously, many factors impact what rates companies are willing to offer a potential customer for particular policies. While these are hard to change, different insurers may weigh risks and calculate rates differently. Obtaining quotes from different insurance companies or working with a broker is the best way to compare insurers’ rates alongside the quality, type, and amount of coverage they offer.
You will also frequently find that insurance carriers have some flexibility in pricing that allows you to save on premiums. For example, you may be able to adjust your deductible or coverage limits to lower your ongoing costs for certain policies. And, as mentioned above, commercial insurers frequently offer a discounted rate for customers who bundle or package multiple policies together. When shopping, you should ask what discounts or other opportunities for savings might be available.
When shopping for insurance, every customer wants to know that they are working with companies that are reliable and trustworthy. Fortunately, several resources exist to provide information about company reputation based on customers’ experience.
One starting place for information about commercial insurers’ reputations is J.D. Power. J.D. Power issues annual surveys ranking customer satisfaction for major companies in a variety of fields, including insurance. J.D. Power’s annual small business survey can allow you to compare carriers on overall satisfaction.
The Better Business Bureau is another important resource for customer reputation. The BBB grades businesses based on their trustworthiness and willingness to resolve customer complaints fairly. An insurance provider with a low BBB grade may be worth avoiding, as it could be a sign of poor customer service or difficulty with claims.
Finally, the National Association of Insurance Commissioners publishes information about insurers on its website for consumers to review. NAIC maintains a database of complaints, financials, and licensing information for insurers across the U.S., so you can search insurers to identify potential issues.
Financial strength is another important attribute for insurance carriers. Insurers’ role is to compensate policyholders or claimants in the event of a loss, which means that insurers should have excellent financial resources available and a track record of paying claims reliably.
Financial strength ratings are available from major agencies like AM Best, Moody’s, and S&P Global. These firms use proprietary systems to rate companies’ financial strength as a signal to customers and investors. Almost every major insurer carries a grade from the credit ratings agencies, allowing you to get a quick sense of potential insurers’ resources and reliability.
The Best Insurance Companies for Electricians
State Farm (Best Electrician Insurance Overall)
State Farm recently marked 100 years in business, making it one of the older and more trusted names for insurance of all types. State Farm’s commercial offerings stand out because of the way that certain policies and coverages are tailored to particular industries.
- Policies and information tailored to business/industry, including an electrician-specific BOP
- Category-leading customer satisfaction ratings
- Excellent financial strength ratings from major agencies
- Relatively high NAIC overall complaint index
- No online quoting is available
State Farm shoppers will find that the carrier’s website includes pages that outline specific coverages relevant to different industries and business types. For electricians and electrical contractors, State Farm’s business owner’s policy offers features specifically meant for the industry. Like other BOPs, this policy includes standard property and general liability coverage, but State Farm also incorporates other features like tools and equipment coverage and protections like completed operations coverage (for claims arising after work is completed) and an installation floater (to protect equipment and materials while in transit or waiting to be installed).
In addition to a strong BOP offering, State Farm provides commercial auto insurance, umbrella liability, workers’ comp, surety bonds, employment practices liability, and professional liability. This makes State Farm’s set of coverage options nearly comprehensive for any need your electrical business may have. The umbrella liability coverage can easily be added in $1 million increments to help offer greater protection.
Customers cannot obtain quotes online and instead must call a local agent to learn more about costs from State Farm. While this does make the shopping experience less convenient, shoppers can receive guidance from an agent on the variety of coverages available, along with potential discounts policyholders may be eligible for.
State Farm is near the top of the category when it comes to company reputation. In the most recent J.D. Power small commercial insurance study, State Farm registered the highest score of any carrier at 856. The company also holds an A+ rating with the Better Business Bureau. While State Farm’s overall NAIC index score is less impressive at 1.6—above the median—its ratings specifically for commercial liability (0.9) and property (1.19) are more in line with national figures.
State Farm’s high marks also extend to the insurer’s financial strength ratings from the major rating agencies. State Farm carries an A++ rating from AM Best, which is the highest possible, along with the second highest rating from Moody’s (Aa1), and the third highest from S&P (AA). These ratings suggest that State Farm is reliable when it comes to paying out claims.
Between its well-designed insurance products, strong company reputation, and excellent financial strength, State Farm checks all the boxes you’d want when obtaining insurance as an electrician or electrical contractor. Whether you just want a BOP to cover your most common risks or need more specialized coverage as you take on bigger and more complicated jobs, State Farm has appropriate policies available. This makes State Farm our pick as Best Electrician Insurance Overall.
NEXT (Best Insurance for Small Electrical Contractors)
NEXT Insurance is a newer insurance company that promises to simplify the insurance buying process for small business owners. With solid discounts and packages tailored specifically for the needs that electrical contractors face, NEXT Insurance is a great all-purpose insurance option for electrician businesses.
- Easy shopping for most essential electrician coverages through a fast online quoting system
- Affordable policies with discounts of up to 25% in some cases
- Good online tools and an app for accessing certificates of insurance, handling claims, and managing policies
- Lacks some more specialized coverages like management liability and surety
- Newer carrier with a shorter track record in the industry
- High NAIC complaint index for commercial liability claims
NEXT provides policies for most of the key coverages that electricians need, including general liability, commercial property, commercial auto, tools and equipment, professional liability/E&O, and workers’ comp. NEXT does not currently offer more specialized insurance products like surety bonds or management liability, so businesses with more complicated needs may also want to look into additional policies from other carriers if they opt for NEXT.
NEXT’s limits are in line with industry standards, including policies up to $1 million per occurrence for general liability, $1 million combined single limit for commercial auto, $1 million per accident for workers’ comp, and $10,000 per occurrence for tools and equipment. However, NEXT offers lower limits on all of these policies as well, allowing smaller businesses to obtain basic coverage and then scale up their limits as needed.
Other helpful aspects of NEXT coverage include 24/7 access to a certificate of insurance, which can help provide documentation to clients, primary contractors or subcontractors, or licensing and regulatory bodies. NEXT also makes it easy to file and track claims online, through its app, or by phone.
The quoting process and cost savings with NEXT are standout features. Using AI and machine learning, NEXT has simplified the quoting process and can provide quick quotes online, allowing you to check prices and purchase a policy in under 10 minutes. Helpfully, NEXT also publishes data about the ranges of costs that policyholders pay for four major components of its electrical contractor insurance coverage: general liability, workers’ comp, commercial property, and tools and equipment. And when you purchase multiple lines of coverage, you may be eligible to receive discounts of up to 25% from NEXT.
Despite being a newer insurance provider, NEXT is already quickly gaining a solid reputation in the industry. The Better Business Bureau gives NEXT an A rating, and the company has been accredited by the BBB since 2018, shortly after its founding. In the NAIC complaint index, NEXT has an overall score of 0.59, which means that complaints are less likely with NEXT than with all insurance companies. However, one ding on NEXT’s NAIC score is that the complaint index on commercial liability coverage—one of the most important components of electrician insurance—is well above the national median for all insurers, with an index of 4.54. It’s important to note, though, that this is based on a fairly small number of complaints in total.
NEXT’s short history in the industry has also not prevented it from earning an A- (Excellent) rating from AM Best. Additionally, NEXT is backed by major insurer Munich Re, a partnership that has helped provide financial resources and credibility since NEXT first began writing policies in 2018.
The ease of purchasing a variety of coverages, potential cost savings, and excellent online and mobile resources for policyholders make NEXT a user-friendly option for many electricians. While larger or more complex operations may require more specialized coverage, NEXT is our pick as offering the Best Insurance for Small Electrical Contractors.
Travelers (Best Insurance for Large Electrical Contractors)
Travelers is one of the largest commercial insurers in the U.S., giving it sizable financial resources, broad industry expertise in a variety of fields, and the ability to offer specialized coverage unavailable with smaller carriers.
- Deep expertise/knowledge of insurance needs in the industry
- Offers several specialized coverages unavailable with other insurers
- Excellent financial strength and customer reputation ratings
- Rates may be high for smaller businesses
- Must obtain quotes through a Travelers agent
Travelers is a leading commercial insurer with deep expertise in a variety of fields, including construction and building trades generally and electrical contracting specifically. Travelers’ IndustryEDGE program not only packages together key coverages for certain industries but also provides specialized claims services and resources for policyholders to reduce potential risks. The package for electrical contractors includes general liability, workers’ comp, commercial auto, and umbrella liability.
However, Travelers also offers other useful coverages like property, inland marine, and more. Surety bonds can be obtained both for commercial purposes—such as might be required for business licensure—and for contracts—such as what a client may require on a job. And some highly specialized coverages offered by Travelers may be harder to find with other insurers. For example, Travelers offers environmental liability, owners protective liability, and railroad protective liability to limit other potential risks that electricians and electrical contractors might encounter in certain types of projects.
Travelers quotes are available through the company’s nationwide network of agents. Quotes and purchases cannot be completed online. As with any insurer, costs will vary based on factors specific to your business and coverage needs, but some online sources suggest that rates with Travelers may be pricier for smaller companies.
Travelers delivers solid marks in company reputation and customer satisfaction. In the most recent J.D. Power study, Travelers exceeded the category average for customer satisfaction with a rating of 846. The Better Business Bureau has awarded Travelers an A rating for its handling of customer complaints. And Travelers has one of the lowest (best) NAIC complaint indexes overall at 0.09, while the commercial liability index of 0.72 is also better than the median for the category.
Travelers also is a high performer in financial strength. As the second largest commercial insurer by premiums written, with nearly 5% of the market, it is no surprise to learn that Travelers is well-resourced and considered reliable. Its A++ rating from AM Best is the highest available, while Moody’s offers an impressive Aa2 rating, and S&P rates Travelers at the AA level.
Travelers writes policies for almost every conceivable risk that electricians and electrical contractors encounter, but the reality is that this level of specialized expertise may not be necessary for a smaller business. But for larger companies who take on bigger and more complex jobs, Travelers offers not only a variety of coverage options but also excellent services and resources for policyholders, a good customer reputation, and some of the best financial strength ratings of any company we evaluated. This makes Travelers our pick as having the Best Insurance for Large Electrical Contractors.
THREE (Best Insurance for Self-Employed Electricians)
Combining the track record and resources of insurance giant Berkshire Hathaway and an innovative approach aimed at streamlining commercial insurance policies, THREE is a great choice for electricians who want a simple, straightforward collection of coverages.
- A simple, easy-to-understand three-page policy with multiple forms of coverage
- Backing of Berkshire Hathaway, which brings financial strength and reputation
- Coverage is more affordable than many comparable packages/bundles, with discounts available
- The streamlined policy may be more difficult to customize
- Standard policies could leave businesses with more complex needs underinsured
THREE’s defining quality is the streamlined, plain language, three-page policy that gives the insurer its name. Depending on what your business needs, the simplicity of THREE’s insurance coverage can be either positive or negative. For businesses without complex needs who don’t want to spend a lot of time shopping for policies, THREE’s straightforward policy is a no-fuss way to get coverage. For businesses that need more tailored insurance products, however, THREE’s simplified approach could leave important gaps in coverage.
The standard THREE policy always includes coverage for business liability, workers’ comp, commercial property, tools and equipment, commercial auto, and business interruption, all in a plain-language three-page document. This is a good fit for many of the common needs electricians and other trade contractors will encounter. Policies are customized based on the purchaser’s specific assets and risk exposures, though, so if your electrical contracting business doesn’t have buildings or vehicles, you won’t pay any more for that coverage. Limits and deductibles can be adjusted in consultation with one of THREE’s Small Business Advisors.
Quotes for THREE can be obtained in 15 minutes or less over the phone with a Small Business Advisor. THREE estimates that its comprehensive coverages are available at a cost 20% lower than comparable insurers provide. Policyholders can also save up to 5% in some states by paying a year’s worth of premiums upfront.
THREE is a newer option in the insurance industry, having launched in 2019, so its track record in the industry is still fairly limited. However, THREE is unlike other insurance startups in that it is a subsidiary of Berkshire Hathaway, an insurance giant that houses major brands like GEICO and Gen Re. Backing from Berkshire Hathaway means that THREE has nearly unmatched financial strength, including an AA+ rating from S&P, an A++ (Superior) rating from AM Best, and an Aa2 from Moody’s.
THREE is also quickly growing its own good reputation in the small business insurance industry. The Better Business Bureau has rated THREE as an A+ business and provided accreditation in 2021. According to NAIC, the overall complaint index for THREE is right in line with the national median at 1.0.
Overall, THREE’s simplified but fairly comprehensive commercial coverage is a great fit for one-man shops or other very small operations that don’t have sophisticated needs and don’t want to spend a lot of time comparison shopping. This quality makes THREE our pick as having the Best Insurance for Self-Employed Electricians.
Nationwide (Best for Surety Bonds)
Nationwide is one of the biggest names in insurance in the U.S., whether it’s personal, commercial, or auto coverage. With stellar credentials and the ability to write almost every coverage electricians and electrical contractors need, Nationwide is one of the best options available for electrical contractor insurance.
- A comprehensive range of coverage is available
- Surety bonds available in all 50 states and for businesses of varying sizes
- Excellent marks for customer reputation and financial strength
- Unable to purchase policies without speaking to an agent
- NAIC complaint index for commercial liability claims is high
Nationwide provides all of the essential coverages that electricians need, including general liability, commercial property, tools and equipment, commercial auto, and workers’ comp. Nationwide’s commercial property and commercial auto coverages are especially well-regarded products for businesses in construction and related fields.
But one of Nationwide’s best attributes is that shoppers can also obtain more specialized products that may be harder to find among rival insurers. For example, Nationwide offers errors and omissions, management liability (including directors and officers and employment practices), excess/umbrella liability, and surety bonds. Its surety bond offerings are particularly strong, with the ability to provide bonds in all 50 states and options for contractors of all sizes.
To review Nationwide’s offerings and pricing, shoppers can start a quote online but must speak with an agent to purchase a policy. This makes the shopping process somewhat more cumbersome for Nationwide than for other insurers that allow both quoting and purchasing online. Nationwide does offer multi-policy discounts, though, so when speaking to an agent it is worthwhile to ask if you’re eligible for any cost-saving opportunities.
Nationwide carries strong marks on several major measures of customer reputation. Nationwide placed third for small insurance carriers in the most recent J.D. Power customer satisfaction rating, with a score of 854—just two points outside of first place. The carrier is A+ rated with the Better Business Bureau and has been BBB-accredited since 1955, meeting the Bureau’s highest standards for honesty and integrity in business. And in NAIC’s complaint index, Nationwide’s overall index score is 0.92, just below the national median—though a score of 3.39 for commercial liability claims may be a flag for some business owners.
Nationwide also brings good financial resources. Nationwide holds AM Best’s second highest rating of A+ (Excellent), while Moody’s offers an A1 rating, and S&P grades Nationwide at an A+. The carrier also ranks in the top 10 insurers for commercial premiums written according to the Insurance Information Institute, providing more evidence both of Nationwide’s popularity in the market and its financial resources.
Nationwide is a good all-around pick for a variety of reasons, including a wide array of coverage, a good reputation, and financial strength. But some of Nationwide’s policy offerings—like commercial auto, commercial property, and surety bonds—stand out as particularly strong, which may make Nationwide a good pick for rounding out coverage if you’ve got some risks covered elsewhere. We particularly think Nationwide is Best for Surety Bonds due to its nationwide availability and ability to provide surety bonds to businesses of all sizes.
Liberty Mutual (Runner-Up Best Electrician Insurance)
Liberty Mutual is a leading commercial insurer in the U.S., with many offerings that are tailored to the needs of risky industries including construction and building trades.
- Strong experience insuring businesses in construction and related fields
- Specialized coverages available, along with good services to manage claims and risks
- BBB accredited since 1931
- Lower J.D. Power customer satisfaction rating and higher NAIC complaint index
- Financial strength ratings are good but not as strong as competing insurers
- Must shop through independent agents and brokers
Liberty Mutual has extensive experience covering businesses in building trades like electricians and electrical contractors. There are a wide variety of coverages available through Liberty Mutual, from standard products like commercial auto, workers’ comp, and contractors equipment to more specialized lines like builder’s risk, environmental liability, subcontractor default, and surety bonds. Liberty Mutual also has a well-integrated set of services associated with its policies, like service teams and attorneys to handle claims, surety experts, and risk management and mitigation consultants.
To obtain a quote from Liberty Mutual, shoppers must contact a broker or agent rather than initiate the process on Liberty Mutual’s website. Agents or brokers will also be able to provide more specific details about what is included in any coverage.
The main downside of Liberty Mutual is its relatively low ratings on measures of company reputation. The most recent J.D. Power small commercial insurance study found a customer satisfaction rating of 834, which fell short of the category average of 842. NAIC’s overall complaint index for Liberty Mutual is 2.66, which means that complaints are more common relative to Liberty Mutual’s share of the insurance market. Despite these marks, however, the Better Business Bureau does give an A+ rating to Liberty Mutual, which has also been BBB accredited since 1931.
Liberty Mutual holds fairly good ratings for financial strength from the major credit rating agencies. AM Best gives an A rating, Moody’s offers an A2, and S&P also rates Liberty Mutual at the A level. While several other carriers in this guide outperform Liberty Mutual on financial strength metrics, the insurer’s ratings are solid and should assure most policyholders that claims will be paid out reliably.
Liberty Mutual has extensive experience working with contractors and tradespeople, offering good coverage that includes several specialized products. While Liberty Mutual lacks the reputation and financial strength of some other large competitors, we like Liberty Mutual’s integration of expert attorneys, consultants, and claims handlers to evaluate claims and help policyholders minimize their risks—especially in an industry where risks are high. This makes Liberty Mutual a runner-up pick as one of the best electrician insurance companies.
Frequently Asked Questions
There is a wide variety of insurance products available for electricians, but for practical or legal reasons, only a few are true “must-haves”.
Business owner’s policies or some combination of general liability and commercial property insurance are generally good to have for businesses of any type. These policies protect businesses from financial risks that are not specific to the business itself, like the work it performs, how many people it employs, or its size.
Workers’ compensation coverage and commercial auto insurance are typically required by state law, with a few exceptions. If you employ others or use vehicles for business purposes, your business should have these forms of coverage. Otherwise, you risk potential fines or criminal penalties in addition to being exposed to risk from claims.
Finally, you may encounter other legal requirements to carry insurance that impact your ability to be licensed as an electrician or to win certain contracts. Many states have a certain amount of general liability or errors and omissions liability as a condition of licensure. Access to a surety bond may also be a condition of licensure or a requirement to bid on public contracts. You should contact your state’s licensing body or insurance agency for your specific requirements.
Electricians will tend to pay more than other professions for most forms of commercial liability insurance because there is greater risk associated with the work. These include worker injuries, frequent travel with vehicles and equipment, and the possibility of causing damage or injury to others and their property. However, electrical contractor insurance can vary substantially in cost depending on the exact policies being purchased and factors specific to your business.
The key factors that usually affect cost include the size of your business, your claims history, where you operate, and where you choose to set your limits and deductibles. Size is important for cost because your risk exposure grows as your business does: larger businesses interact with more employees, clients, and others who could bring claims. Claims history matters because businesses with frequent claims against them could be seen as more reckless or risky, so insurers will charge more to cover them. Location may affect the likelihood of certain perils (especially for property and auto coverage) or could impact how much or what types of coverage you need to carry. Finally, deductibles and limits change how much risk you carry as the policyholder and in turn what insurers feel they need to charge.
For most electricians and electrical contractors, the essential coverages you need will range from a few hundred to a couple of thousand dollars per policy per year. Pricing for workers’ comp and commercial auto may be more expensive than that, especially for larger businesses. The best way to get accurate pricing information is to request a quote from a commercial insurance broker or agent based on your unique risks.
To obtain electrician insurance, you should first review any coverage requirements that apply to your business to be sure you’re shopping for the right policies. From there, you can research and reach out to companies that provide the policies you’re looking for to buy coverage.
Some insurance carriers with simpler products, like THREE or NEXT, allow you to obtain quotes and purchase coverage online. If you have more complex risks, you will likely need to contact an agent or broker directly to discuss what types of coverage you need and purchase a policy. Regardless, you will likely be asked to share information about your business that will impact what’s included in your coverage and the rates and discounts that might be available to you. Some large insurers allow you to initiate a quote online and then be contacted by a representative, but in other cases, you may need to reach out directly to an insurance professional in your area.
Each company featured in our guides has been independently selected and reviewed by our research team. If you select one of these companies and click on a link, we may earn a commission.
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