Insurance Coverage Essentials for Electricians
For Michael Senderovich, it's simple: No electrician should ever rewire a home, repair a broken outlet or replace a fuse box unless protected by a quality general liability insurance policy.
And that policy should provide at least $2 million in annual coverage and at least $1 million of coverage for every insurable incident, says Senderovich, president of Zeyger Insurance in Calabasas, California.
Senderovich recommends, too, that electricians always take out a commercial auto policy, too. A personal auto insurance policy doesn't provide enough coverage, and could cost an electrician whose auto is damaged while on the job.
In short? Electricians should never skimp on insurance protection, Senderovich said. It can be tempting for electricians, who might be facing an uphill battle to remain profitable in a competitive industry, to cut corners on insurance costs. But a single incident — a homeowner who is electrocuted or faulty wiring that causes a home fire — could cost electricians big, perhaps big enough to send their business into bankruptcy.
"Electricians should not take a single job unless they have a high-quality general liability policy," Senderovich says.
The good news? Insurance coverage for electricians is not all that complicated. By purchasing the right mix of insurance products, these entrepreneurs can protect themselves from both injury and property damage claims.
It's all about doing the research and meeting with insurance brokers who understand the unique challenges electricians face.
General liability is the key
Walt Capell, president and owner of the General Liability Shop, a national insurance agency, says that the key for any electrical contractor is that general liability coverage.
This coverage, also konwn as commercial liability insurance, provides policyholders with financial protection against any lawsuits that customers, visitors to a property or other third parties file against them because of bodily injuries or property damages that the contractor might have caused.
A good general liability policy covers everything involved in defending against a lawsuit. This can include attorney fees, witness fees, settlement costs, court costs and any court-ordered judgments. General liability insurance also covers the medical expenses suffered by an injured party and the cost of repairing or replacing damaged property.
In short, it's a key safety net for electricians.
But it's not the only protection electricians need. Capell recommends, too, that electricians who employ others pay for workers' compensation insurance, too. This insurance will cover any medical costs that their employees suffer because of an injuries suffered on the job.
Capell says that electricians should also invest in commercial property, commercial auto and inland marine insurance.
Commercial property insurance will cover any damages to a shop or other facility owned by an electrician. This provides another form of safety net; would you be able to rebuild your electrician's shop if it was destroyed in a fire? If not, you should invest in commercial property insurance, which will allow you to rebuild without spending your own money.
"Commercial property is needed if they own a facility, no matter how big or small the facility is," Capell says.
Inland marine insurance provides protection for any property owned by electricians that they are moving from one location to another. This insurance might be a smart investment for electricians that use expensive tools costing thousands of dollars. Inland marine protection could reimburse these electricians if their costly tools are damaged or destroyed.
Shopping around for insurance
Benjamin Palancia, owner of Albert Palancia Agency in Mamaroneck, New York, says that electricians need to take a close look at their own businesses when determining how much insurance they need.
Electricians who are one-person shops will need less coverage than those who rely on a staff of employees. Those who specialize in higher-voltage work or who routinely work from greater heights might need more expensive policies, Palancia said.
The key, though, is to meet with an insurance broker and to shop for the right mix of policies. Palancia said that most of his electrician clients actually take out a range of policies from different insurers. Some might take out their general liability insurance from one insurer, their commercial auto policies from a second and their workers' compensation protection from a third.
Working with different insurers can often provide electricians with the lowest price for their combined insurance policies, Palancia says.
"There are so many companies out there that write lines for electricians," Palancia says. "Companies like insuring electricians because there aren't as high a volume of claims as there are with other contractors. It seems like the whole world wants to write policies for electricians."
How much electricians might pay for insurance varies, again on the size of the business, the type of work electricians handle and the size of their payroll, Palancia said. But he estimated that electricians running one-person operations might pay just $1,000 a year for their liability insurance and $1,500 a year for their commercial auto coverage.
Those electricians with larger operations? They might pay a total of $500,000 a year for all of their insurance protection, Palancia says.
The good news is that a growing number of electricians today understand how important it is to protect themselves with a strong insurance package, Palancia says.
This doesn’t mean, though, that all electricians are buying the coverage they need.
“There are some fly-by-nighters who try to get by without buying the right amount of insurance,” Palancia says. “But you get that with all contractors. It’s not just with electricians. There are always people who want to sneak through without the proper insurance. That’s a bad choice, though. It can come back to cost these people a lot of money.”
Supplemental insurance can help, too
Holly Waldhoff, director of sales integration with the Chicago office of Combined Insurance, said that electricians — whether they own a shop or work for someone else — should also consider supplemental insurance to help protect themselves financially.
Waldhoff says that all electricians should have a disability policy that will pay them if they are injured or sick and can't work for a period of time.
"If you can't work, you still need to pay your bills," Waldhoff says. "You need to receive enough money to cover those bills and continue living your life, even if you can't take on any jobs because of a sickness or illness. That's why disability insurance is so important."
Waldhoff says that accident insurance can be a smart supplement, too. This insurance provides payouts when you injure yourself either on or off the job and can't work. This insurance coverage will pay for the medical costs of treatment and recovery.
Waldhoff says that most electricians do their research when searching for insurance coverage. When electricians aren't covered properly, it's not that they don't want insurance, it's that they don't understand what policies can provide them with the best protection.
"A lot of times when you find electricians or others not covered properly, it's the lack of knowledge that these supplemental policies are available to them," she adds. "Insurance can be a difficult world to navigate if there isn't someone there helping you through it."