Why Should an Electrical Company Have Insurance?

Why Should an Electrical Company Have Insurance?

Working on electrical systems is risky. Every day, electrical contractors deal with the dangers involved in handling exposed wires, active circuits, and more. Compared to other industries, being in the electrical business is more hazardous. That’s why electrical companies need insurance.

What type of insurance should an electrical company have?

There are several types of insurance that electrical companies should look into. Electrical contractors typically start with a Business Owner’s Policy (BOP), a standard insurance policy for small businesses. Aside from the BOP, an electrical company should consider the following:

#1 Professional Liability Insurance

Professional liability insurance covers work-related accidents. For instance, if one of your contractors were to wire a home and it results in a fire, this insurance policy would be able to protect you should the homeowner take you to court.

#2 General Liability Insurance

Professional liability insurance covers accidents that arise from your company’s actual services. On the other hand, general liability insurance covers incidents that don’t happen on duty. For instance, if a client slips and falls in your office, your insurance policy would be able to cover the medical bills.

#3 Commercial Property Insurance

Your electrical company has likely spent a lot of money on specialized equipment. Commercial property insurance protects your business’ assets in case of theft, fire, and other covered perils. It covers the replacement value of your property -- for instance, if you lose a voltage tester, your insurance policy will provide you with the money to buy a new voltage tester.

#4 Workers’ Compensation

If your workers are injured while on the job, this type of insurance policy will cover the costs of their hospitalization. Plus, it compensates them for their lost wages while they are recovering. Since electricians are exposed to a multitude of risks, this insurance policy is crucial for any electrical company.

#5 Business Income Insurance

Did a fire burn down all of your equipment? If you have business income insurance, you’ll be able to recover your lost income. It’s worth mentioning that this type of insurance applies only to certain incidents. If your equipment was damaged due to your negligence, you’re on your own.

#6 Commercial Auto Insurance

Does your electrical company have an automobile that’s used solely for business? If so, it would be wise to have it insured. The last thing you want is to spend thousands of dollars on repairs, in case your vehicle is damaged while on the job. However, if your vehicle is for work and personal use, you may not qualify for this type of insurance policy.

#7 Business Interruption Insurance

If you’re operating in an area that’s always hit by thunderstorms, hurricanes, and so on, it would make sense to get business interruption insurance. This insurance policy ensures that you’ll be able to overcome the financial setbacks in case of natural disasters, illnesses, pandemics, and so on.


Running an electrical company can be risky, but with the right insurance, you can have peace of mind knowing that you’re covered in case of certain perils. If you have any questions about getting insured, you can always arrange a meeting with a local insurance agent.