Electrical contractors have an important job: they repair, set up, and install electrical wiring, sockets, electrical boxes, and more in homes and businesses. While this may sound easy, the job itself is filled with potential dangers and hazards, from damaging a customer’s property by accident, losing and breaking tools, and even lacking the correct surety bonds to protect your business and your customer’s property.
But which types of insurance does a commercial electrical contractor need? The three main types discussed below are a perfect starting point.
General Liability Insurance
General liability insurance is often packaged with building coverage and other business policies into something called a BOP, or Business Owners’ Plan. However, this particular type of insurance can be purchased on its own.
A general liability policy protects your company against what are called third-party claims. These are claims brought about by your customers or clients, not your employees. For example, if one of your employees wires a switch wrong that accidentally sets part of your client’s house on fire, your general liability policy may cover the cost of repairs and damage cleanup, as well as any legal fees or settlement amounts. Without one, your business would have to absorb the costs out of pocket.
Coverage for Tools and Equipment
Next, there are insurance options for your tools and equipment. One of them, equipment breakdown coverage, pays for repairs or rental costs should a crucial piece of equipment fail for reasons other than old age and lack of maintenance. If you move your tools around all day, keeping them in a truck or trailer, then an inland marine insurance policy may apply. In addition, you can get a special tool or equipment rider added to your BOP or Business Owners Policy.
Since your tools and equipment are crucially important to your workday, it’s important to have them properly insured. The last thing that you need is for tools to go missing or equipment to break and then have to pay for repairs or new models out of pocket.
What You Need to Know about Bonds
There are several different types of construction-related bonds, but the ones most often used by electricians are surety bonds. These bonds require a government-approved third-party that holds the bond, taking on the financial risk. You’ll have to pay a portion of the total bond cost up front, and if the homeowner needs to use any of those funds should something go wrong during the construction process, they’ll get paid by the bond holder who you’ll then reimburse.
Many state and local governments require you to have a surety bond of a specific amount before you start an electrical job. The bonds are designed to provide an additional layer of protection for the homeowner, just in case.
Do You Need Insurance for Your Electrical Contracting Company?
If you’re running an electrical contracting business and want to clarify your current insurance policies or need to take out new ones, contact Spivey Insurance. Our skilled and knowledgeable agents can help you choose the best policies for your needs, increase your insurance limits, and more.