Insurance for the Electrical Trade
Electrical contractors occupy a middle ground in construction insurance. You're not as expensive to insure as roofers, but you're not cheap like painters either. The fire hazards inherent in electrical work create long-tail liability exposure that requires specific insurance considerations.
Your Primary Risk Exposures
Fire From Your Work
A wiring installation that seems fine during rough inspection can fail months or years later. Faulty connections, improper load calculations, or code violations can cause fires long after you've moved on to other projects. This completed operations exposure is the defining characteristic of electrical contractor insurance.
Last year, one of our clients received notice of a lawsuit from a fire that occurred 14 months after they completed a residential panel upgrade. The connection at the main breaker had failed. Without proper completed operations coverage, they'd have faced the claim personally.
Shock and Arc Flash
Working with live electrical systems creates injury potential for your employees, other trades on the job site, and building occupants. Arc flash incidents cause severe burns and are more common than many contractors realize.
Code Violation Consequences
Work that doesn't meet code creates liability beyond just the cost of correction. If a code violation contributes to an injury or fire, the resulting claim can be substantial.
Building Your Coverage Program
General Liability
Your GL needs strong products-completed operations limits. This isn't the place to cut corners. Fire damage liability is included in standard GL policies, but understand that your work is excluded from coverage, meaning the policy pays for damage your defective work causes to other property, not the cost to fix your own defective installation.
Workers' Compensation
Classification 5190 carries moderate rates compared to some trades. Shock hazards and arc flash exposure make coverage essential. Even sole proprietors should consider voluntary coverage given the injury potential.
Professional Liability
If you provide design services, stamp drawings, or perform engineering calculations, you need errors and omissions coverage. Standard GL doesn't cover professional mistakes. This is especially important for contractors doing design-build work or offering engineering services.
Tools and Equipment
Specialized testing equipment, meters, and tools have high replacement costs. Inland marine coverage protects this investment better than commercial auto alone.
The Completed Operations Challenge
Electrical fires don't happen on a schedule. Your policy must provide coverage for claims that arise years after job completion.
Maintain continuous coverage without gaps. Keep records of work performed, including job addresses, scope descriptions, and permit numbers. When you retire or sell your business, tail coverage extends your reporting period for claims arising from past work.
Commercial Project Requirements
Commercial electrical work typically requires $1 million per occurrence and $2 million aggregate at minimum, often higher. Umbrella coverage of $1 to $5 million depending on project size. Additional insured endorsements for project owners and general contractors. Professional liability if any design services are included.
Specialty Electrical Work
Low-Voltage and Data
Generally lower GL rates than high-voltage work. Property damage from installation remains a concern, but fire risk is reduced.
Industrial Electrical
Higher rates reflect the hazardous environments and equipment involved. Arc flash exposure increases substantially. Equipment damage potential is elevated.
Solar Installation
A growing specialty with unique insurance needs. Roof work components push rates higher. Completed operations coverage is critical for system performance issues.
Common Questions
Do I need separate coverage for fire caused by my work?
Your GL covers fire damage to third-party property. Damage to the property you're working on may require additional coverage depending on policy language.
How long can completed operations claims take to develop?
Electrical fires can occur years after installation. The statute of repose in California is 10 years for construction defects. Maintain coverage continuously and keep thorough records.
Is professional liability required for all electrical contractors?
Only if you provide design services or engineering. Installation-only contractors typically don't need E&O coverage.