To withstand and compete in an ever-changing economy, businesses seek flexible workforce arrangements that allow for swift adjustments without the adverse effects inherent in upsizing, downsizing, and other workforce challenges. Most businesses are now redirecting to independent contractors to attain the flexibility. Independent contractors act as a separate entity from your business. Even though they perform services on your company’s behalf, independent contractors like electricians are not direct employees of your business, hence subject to their own risks and required insurance.
As the amount and demand for independent contractors increase, so do the risks. According to the Electrical Safety Foundation International, 2019 had the most recorded fatal electrical injuries since 2011. With 166 fatal electrical injuries, there was a 3.75% increase in fatal injuries over 2018. Like any other business owner, Electrical contractors can also be accused and held responsible for damages, and when that happens, proper insurances are a lifesaver.
Types of Electrical Contractors Insurance
About 90% of independent contractors pay less than $700 per year or $60 a month for a commercial general liability insurance. Electricians Insurance rates may vary depending on the exposure of whether most projects are residential or commercial. Remember that as the exposure’s risk go up, so will your premium. But let’s discuss how each policy can save your business from an even costly downfall.
- Electricians Liability Insurance – this covers third-party claims relating to bodily injury and property damage. A third-party is neither you, your business, nor your employees. Third-party can either be your customer, a passerby, or an owner of the tools rented to you. Instead of paying directly for medical bills and attorney fees arising from your customer’s bodily injury and property damage claims, your General Liability Insurance will cover the expenses for you.
- Workers Compensation – this covers your employees’ medical costs and lost wages arising from work-related injuries. Should the work-related injury result in death, the beneficiary of the covered employee will receive death benefits from this policy. Hence, most states will require this coverage to protect employees, but you may check your own state’s requirement here.
Tip: An owner can be included in the Workers Compensation insurance. It is best to disclose this intent to your insurance broker to earn the benefits that your medical insurance might not be able to provide such as lost wages, and death benefits. The price difference is relatively low, and the benefits far outweigh the cost.
Expert’s Tip: Choose the limits $1M/$1M/$1M on per employee, per disease, per occurrence and not any lower. Bigger projects require this liability limit at a minimum. By initially obtaining lower limits, it could result into a more costly price as coverage adjustments in between effective dates can tend to double the price.
- Inland Marine Insurance – this type of business insurance covers for your products, tools, and equipment. Electricians transport specialized tools from location to location thereby exposing them to different risks. Theft is among the most common as these tools and equipment are made from high resale value materials. The cost of replacing a cherry picker is far more expensive than obtaining an Inland Marine Insurance.
- Commercial Auto – electricians travel to different worksites, local or long-distance. While personally owned vehicles must already have their own personal auto insurance, it is important to note that claims arising from work-related incidents may not be covered. Not only does a Commercial Auto Insurance have higher liability limits and can cover more complex legal issues, it can also insure other drivers in the company in a single endorsement.
Many electrical contractors opt for a cheaper insurance policy thereby compromising critical coverage. Imagine installing smoke alarms and Carbon Monoxide detectors and getting a phone call from one of your previous clients claiming for a “faulty work”, while it may be caused by other factors, independent contractors must be prepared for the worst – and that is to settle the claims filed by a third-party. The importance of being an insured electrical contractor can never be over emphasized. Protect your business with the right insurance and you can do what you do best without having to worry on the possibility of losing what you have worked so hard for.
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