About General Liability Insurance
All businesses, regardless of industry, face risks that should be covered by insurance. The most common and comprehensive type of policy business owners invest in is general liability insurance (or CGL).
Some of the risks CGL insurance covers are:
- Bodily injury
- Property damage
- Medical payments
- Legal defense and judgment
- Personal and advertising injury
While businesses aren’t legally required to carry general liability insurance, operating without it is extremely risky. If your business is sued, you could end up facing fees totaling hundreds of thousands of dollars (or more). Having a sufficient CGL policy in place to help compensate for these damages is the only way to prevent this type of event from devastating your business.
COMMON SITUATIONS THAT GENERAL LIABILITY INSURANCE WOULD COVER FOR AN ELECTRICIAN
Example 1: You accidentally start a fire during some repairs, and it spreads rapidly through a client’s living room, damaging furniture and electronics worth thousands of dollars. General liability insurance would likely cover some of what your business owes in damages or any settlement reached.
Example 2: During a repair, a customer’s unattended child touches a live wire and suffers severe injuries. If found liable, your business would probably be covered for some of the resulting damages or any settlement reached between you and the customer.
Example 3: You decide to take a lunch break while repairing some wiring in a customer’s house. After eating, you accidentally leave a bar of dark chocolate on the floor. The client’s dog sneaks in and eats the entire thing, becoming seriously ill. If held liable, your business would probably have some coverage under a general liability insurance policy for damages incurred or a settlement reached outside of court.
Of course, this is not an exhaustive list of perils a general liability insurance policy will cover, and some conditions may result in a particular peril not being covered. It’s always best to talk to your agent in-depth about the specifics of your policy to avoid blind spots in coverage.
COST OF GENERAL LIABILITY INSURANCE
The average electricians in America spends between 500-$1,500 per year for $1 million in general liability coverage.
Check out the chart below for a snapshot of average CGL expenditure across a variety of industries:
Several factors will determine the price of your policy. These include your:
- Number of employees
- Per-occurrence limit
- General aggregate limit
You may be able to acquire general liability insurance at a discounted rate by purchasing it as part of a business owner’s policy (BOP) rather than as a standalone policy. A BOP is a more comprehensive solution that includes multiple forms of coverage, such as business interruption and property insurance.
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OTHER TYPES OF COVERAGE ELECTRICIANS NEED
While general liability is the most important type of insurance to have, there are several other forms of coverage you should be aware of. Below are some other types of insurance all electricians should obtain:
Professional Liability Insurance
In the event that your services are deemed unsatisfactory, you can find your business confronted with a suit alleging professional negligence. Instead of paying damages out of your business’s profits, a professional liability policy can cover a good chunk of whatever figure you end up having to pay.
Commercial Property Insurance
Your electrician operation will no doubt require expensive professional equipment, tools, and machinery to help you get the job done. You cannot afford to lose these assets to an unpredictable disaster like fire or violent weather. Acquire a commercial property policy to protect your business’ materials, including equipment, tools, machinery, vehicles, and any owned real estate.
TYPES OF COVERAGE SOME ELECTRICIANS MAY NEED
In addition to the policies outlined above, there are a few other types of coverage your electricians may require depending on certain aspects of your operations. Some of these might not apply to you, so be sure to ask your agent which policies are right for your business.
Commercial Auto Insurance
If you have a vehicle that is driven primarily for business use, you’ll need to pick up commercial auto insurance to stay covered for accidents that happen while on the road.
Workers’ Compensation insurance
If you decide to hire any part-time or full-time employees, most states legally require you to have workers’ compensation insurance. This covers costs related to injuries that an employee suffers while working.
ADDITIONAL STEPS TO PROTECT YOUR BUSINESS
Although it’s easy (and essential) to invest in business insurance, it should not be your frontline defense. Yes, insurance will compensate for your business’ financial losses after an incident occurs, but it’s much better to avoid losses altogether.
With this in mind, here are three things you can do to better protect your business:
- Use legally robust contracts and other business documents. (We offer free templates for some of the most common legal forms.)
- Set up a limited liability company (LLC) to protect your personal assets. (Refer to our guide for step-by-step instructions on how to form an LLC in your state.)
- Streamline your business’ internal processes. This will remove unnecessary variables from common tasks and create a safe, consistent environment for conducting business.
FREQUENTLY ASKED QUESTIONS
What is included in a business owner’s policy?
A typical business owner’s policy includes general liability, business interruption, and property insurance. However, BOPs are often customizable, so your agent may recommend adding professional liability, commercial auto, or other types of coverage to your package depending on your company’s needs.
What is the difference between business insurance and general liability insurance?
“Business insurance” is a generic term used to describe many different types of coverage a business may need. General liability insurance, on the other hand, is a specific type of coverage that business owners need to protect their assets.
Do I need insurance before I start a business?
You should invest in coverage for your business before your first interaction with a customer. Although the cost of insurance may seem high for a brand new business, it’s best to be proactive when it comes to protecting your assets. After all, you can’t buy insurance to cover a loss that has already occurred.
Will insurance protect my business from everything?
Not necessarily. Certain exceptions may be written directly into your policy, and some perils may be entirely uninsurable. Be sure to discuss the scope of your policy in-depth with your agent to avoid being blindsided by holes in your coverage.