Insurance Guide for Electrical Contractors

From handling significant construction installations to responding to emergency domestic electrical issues in the dead of night, the role of an electrician is diverse.

While your expertise and experience are vital, dealing with mishaps, errors, or unhappy customers are part of life. For electrical contractors, having the right insurance provides a safety net when things go wrong.

The Importance of Insurance for Electrical Contractors

Like many trained professionals, having the right insurance programme in place can be the difference between the success and failure of your business and while you can’t plan for the unexpected, you can prepare for it.

Your electrical contractor insurance protects you if anything goes wrong. If you’re in a position where there’s a claim for accidental damage, loss, or injury you’ll want to be confident that your insurance is there to support you.

The right insurance cover will not only protect you, your assets and staff but also enables you to meet your industry membership requirements which can help you win new clients. While insurance might not be top of your to-do list, it is likely that you have considered the risks associated with running your business, things like;

Causing a serious injury – an incorrectly installed switch malfunctions, resulting in electrocution of a member of the public. Working with electricity is dangerous and could also have potential implications should a staff member suffer injury.

In the event of a claim, your insurance can help resolve issues in a timely manner and protect your reputation.

From talking to our client’s, we know that these are very common risks which can be protected with insurance.

We also know that despite your best efforts to make sure your business delivers brilliant customer service, things can go wrong, and having the right insurance programme to protect you means you can relax and get on with running your business. Here we explore some of the insurance covers, you should consider.

How do I know what cover I need, as an Electrical Contractor?

As an electrical contractor your customers rely on you for everything from fixing a faulty plug to large industrial installations. Electricians can work on a whole range of projects in both domestic and commercial settings, so knowing what insurance you need can be tricky. The best advice we can give you is to get in touch and speak to one of the team at Alarminsure who have all the experience and expertise to find you the right cover based on your circumstances. However, if you’re on the go right now and want more of an indication of the types of cover then read on.

The most common type of insurance is Public Liability insurance, which protects you if you accidentally injure or damage someone’s property as you go about your job, for example if someone trips over your equipment or a cable and sprains their wrist. If this results in a claim against you, your public liability insurance would respond.

If you have an apprentice or an employee, then Employers Liability is a legal requirement. This protects you in case they injure themselves at work, for example if they are installing a smart meter and fall from a ladder and are unable to work for several weeks as they recover.

Some electricians are also involved in designing and installing new cabling systems, carrying out landlords’ inspections, or commissioning systems, in homes or commercial settings. This design work can also present problems if the advice you give a client falls short and they think that you were negligent, then either Professional Advice or Professional indemnity will be required, this can be quite a complicated area so if in doubt ask.

If you then add in the need to insure your tools, premises and maybe even your work vehicles you can see the different types of insurance required to provide you with a comprehensive insurance package.

Where do I buy insurance for Electrical Contractors?

There are several options for buying electrical contractors’ insurance, you can buy it online, via a trade association or from an independent insurance broker. In this post we explore the information you’ll need to know and what to expect if you buy insurance online vs. Insurance broker.

What information do insurers need?

To get an insurance quote it helps to have the following information to hand:

• Details of the work you carry out, who for and where you typically work
• Your annual turnover
• The maximum contract values
• The number of staff you have
including the amount you pay in wages
• The cost of replacing equipment, tools and machinery
• Details of any past claims.

Comparing Cover and Options

If you are not experienced in reading or understanding insurance contracts, the thought of comparing two quotes can be daunting and it can be tempting to go on price alone, but this could be a false economy if the policy you buy doesn’t give you the insurance protection you need.

There are also other factors to consider when buying insurance, such as the stability and reputation of the broker and insurer you use, unfortunately not all brokers or insurers were born equal, and it is worth doing your own due diligence before you buy. This could be checking their website, customer reviews, looking at their terms of business and fee structure, what is the claims process, do they insurer other similar businesses to you, is the insurer they are using “rated” by this we mean an independent evaluation of the insurer’s ability to meet their financial commitments (most importantly pay claims). Where an insurer is ‘rated” there is more certainty they will be able to meet claims costs. All these factors can help give you a better feel for the type of company they are and if they are the right one to look after your insurance.

Online vs. Broker

There is huge appeal to buying your insurance online, not least that you can do it when it suits you and it is mostly a case of selecting the cover you want from drop-down menus, and this suits many business owners. However, it is worth noting that if you buy insurance online you are not getting any advice. It is up to the buyer to understand the cover they need, how much and what the terms of the insurance contract are i.e., understand the policy wording.

If your business is a little bit different or you are not sure what cover you need it could be advisable to talk to an insurance broker who can take your information and apply their skills and experience to get you the right insurance to meet your needs and give you advice on what products you need, as well as helping you navigate the different types of policy, set out the terms of the insurance I.e., what’s covered and what isn’t, then you need to be talking to an insurance broker.

What is and isn’t covered in an electrical contractor’s insurance policy?

Here’s a few examples…

• Common extensions to cover – extensions to cover offer insurance protection in addition to the standard wording, for electrical contractors this can include offering additional covers such as fidelity cover (dishonesty by employees), professional advice, loss of keys, professional indemnity, financial loss extension and defective workmanship)
• Policy exclusions – most policies list their exclusions, it’s always worth checking this out in case anything is relevant to you, and you need additional cover. If in doubt ask, we’re always happy to help.
• What is my Policy excess? A policy excess is an amount you must pay towards making a claim. The amount of the excess should be agreed when you take out your policy and will be clearly set out in your policy documents.
• What are my policy limits? A policy limit is the maximum amount your policy will pay out under a certain section. Your insurer will usually take any excess into account before applying policy limits. Consider what limits you might need and whether this is adequate for your needs in the event of a claim.

How much cover do I need, as an Electrical Contractor?

Unfortunately, there is no magic formula to working out how much insurance you need, which is why we would recommend talking to an experienced insurance broker, but you can have a think about these factors when considering how much cover you need;

• The replacement cost of equipment, tools and kit.
• The level of risk in terms of how often you come into contact with members of the public.
• If you are a member of a trade body or association that require you to have a particular level of cover for membership.
• The maximum value of any contract, what the likely legal costs could be if you were thought to be negligent.

When you think about what limit you might need for liability, it can be difficult to accurately gauge what you need. We recommend you think about your largest contract and the cost involved if this was, for example, completely destroyed, due to your (even inadvertent) negligence. This could be very different depending on whether the contract is domestic or commercial. Keep in mind the possibility of freak accidents occurring which can drastically change the limit of indemnity needed. We are happy to talk through this as needed.

How much does Electrical Contractors Insurance cost?

The price of electrical contractors’ insurance depends on several factors including the work you carry out, your turnover, contract value, and the number of staff you have. It can also be affected by any claims you may have had in the past; the level of policy excess you want to pay and any additional cover that your buy.

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