Electrical contractors face risks from high-voltage work, equipment theft and installation liability. Below are six essential coverage types with recommended limits for electrical businesses.
What Insurance Do You Need for an Electrical Business?
The types of insurance an electrical business needs most include general liability, workers' comp, commercial auto and professional liability insurance.
Get matched to the best electrical business insurer for your needs below.
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Updated: February 4, 2026
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Electrical Business Insurance Requirements: Key Takeaways
General liability insurance is most critical for electrical businesses due to high claim risks from faulty wiring, electrical fires and power surges (read more).
Electrical contractors must carry workers' compensation, commercial auto insurance and contractor license bonds required by state law (read more).
Optional coverage includes professional liability, tools and equipment insurance and commercial property insurance.
Request certificates of insurance from your insurer, verify coverage matches state requirements and submit COIs to licensing boards and clients (read more).
What Insurance Types Are Needed for an Electrical Business?
Third-party bodily injury and property damage from electrical work, including power surges, exposed wiring injuries and installation fires. | $2 million per occurrence and $4 million aggregate, with commercial projects requiring up to $5 million. | An electrician caused a power surge during panel installation, destroying $85,000 in servers and costing the client $22,000 in lost revenue. General liability covered the $125,000 total, including $18,000 in legal fees. | |
Medical costs and lost wages for electrical burns, falls, electrocution and equipment injuries. Required by law in most states once you hire employees. | Your state sets minimums based on payroll and risk classification. | An apprentice suffered second-degree burns on both hands from a 240-volt shock, with treatment costing $73,000 and lost wages reaching $19,000. Workers' comp covered all $92,000. | |
Business vehicles transporting equipment and crew, covering accidents you cause, vehicle damage and tool theft. Required in 49 states. | $1 million combined single limit with comprehensive and collision. | A rear-ended van caused a multi-car crash with $41,000 in medical bills, a $28,000 totaled van, $12,000 in destroyed equipment and $15,000 in other damage. Commercial auto covered $96,000 with a $1,000 deductible. | |
Claims from inadequate work, overlooked code issues or faulty recommendations, including load calculation errors and design failures. | $1 million to $2 million per claim for commercial contracts. | A contractor's restaurant electrical design couldn't handle kitchen equipment, causing outages and equipment damage. Professional liability covered the $180,000 lawsuit plus $34,000 in legal costs. | |
Specialized gear like voltage testers, thermal cameras, conduit benders and power tools damaged or stolen at job sites. | $25,000 to $50,000 based on equipment value. | Thieves stole $31,000 in equipment overnight, including a $4,200 thermal camera and $8,500 in wire-pulling tools. Insurance reimbursed the full amount within one week, preventing extended work stoppage. | |
Contractor license bonds | Guarantees regulatory compliance, project completion and subcontractor payment. Required in most states for electrical contractor licensing. | $10,000 to $25,000 in most states, ranging from $5,000 to $50,000. | A contractor abandoned a $38,000 rewiring project, leaving exposed wiring. The homeowner's bond claim provided funds to hire another electrician, while the original contractor reimbursed the surety and faced license suspension. |
Electrical Business Insurance Requirements
State laws and client contracts determine which insurance types you must carry and coverage amounts.
Workers' compensation | Required by law in every state except Texas and South Dakota once you hire employees. Penalties include fines up to $10,000 per employee, criminal charges and personal liability for all medical costs and lost wages. | State workers' compensation boards set minimum coverage based on payroll and industry classification. Electrical contractors pay $2 to $8 per $100 of payroll, with California and New York charging higher rates. |
Commercial auto | Required in 49 states for business vehicles transporting equipment and crew. Personal auto policies exclude commercial use, leaving you liable for accidents plus subject to fines and license suspension. | State minimums range from 25/50/10 to 30/60/25 for split limits. Commercial contracts typically require $1 million combined single limit to satisfy legal and client requirements. |
Contractor license | Required in most states before obtaining electrical contractor licenses. Bond amounts vary: Arizona ($2,500-$50,000), Minnesota ($25,000), New Jersey ($1,000), North Carolina ($50,000-$130,000), Washington ($4,000). Bond lapses trigger immediate license suspension. | State licensing boards set amounts from $1,000 to $130,000 based on project scope and classification. Most states require $10,000 to $25,000, though California, Texas and high-volume states require $15,000 or higher. |
General liability | Required by licensing boards in California, Massachusetts, Idaho and Kentucky before license issuance. Commercial clients and property owners require this before electrical work begins, protecting against property damage and injury claims. | State licensing requirements range from $100,000 to $1 million per occurrence. California requires $1 million per occurrence and $2 million aggregate. Commercial contracts typically require $1 million/$2 million, with large clients requiring $3 million to $5 million. |
Required by large commercial clients, hospitals, data centers and government contractors as additional protection above general liability limits. High-value clients mandate umbrella coverage against catastrophic losses from electrical fires or major system failures. | Large commercial clients require $3 million to $5 million in combined coverage. Premium clients including hospitals, airports and critical infrastructure require $5 million to $10 million in total liability protection. | |
Required by landlords when leasing space and by lenders when financing property for your electrical business. Protects their building investment and your equipment, ensuring continued operations after fire, theft or weather damage. | Coverage equals replacement cost of building plus contents, typically $100,000 to $500,000. Landlords and lenders set minimums matching the building's insurable value and your inventory of supplies and equipment. | |
Professional liability | Required by commercial clients contracting design-build services, engineering work or system planning beyond basic installation. General contractors and building owners mandate this when your work includes system design or code compliance consulting. | Most design-build contracts require $1 million to $2 million per claim. Government projects, healthcare, education and critical infrastructure require $3 million to $5 million in coverage. |
How to Meet Electrical Business Insurance Requirements
Follow these five steps to meet electrical business insurance requirements and maintain coverage:
- 1Request Certificates of Insurance (COIs) from your insurer
Contact your insurer immediately after buying coverage to request COIs for general liability, workers' comp, commercial auto and your license bond. You need these before bidding commercial jobs, starting work at corporate facilities or applying for C-10, EC or electrical licenses, with most insurers delivering COIs within hours via email.
- 2Verify COI limits match licensing and contract requirements
Compare your COI against state electrical board minimums: California requires $1 million/$2 million general liability for C-10 licenses, while Massachusetts mandates $300,000/$600,000. Confirm workers' comp meets state rates ($2 to $8 per $100 payroll), commercial auto shows required limits and bond amounts match your state ($25,000 in Minnesota, $4,000 in Washington, $15,000 in California).
- 3Add general contractors as additional insureds for projects
General contractors require being named as additional insureds before you work on their sites. Submit the GC's company name, project address and contract value to your insurer, receiving updated COIs within 24 to 48 hours for pre-construction meetings and electrical permit applications.
- 4Submit COIs to licensing boards and project stakeholders
Provide certificates to your state electrical board during licensure and annual renewals to maintain active status. Submit COIs to general contractors at pre-construction meetings, to building owners before accessing electrical rooms and to landlords before leasing shop space, with most requiring 30 days' notice before expiration.
- 5Set renewal reminders to prevent coverage gaps
Schedule reminders 60 days before expiration to avoid losing your electrical license or removal from active job sites. Coverage lapses during summer and fall construction seasons cost you commercial contracts, delay projects and require license reapplication with reinstatement fees.
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About Mark Fitzpatrick
Mark Fitzpatrick, a Licensed Property and Casualty Insurance Producer, is MoneyGeek's resident Personal Finance Expert. He has analyzed the insurance market for over five years, conducting original research for insurance shoppers. His insights have been featured in CNBC, NBC News and Mashable.
Fitzpatrick holds a master’s degree in economics and international relations from Johns Hopkins University and a bachelor’s degree from Boston College. He's also a five-time Jeopardy champion!
He writes about economics and insurance, breaking down complex topics so people know what they're buying.