The goal of this blog post is to give you a checklist for the basic coverages you need to consider for your electrician business from the very start. Once you have the basics, you can scale the dollar values as needed.
1. The Base Coverage – General Liability insurance
The first thing that you must think about is going to be general liability insurance. It is designed to protect you from lawsuits of bodily injury and property damage that you cause to other people. There are three main categories for General Liability insurance
First – slips and falls. For a contractor, this can happen either at the office or the jobsite. If you’ve ever had insurance companies, ask you about your practices for restricting access to job sites, this is why.
Second, Product and Completed Operations Liability coverage. This is a liability associated with your work.
Here’s a scenario, let’s say you install a circuit breaker in a commercial building. It passed inspection. 6 months later, the breaker malfunctioned due to improper wiring. The building owner files a claim of negligence against you. This would be a completed operations claim.
If instead, the panel was faulty, that would be a product liability claim.
Third – personal and advertising injury. If you take out an advertisement that offends somebody, that's also baked into a general liability policy.
2. Errors and Omissions Liability
I always find Errors and Omissions easier to explain after General Liability insurance. If General Liability is for lawsuits about hurting someone or breaking something, Errors and Omissions is because you forgot to do something, or failed to do something you promised to do.
This would be most applicable if you are doing design work, and the design is faulty. A faulty design can’t be property damage. The design didn’t break anything. It’s an intellectual mistake. It’s an error or omission.
3. Pollution liability.
According to an insurance policy, if something gets in the ground that doesn’t belong there, it’s a pollutant.
For example, if as part of a job, your team is hired to remove and dispose of old transformers equipment containing chemicals. In the process of disposing of that equipment, your team drops the transformer and chemicals spill into the ground.
You will have to pay for cleanup, fines by regulators, and damages from the pollution.
4. Workers Compensation
The next thing that you want to consider as part of your program is workers' compensation insurance.
If you're paying a helper, an employee, or a subcontractor, you should be thinking about workers' compensation.
The way it works in America is that if you pay somebody and they get hurt on your job site, if they don't have their own workers' compensation insurance, they can come back to your program.
This means you really don't get to choose whether you're responsible for somebody's injuries if they're working for you. All you get to choose is whether they have insurance that's going to pay for it or if you're going to be paying for it.
If you have somebody working for you, think about worker's compensation insurance.
5. Auto Insurance
If you own a vehicle in business, you should insure the vehicle.
If you are using your own personal vehicle and you have that insured under your personal insurance, you still need to be thinking about hired and non-owned auto liability to sit on top of your personal auto insurance.
Basically, every business needs some form of auto insurance, it's just that not every business owns a vehicle.
6. Umbrella
Depending on the size of your organization, you should be thinking about an umbrella.
An umbrella increases the overall amount of liability coverage that you have in your program.
Here are some examples of scenarios that could cause claim to go more than $1,000,000 -- working on large facilities, if people think you have money, vehicle accidents, to name a few
These are all factors that can increase the likelihood that you're going to have a multimillion-dollar claim.
As a result, if you have increased amount of assets, if you're working on large facilities, if you have a large fleet of vehicles, you should be considering the possibility that you may need more than $1,000,000 of liability coverage.
A lot of people don't tend to think about an umbrella until they have a contract that requires them to.
But if you're going to be proactive and risk conscientious, you should be thinking about the probability that there could be a scenario that goes over $1,000,000.
7. Property Insurance and Tools
The next thing that you should think about would be property insurance.
If you own a building, you need to insure the building.
If you rent a space and you need to insure the desks and chairs and equipment in the space, that's important.
Make sure you're evaluating your coverage needs for those issues.
But then also, if you have tools that are going on to job sites, make sure to think about that.
Make sure you're doing an inventory of all the property that you own, the equipment that's being used on job sites, and the equipment that other people are using, and make sure that people understand how your insurance program is going to interact and what they need to be carrying on their own.
8. Employment Practices Liability
If you have employees, you have a possibility that employees may not like how you either hired them or fired them.
And employment practices liability insurance helps you pay for the attorney and the settlement if you get sued for your hiring and firing practices.
These types of lawsuits happen frequently, and they are as varied as the human population.
A man changes gender to a woman, then claims they face hostile workforce.
A person doesn’t show up for work, then claims they were fired because of their race.
If you have employees, you could be sued for wrongful hiring and firing.
9. Cyber Liability
Look, computers are an integral part of what we do.
If you're keeping any type of data on your customers, if your systems get breached, you're responsible for credit monitoring services and damages that happen because of that breach. They could be blueprints, credit cards, or other data.
Or a cyber breach could cause a delay in completing a project. If your project management software goes down, would you be able to continue working?
Or an employee could respond to a phishing email. These emails have gotten much more sophisticated over the years.
In both situations you could be out substantial amounts of money, and a robust cyber program can protect you.
Conclusion:
My hope is that this list gives an “everything you need to know” guide for Maryland electricians wanting to audit their insurance program.
If you are looking for a more in-depth analysis of your situation, it’s always good to have a broker review your insurance program and your business to help you make educated decisions about your needs.
I can be contacted at insuranceforentrepreneursdh@gmail.com
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