If you run an electrical contracting business, you already know the work is risky. You're dealing with live wires, working in cramped spaces, and installing systems that could cause serious damage if something goes wrong. One faulty connection could start a fire. One exposed wire could send someone to the hospital. And when that happens, the person holding the bill isn't your client—it's you.
That's where general liability insurance comes in. It's not just a nice-to-have. For most electrical contractors, it's required by law, demanded by clients, and absolutely essential for protecting your business from claims that could put you out of operation. Whether you're a solo electrician or running a crew, understanding what GL insurance covers—and what it doesn't—can save you from financial disaster.
What General Liability Insurance Covers for Electrical Contractors
General liability insurance is built to protect you from claims made by third parties—clients, property owners, visitors to your job site, anyone who isn't on your payroll. The coverage breaks down into four main categories:
Bodily injury coverage kicks in when someone gets hurt because of your work. Maybe a client trips over your extension cord and breaks an ankle. Maybe a homeowner gets shocked by an exposed wire you were working on. An average of 125 electrical shock incidents happen every year, and the average slip-and-fall claim costs around $20,000. Your GL policy covers medical bills, legal fees, and settlements if you're sued.
Property damage coverage handles damage you cause to someone else's stuff. If you accidentally drill through a water pipe and flood a client's basement, or if your wiring mistake fries their expensive home theater system, this coverage pays for repairs or replacement. These claims can add up fast—especially in commercial settings where equipment costs hundreds of thousands of dollars.
Personal and advertising injury coverage protects you from claims like slander, libel, or copyright infringement. This matters less for most electrical contractors, but it's part of the standard package.
Completed operations liability is absolutely critical for electrical work. This covers problems that surface after you finish a job and leave the site. If a wiring fault you installed six months ago causes a fire, you're still on the hook—and fire damage claims can easily hit six figures. Without this coverage, you could be paying out of pocket for work you thought was done and dusted.
Why You Actually Need It (Beyond "Everyone Says So")
Let's be blunt: most states won't even let you get an electrical contractor license without proof of general liability insurance. Texas requires a Certificate of Insurance showing at least $300,000 per occurrence and $600,000 aggregate. Oklahoma requires $50,000 minimum. California wants $1 million per occurrence and $2 million aggregate for C-10 electrical licenses. If you can't produce a valid COI, you can't legally operate.
But even if your state has lower minimums, your clients won't. Virtually every commercial project owner requires $1 million per occurrence and $2 million aggregate coverage before they'll let you bid. General contractors demand Certificates of Insurance at pre-construction meetings. Building owners want to see proof before you access electrical rooms. Landlords require it before leasing you shop space. Without a current COI, you're not getting the job.
And here's the thing that surprises a lot of contractors: the real financial risk isn't the premium you pay—it's what happens if you don't have coverage. One lawsuit from a serious injury or fire could bankrupt your business. Legal defense alone can cost tens of thousands of dollars, even if you win. A settlement or judgment could force you to liquidate assets, lose your home, or shut down permanently. The $57 to $72 per month you pay for GL insurance is cheap compared to that outcome.
Standard Coverage Limits and What They Mean
General liability policies use two numbers: per occurrence and aggregate. The per occurrence limit is the maximum your insurer will pay for a single claim. The aggregate limit is the total they'll pay for all claims during your policy period (usually one year).
The industry standard is $1 million per occurrence and $2 million aggregate—often written as $1M/$2M. This is what most commercial clients require, and it's what most insurers quote as their baseline package. You'll also typically see $1 million for products and completed operations aggregate, which specifically covers issues that arise after you finish a job.
Some contractors think they can save money by going with lower limits. That's a mistake. First, you'll be shut out of most commercial work. Second, if a claim exceeds your limits, you're personally liable for the difference. If you have a $500,000 policy and face a $1.2 million judgment, you're writing a check for $700,000 out of pocket.
For high-risk projects—tract homes, schools, hospitals, historical buildings—you may need higher limits. Insurance carriers often require $2 million to $5 million in coverage for these jobs and charge 30-50% higher premiums. If you're bidding on a hospital renovation or wiring a school, expect your client to demand proof of higher limits and umbrella coverage before you start.
What General Liability Doesn't Cover
This is important: general liability only covers third-party claims. It doesn't protect your business from everything that can go wrong.
If one of your employees gets hurt on the job, GL won't cover it—that's what workers' compensation insurance is for. If your tools get stolen from your truck (and tool theft is rampant in the construction industry), GL won't replace them—you need inland marine or tool insurance. If you give bad advice and a client sues you for professional negligence, GL won't defend you—that's professional liability or errors and omissions insurance.
And if you cause an accident while driving to a job site, your personal auto insurance probably won't cover it if you're using your vehicle for business. You'll need commercial auto insurance for that.
Most electrical contractors end up carrying a bundle of policies: general liability, workers' comp, commercial auto, and inland marine at minimum. Some also add umbrella insurance to boost their liability limits beyond the standard $1M/$2M, especially if they work on large commercial projects.
How Much You'll Actually Pay
The average electrical contractor pays about $57 per month for general liability insurance—roughly $684 per year. But that's just an average. Your actual premium depends on several factors.
Revenue is the biggest factor. A solo electrician doing $100,000 in annual sales will pay less than a contractor with ten employees pulling in $2 million a year. Your claims history matters too—if you've had multiple claims in the past few years, expect higher rates. Location plays a role; contractors in high-cost-of-living states typically pay more. And the type of work you do affects pricing. Residential service calls are lower risk than industrial installations, so you'll pay less.
Most contractors pay between $500 and $1,200 annually for $1M/$2M coverage. If you're just starting out with no claims history and low revenue, you might pay closer to $42 per month. If you're bidding high-risk projects or have a claim on your record, you could pay $200 or more per month.
How to Get Coverage and What to Look For
Getting general liability insurance isn't complicated, but you want to make sure you're buying the right policy. Start by talking to an insurance agent who specializes in contractor coverage—they'll understand your specific risks better than a general agent.
Make sure your policy includes completed operations coverage with an aggregate limit that matches your general aggregate. This is non-negotiable for electrical work. Ask about additional insured endorsements—most general contractors will require you to name them as an additional insured on your policy before you start work.
Review your policy annually. As your business grows, your coverage needs change. If you're taking on bigger projects or expanding into new types of work, you may need to increase your limits or add endorsements. And make sure you understand the renewal process—many states require 30 days' notice before your policy expires, and you'll need to submit updated Certificates of Insurance to maintain your license.
General liability insurance isn't glamorous, and writing that check every month doesn't feel good. But it's the foundation of a sustainable electrical contracting business. It keeps you legal, gets you in the door with clients, and protects you from the kind of catastrophic loss that ends careers. If you don't have coverage yet, get it today. If you do have it, make sure it's actually enough.
