There are a few requirements when applying for an electrical contractor insurance. Every state has different requirements so be sure to check your state and local requirements. Licensing will be withheld until the requirements of the insurance are met.
Why are these required?
Electrical contractor insurance protects both the consumer and contractor, with both commercial or residential electrical work. An electrical contractor must carry the appropriate liability insurance to cover any losses. If for example, the contractor does not complete a job, or if something should occur in during a job, the contractor will be held liable.
There are two types of liability insurance that protect the consumer and contractor.
- Electrical contractor insurance, which is required by all states. The amount of required coverage depends on the state you are working in and the cost of the job being performed. Check your states licensing board for specific requirements.
- There are also bond options that vary per state. Although they are not required in all cases, they add credibility to your business. There are 3 basic bond insurance policies that you, as a contractor should carry. A performance bond is required of the contractor. This bond assures that you, the contractor, will honor the contract. A bid bond is required for submitting bids for contracts. This assures that the contractor will stick to the bid proposed. Finally, a payment bond is required. This guarantees that the contractor holds the responsibility for and sub-contractor, material, and any other major job-related costs while performing the contracted work.
To be licensed as an electrical contractor, proof of the required bonds and electrical contractors insurance is a must have. Your application for a license will even be considered without this proof. Your insurance provider will supply you with the proper certification to prove you have the correct coverage. Your independent business insurance agent will be able to tailor your policies to your state requirements and your contracting needs.
How to Find the Best Deal For Your Electrical Contractors Insurance
Research your state requirements for electrical contractors insurance. Become an informed contractor. Check online and local business associations. In order to qualify for the bond insurance, you must prove to the issuing company that your business finances are in order. In most cases a flawless credit rating is also required. There are reasonable substitutes for the surety bonds. Letters of credit and electrical contractors insurance will work for some contracts.