Utility Contractor Insurance

Whether you need a license or permit depends on the type of utility work you do and the laws in your state and local jurisdiction. In some areas, you may need to be bonded and insured as well.

Here are a few examples of licenses and permits you might need:

• Business license. When you start out, you'll need to get a business license and register with your local government.
• Contractor's license. In some states, you'll need a contractor's license to work on water or sewer lines, electrical systems, gas lines, or other utilities. This often depends on the value of the projects you take on.
• Building permit. In most areas, you'll need a permit from your local building department to install, upgrade, or repair a utility system.
• Additional permits. You might need permits for work in the public right-of-way, equipment that emits pollutants, excavation, or hazardous materials, depending on your local regulations.

Even when it's not required, a license or certification can help elevate your business above the competition when trying to get a contract or win a bid.

For example, the Utility Safety & Ops Leadership Network (USOLN) offers a Certified Utility Safety Professional (CUSP) program, while the National Rural Water Association (NRWA) offers a Utility Management Certification (UMC).

Utility contractors aren't always legally required to have general liability insurance.

However, there are situations where you may need it, including:

• To get a license or permit. In some states, such as California, utility contractors need to carry liability insurance as part of the requirements for getting their license. Similarly, some jurisdictions require proof of insurance in order to get a permit.
• To sign a contract. Many clients, especially government agencies, will require you to carry insurance. It's often included in the terms of a contract, so your clients know they'll be financially protected in the event of an accident or lawsuit.
• To win contracts. Clients may choose to work with an insured and bonded utility contractor over a business that operates without these safeguards.
• To protect your business. Utility work is so high stakes that it's not worth the risk of working without insurance. If you damage a water line and flood a building, the recovery costs and legal fees could be financially devastating.

The cost of insurance for utility contractors depends on your business’s unique risks and the policies you buy.

Factors that affect your premiums include:

• Type of utility work and services. Whether you work on overhead electrical utilities, gas line installation, or water line repairs will affect how much you pay for insurance.
• Business size and revenue. Bigger businesses that earn more tend to pay more for insurance, as they're associated with costlier claims.
• Business location. Businesses in areas that are susceptible to flooding or property crime can expect higher insurance rates. Higher property values or healthcare costs can also drive up the cost of insurance.
• Number of employees. A larger workforce brings an increased risk of injuries, accidents, and lawsuits, which results in higher premiums for policies like general liability and workers' comp.
• Years of experience. A construction contractor who has been in business for a long time with a strong safety record and risk control measures may see a reduction in insurance rates.
• Insurance products. Some policies, such as general liability insurance, are more affordable than others, such as commercial auto insurance.
• Policy limits and deductibles. You can save money on insurance by choosing lower limits or a higher deductible. However, make sure you can easily afford the deductible and that your limits are sufficient to cover a potential claim.
• Claims history. Utility construction companies with a clean history of claims will pay less for insurance, which is another reason to focus on risk management.

Whether you lay underground cables or work on overhead power lines, utility contractors and construction businesses often benefit from the following types of coverage:

• Owners and contractors protective (OCP) insurance is a type of construction insurance that contractors buy to protect the project owner from any claims that arise from their work.
• Railroad protective liability insurance supplies liability coverage for utility work that takes place near railroad tracks or crossings.
• Commercial property insurance covers your office and its contents, including computers, furniture, and equipment stored at your utility company's office. If you don't have an office, you can buy business personal property (BPP) coverage to protect the items that belong to your business instead.
• Inland marine insurance covers tools and equipment that travel with you to worksites. It also protects items in transit and stored off site.
• Business interruption insurance, also called business income insurance, covers operating expenses and lost profits if a storm or other covered property claim forces your business to close temporarily.
• Contractors pollution liability insurance helps pay for cleanup and legal fees if your construction company is held responsible for harmful runoff or particulate from a jobsite.
• Commercial umbrella insurance boosts the coverage of your underlying general liability, commercial auto, or employer's liability insurance once the limit is reached on a claim.
• Surety bonds are often required in the construction industry. They reimburse your client if your business fails to comply with contract terms or regulations, such as OSHA safety standards.