License in my own name, insurance quote three times what I expected, and no jobs yet

Luis Mendoza· Licensed electrician going out on my own after nine years with a contractor· Registered, Trades & Contractors·

Nine years wiring houses for somebody else. Passed the exam, filed the entity in March, and I have now been a business owner for six weeks without doing a single hour of paid work.

The insurance is what stopped me. I called the first agent expecting a number like the one my old boss used to grumble about and got a quote roughly three times that. When I asked why, he talked about what I'd told him I might do, which included a bit of light commercial, and said the commercial piece changes the whole picture.

Then a general contractor I've known for years said he'd put me on a job if I could send a certificate naming his company as additional insured, and I had to look up what that meant on my phone in the truck.

Still open: whether I need workers comp with no employees, which my state seems to have opinions about; whether to carry my tools on the policy or eat a theft if it happens; and whether to get bonded now or wait until somebody asks.

What did you actually buy in year one, and what did you skip and regret skipping?

3 replies

Jamal Carter·

Additional insured certificates are completely routine, don't let that one rattle you. My agent turns them around the same day and doesn't charge me. Every GC I work for asks, and the ones who don't ask are the ones who don't pay, which I learned the expensive way.

Year one I bought general liability, commercial auto on the van, and tools coverage. I skipped bonding until a permit office asked for it, then got it in two days for less than I'd feared.

The commercial piece changing your quote is real. Tell your agent honestly what you actually intend to do this year rather than everything you're licensed for. Mine re-quoted me lower when I narrowed it.

Luis Mendoza·

'Tell him what you're actually doing this year' is the bit I got wrong. I listed everything I'm capable of because I was proud of the license, and priced myself as a commercial contractor with no commercial work on the books.

Calling him back Monday to re-quote as residential service and small remodels, which is the honest answer for the next twelve months. And I'll ask about adding the GC to the certificate at the same time, so I stop looking things up on my phone in front of people.

Miguel Alvarez·

Different trade, I'm opening a two-bay shop, but the insurance conversation was the same shape and it's the one thing I'd tell anyone to start early. Mine had a whole extra category because customers' vehicles sit on my property overnight, which I had not once thought about.

Get three quotes, not one. The spread between my cheapest and my most expensive was wide enough that I assumed I'd misread something. And ask each of them what isn't covered, because they all describe what is covered very enthusiastically and you have to drag the rest out of them.

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