What Happens If an Electrician Causes a Fire?

Say you run a three-person electrical shop. Midway through a panel upgrade at a client’s home, a wiring error ignites behind the drywall. Sprinklers knock it down, but the kitchen and part of the living room are scorched. The owner’s upset, the GC’s panicking, and you’re wondering: Who pays—and what happens next?

If your work sparks a fire, the property owner typically files a claim with your commercial general liability (CGL) insurer or, sometimes, with their own property insurer, which may pay first and then go after you through subrogation. CGL can cover third‑party property damage and legal defense, but it won’t pay to fix the faulty work itself. Contracts, state licensing rules, and which policies are in force all shape the outcome. As of October 2026, some states even require electricians to carry minimum liability limits. (iii.org)

Key takeaways

• CGL is the main policy for client property damage from an on‑the‑job fire; it generally covers resulting damage and defense, not the cost to redo your defective work.
• If the client’s insurer pays first, it can subrogate—step into the client’s shoes to recover from you or your insurer. (www-legacy.iii.org)
• State rules can apply: for example, Texas requires electrical contractors to maintain at least $300,000 per‑occurrence GL (as of October 2026). (tdlr.texas.gov)
• Other coverages that may help include business property/BOP, builders risk, contractors E&O, workers’ comp, and an umbrella. (content.naic.org)
• In the first 24–72 hours, secure the scene, notify carriers promptly, preserve evidence, document everything, and meet any OSHA reporting duties if a worker is hurt. (osha.gov)

Who pays for the damage when an electrician sparks a fire?

Usually your CGL handles third‑party property damage and defense if a claim or lawsuit alleges negligence. That means repairing the client’s fire damage up to your policy limits, subject to terms and exclusions. The Insurance Information Institute notes that CGL covers property damage or injury caused by your operations and typically pays defense costs and covered damages on your behalf.

Sometimes the property owner’s insurer pays first, then seeks repayment from you through subrogation. Cornell Law’s Wex defines subrogation as the transfer of the insured’s rights to the insurer after it pays a loss, allowing that insurer to pursue the responsible party. In practice, that might mean the homeowner’s carrier funds the rebuild, then sends a demand to you or your GL carrier. (law.cornell.edu)

Contracts can change how a claim flows. If you’re working under a general contractor, the GC may tender the claim to your policy if the GC is listed as an additional insured, and your contract may include indemnity obligations. Industry guidance shows how additional insured endorsements and indemnity clauses shift upstream and downstream risk—often deciding whose policy responds first. (agc.org)

Regulatory requirements matter too. As of October 2026, the Texas Department of Licensing and Regulation requires electrical contractors to maintain business liability insurance of at least $300,000 per occurrence, $600,000 general aggregate, and $300,000 products/completed operations; failure to maintain coverage is a sanctionable offense. Your state’s thresholds can differ, so check your board’s rules.

Does general liability cover fires from faulty electrical work?

Often yes—for the resulting property damage to others—but not for fixing your own faulty work. Standard CGL forms include “damage to your work” exclusions that remove coverage for repairing or replacing your defective work after completion; there’s usually an exception when a subcontractor performed that work. Courts and trade press often parse how these “your work” exclusions and subcontractor exceptions apply to contractors. Carriers can also add endorsements that narrow or remove those exceptions. That’s why you might see CGL pay for fire damage to the client’s home while you eat the cost to redo the bad wiring. (insurancejournal.com)

CGL’s products‑completed operations hazard is another key piece: once you’ve left the site, losses caused by your completed work (like a fire days after you finish) typically fall here, subject to your completed‑operations aggregate. The Insurance Information Institute’s overview of liability coverage and products‑completed operations explains how limits apply and why many contractors buy umbrella policies to increase limits. (www-prod.iii.org)

What other insurance can respond besides general liability?

Several coverages can either pay first (depending on the contract/policy) or fill gaps CGL doesn’t address.

According to the NAIC, a BOP is widely purchased by small businesses and bundles general liability, commercial property, and business interruption coverages. NAIC materials also note that commercial property covers fire damage to your own premises and that builders risk insures buildings and materials during construction.

For homeowners hiring you, homeowners policies generally include fire as a covered peril. If their insurer pays first, it may still subrogate against the contractor or subcontractor responsible. (content.naic.org)

What should you do in the first 24–72 hours after a job‑site fire?

• Make people safe and call the fire department. Don’t re‑energize anything until authorities clear it.
• Preserve the scene. Limit disturbance to damaged components; insurers will need to inspect. Bag and tag removed parts.
• Notify carriers immediately. Report the incident to your CGL (and to builders risk or property insurers if applicable). Share factual details; don’t admit fault on the spot.
• Document everything. Take photos/video, list damaged areas, note who was on site, and keep permits, inspections, and materials invoices.
• Coordinate with the property owner/GC on emergency repairs and temporary protection.
• If anyone was injured, determine OSHA reporting and recordkeeping duties. OSHA requires employers to report a work‑related fatality within 8 hours, and any inpatient hospitalization, amputation, or loss of an eye within 24 hours.

For context, electrical malfunctions remain a meaningful share of residential fires nationwide. The U.S. Fire Administration’s 2024 estimates show 26,400 residential building electrical malfunction fires, causing 255 deaths, 800 injuries, and about $1.56 billion in loss. These figures aren’t specific to contractor negligence, but they show the severity potential when electricity and structures mix. (usfa.fema.gov)

What would you do? A quick checklist

Run this before the next job—and re‑run it if a fire occurs.

• Contracts and COIs
  • Do you have a signed subcontract or service agreement that allocates risk and requires additional insured status for upstream parties where appropriate?
  • Have you collected and verified certificates of insurance from every sub, with endorsements for additional insured and waiver of subrogation where your contract requires it? See our guide on what happens if a subcontractor has no insurance.
• Coverage in force
  • Do you carry CGL with products‑completed operations and an adequate completed‑ops aggregate? Consider an umbrella for severe losses.
  • On active build/remodel projects, is there builders risk in place and do you know who purchased it—the owner, GC, or you? Compare responsibilities with builders risk vs. general liability for contractors.
• Operations and safety
  • Are your crews following electrical safety work practices and lockout/tagout procedures? Are energized work justifications documented?
  • Do you have an incident response playbook assigning who preserves evidence, notifies carriers, and coordinates with the AHJ and GC?
• State and licensing
  • Are your state license and required insurance current? For example, Texas mandates minimum GL limits for electrical contractors (as of October 2026). Check your board’s site for your state.
• Questions to ask your agent
  • Will my CGL cover resulting fire damage from my work, and what endorsements could limit that (e.g., “damage to your work” with no subcontractor exception)?
  • What are my products‑completed operations aggregates and do they reset annually?
  • If I’m added as an additional insured on a GC’s policy, how do those AI endorsements interact with mine?
  • If a client’s insurer subrogates after paying a fire loss, how will my carrier handle it?

Frequently asked questions

Bottom line

If your work sparks a fire, CGL is the workhorse policy for third‑party property damage and defense, but it won’t pay to redo your defective work. Contracts, additional insured status, and builders risk can shift who pays first. Keep licenses and required insurance current, tighten work practices, and have a response plan. For more on coverage and paperwork, see what to do after a contractor liability claim, electrical contractor insurance in California, and required insurance for California electricians.