MR. ELECTRIC

The Mr. Electric franchise agreement requires four core coverages — general liability, commercial auto, workers' compensation, and cyber liability — plus carrier minimums and endorsement language. The compliance section below covers all of it exactly as the 2025 FDD reads. The rest of this article addresses what those requirements do not cover: the shock injuries your standard policy may exclude, the unpermitted work your carrier can use as a denial defense, and the gap between the limit on your certificate and the dollar value of a single residential electrical fire.

The franchisor entity is Mr. Electric SPV LLC — a Delaware limited liability company organized November 13, 2020, with principal offices at 1010 North University Parks Drive, Waco, Texas 76707. Mr. Electric SPV LLC is a wholly-owned subsidiary of Neighborly Assetco LLC. The FDD requires you to name Mr. 

Electric SPV LLC — and any other person or entity Mr. Electric designates as Additional Insured — on all required liability policies. A certificate that names only "Mr. Electric" generically, or only "Neighborly," fails compliance review regardless of the limits the policy carries.

What the FDD requires you to carry:

Commercial general liability insurance at $1,000,000 per occurrence — including Products/Completed Operations and Personal Injury and Advertising Injury — and $2,000,000 aggregate. The Products/Completed Operations component is what responds when wiring you installed last year causes a fire this year. Personal Injury and Advertising Injury responds to claims arising from advertising statements and certain non-bodily-injury claims like wrongful entry. Both must be included in your general liability policy.

Commercial auto liability at a combined single limit no less than $1,000,000 and up to $2,000,000 if Mr. Electric specifies — on each owned, non-owned, or hired vehicle used in the business. Every service van, every truck, and every personal vehicle a technician uses for a job run is captured. Personal auto policies exclude commercial use, so an electrician's personal vehicle on a service call is not covered under their personal policy if there is an accident.

Workers compensation insurance — required regardless of whether your state mandates it. Minimum coverage at state-required levels if applicable. For an electrical franchise, this matters even more than for most trades. Electrocution is the second-leading cause of construction fatalities per OSHA's Fatal Four, and electrical contractors carry injury rates above the private industry average. Workers compensation is what responds when one of your employees is hurt on the job.

Cyber liability insurance at $500,000 per claim and $500,000 in the aggregate, covering financial losses from unauthorized access, loss or corruption of data, privacy and data security breaches, misdirected funds, virus transmission, denial of service, and loss of income from network security failures. Mr. Electric requires cyber coverage at a meaningfully higher limit than most home services FDDs. Take this seriously when binding your policy.

The FDD also requires the additional insured language described above, a waiver of subrogation in favor of all Additional Insureds on every required liability policy, and your insurance to apply as primary and non-contributory — meaning your policy responds first, before any coverage Mr. Electric SPV LLC carries. Your policies must be written by a carrier with an A.M. Best rating of A-VIII or better. The FDD permits you to satisfy required limits through an umbrella policy.

The Mr. Electric FDD does not include a separate "Recommended but not required" section — every coverage listed in Item 8 is mandatory.

What the FDD does not specify: occurrence form versus claims-made for general liability, specific additional insured endorsement form numbers (such as CG 20 10 or CG 20 37), or separate Employers Liability limits. None of those are stated in the Mr. Electric FDD's insurance section. They may still be coverages experienced operators choose to carry — see "What experienced Mr. Electric operators carry beyond the FDD minimum" later in this article for Rikor's recommendations.

Customer shock injuries are among the highest-severity claims an electrical franchise can generate. They are also the category where the gap between "my policy covers it" and "my policy responds to this specific claim" is widest.

Here is the standard coverage path: a customer is in the home when your electrician is working on a circuit. Something happens — a hot wire is brushed, a panel cover is removed at the wrong moment, a child reaches for a junction box. The customer is shocked. Medical attention is required. A claim is filed.

The general liability policy covers third-party bodily injury arising from your operations. A shock injury during active service work fits squarely inside that definition. The carrier reserves the claim and begins defense. So far, the policy is working as intended.

Where it starts to come apart depends on three details that surface during defense.

First: was your electrician licensed to perform the work being done at the moment of the injury? In many states, a journeyman can work under a master electrician's supervision — but only for specific categories of work. If the injury occurred during work that legally required a master's direct involvement and your master was not on site, your carrier has an exclusion path based on the policy's applicable-law provisions.

Second: was the property properly de-energized before the work began? Lockout-tagout procedures are required by OSHA for any electrical work where energized circuits are present. If your operation cannot produce records showing the circuit was tagged out at the time of the injury, the claim becomes harder to defend. The carrier may still respond, but defense costs grow and settlement leverage shifts.

Third: was the customer told to stay clear of the work area? If your technician was working on a kitchen circuit and the customer's child wandered into the area, the line between your operational negligence and the customer's supervision failure becomes a litigation issue. The general liability policy will respond, but contributory negligence rarely cuts the claim by enough to matter for high-severity bodily injury.

Unpermitted work is the most common path to a general liability coverage denial for electrical franchisees — and the one that most franchisees do not anticipate until the denial letter arrives.

The standard ISO commercial general liability policy includes a provision that excludes claims arising from work that violates applicable law. Performing electrical work that required a permit, without obtaining one, is a violation of applicable law in most jurisdictions. The carrier can apply the exclusion to deny the claim — and frequently does for residential service work in higher-litigation markets.

The mechanic is straightforward. Your electrician completes a job that required a permit. The work was done correctly. The customer is satisfied. Months later, a problem develops — a circuit fault, a fire, a code-inspection failure during a real estate transaction. The claim is filed. Your carrier reviews the file. The carrier checks for the permit. There is no permit. The denial follows.

This is not aggressive underwriting. It is the standard policy form applied correctly. The exclusion is in every standard ISO commercial general liability policy. The only thing that varies is whether your specific carrier interprets a permit lapse as triggering the exclusion. In a contested claim, the carrier's interpretation is what controls — and you find out which interpretation applies only when the denial letter arrives.

The prevention is operational, not insurance. Every job that requires a permit gets one. Every job ticket records the permit number. Every inspection date is logged. The certificate of insurance does not protect you from your own jurisdiction's permitting requirements — only your operational discipline does.

For Mr. Electric franchisees in particular, the exposure is elevated by the brand's residential service model. Service calls feel like maintenance. They often are. But the line between "minor repair" and "work that required a permit" is set by the state electrical code, not by what the homeowner thinks. A panel-mounted breaker swap may require a permit in your jurisdiction.

So may a circuit replacement that crosses certain amp thresholds. If your electricians do not know the local permitting rules by heart, your insurance is one of the things that fails when a claim arrives.

Inspection-related claims are the completed operations scenario that most directly threatens the boundary between general liability and professional liability. They are also the category where the language on your service ticket determines coverage more than the limit on your policy.

The standard scenario: a Mr. Electric franchisee performs a service inspection or troubleshooting visit. The electrician identifies a problem, recommends a repair, and either performs it or quotes it for later work. Months or years later, a fire occurs in the home. The investigation identifies a condition that — the plaintiff alleges — your electrician should have caught during the inspection. The claim follows.

The general liability policy covers bodily injury and property damage from your operations. If the fire damages property and your electrician's work is alleged to have caused or contributed to it, the policy should respond. So far, conventional.

Where this category becomes a professional liability question is in the inspection itself. If the plaintiff's case is "your professional inspection failed to identify a hazard that a competent inspection would have caught," the claim is not really about damage your work caused — it is about a professional judgment failure. Standard general liability does not cover professional judgment errors. The carrier will defend the claim, but it may simultaneously argue the loss does not fit the coverage. That dual-track defense produces settlement pressure: the carrier wants to close the file, the policyholder wants the claim either covered or dismissed.

The coverage that responds cleanly to this scenario is Contractors Errors and Omissions insurance. It covers professional judgment claims — including diagnostic and inspection-related allegations — that the general liability policy explicitly excludes. The Mr. Electric FDD does not require it. Experienced operators carry it because diagnostic and inspection work is the highest-frequency professional liability exposure in residential electrical service.

What protects the franchisee operationally is the inspection record. A service ticket that documents what was inspected, what was found, what was recommended, and what the customer declined creates the evidence that distinguishes a missed hazard from an unaccepted repair. Without that record, every inspection becomes a claim waiting to be filed.

Power surge claims are among the most disputed categories in residential electrical insurance — not because the damage is contested, but because the coverage question depends on whether your work caused the surge or your work failed to prevent one.

The two scenarios produce different outcomes.

Scenario one: your electrician installed a new circuit, panel component, or service entry, and a surge originated from that installation — a loose neutral, an improperly torqued lug, a wiring error that produced a voltage condition. Customer appliances and electronics are damaged. The claim is filed. Your general liability policy covers property damage arising from your operations. The carrier defends the claim. If liability is established, the policy pays the damage. This is the policy working exactly as designed.

Scenario two: your electrician installed a new panel or service entry, and a surge originated outside the building — a utility-side fault, a lightning strike, a transformer failure — that damaged customer electronics. The customer alleges your work created or worsened the surge path. The claim depends on whether the surge was your operation's responsibility or the utility's. The general liability policy will defend, but the defense is harder and the settlement leverage is lower because the cause is contested.

Scenario three: your electrician installed a system that did not include a whole-house surge protector, and the customer's electronics were damaged in a subsequent surge event. The customer alleges your professional recommendation should have included surge protection. This is a professional advice claim — not a property damage claim from your work. Standard general liability does not cover advice claims. Contractors Errors and Omissions does.

The dollar exposure on power surge claims varies widely. A whole-house electronics loss including HVAC controls, appliances, computers, and smart home equipment can exceed $20,000 in a high-end residential property. The defense costs to determine causation can exceed the loss itself.

For Mr. Electric franchisees, the prevention is professional and operational. Whole-house surge protection is part of every new panel installation quote. Service tickets document customer decisions on optional protection. The presence of a written recommendation — even if declined — converts a professional advice claim into an unaccepted-recommendation claim. The legal outcome is materially different.

Understanding what your insurance costs starts with how it is rated. For Mr. Electric franchises, both general liability and workers compensation premiums scale with your actual business activity — not a flat annual fee. The rate applied to that activity depends on classification and state.

General liability

General liability for electrical franchises is rated on revenue per $1,000 or payroll per $1,000, depending on the carrier. Your insurer takes your annual revenue (or payroll), divides by 1,000, and multiplies by the rate filed with your state's department of insurance for the NAICS 238210 classification — Electrical Contractors and Other Wiring Installation Contractors.

The filed rate is specific to your state. A Mr. Electric franchise in Texas and one in Illinois with identical revenue and identical coverage structures pay meaningfully different general liability premiums. That variation is real and not negotiable — state rates are filed rates.

At year end, your general liability carrier audits your actual revenue. If it exceeded the inception estimate, you receive an audit bill for additional premium. If it came in lower, you may receive a credit. Budget for a mid-year estimate update if your revenue is growing.

Workers compensation

Workers' compensation is rated on payroll — not revenue. Your carrier applies a rate per $100 of payroll based on the NCCI classification code assigned to your electricians based on the work they perform.

For licensed electricians performing residential and light commercial service work, the primary classification is NCCI code 5190 — Electrical Wiring Within Buildings and Drivers. This code should appear on your workers' compensation declarations page for service technicians doing day-to-day electrical work. If a different code appears, ask your agent why and confirm it accurately reflects what your electricians actually do.

The formula: your payroll divided by 100, multiplied by your state's rate for NCCI 5190, multiplied by your experience modification, equals your base workers' compensation premium.

Workers' compensation rates vary dramatically by state. For NCCI 5190, Florida is approximately $2.969 per $100 of payroll. 

New York runs approximately $5.76. Illinois voluntary market rates can reach $7.73. Texas loss cost rates are around $1.33. An electrical franchise with $500,000 in technician payroll pays dramatically different premium across these states — for the same work, the same crew, and the same classification code.

The second classification that may apply is NCCI code 5183 — Electrical Apparatus Installation for commercial tenant improvement work and new construction electrical installation. Code 5183 carries a higher rate than 5190 in most states. If your operation begins taking on commercial installation work without notifying your workers' compensation carrier, the year-end audit produces a reclassification bill.

Apprentices and the master rate problem

Mr. Electric franchisees who employ both master electricians and apprentices face a classification trap that surfaces at audit. The master rate (5190) applies to licensed electricians performing wiring work. Apprentices working under supervision may also be classified under 5190 — but only when the audit can confirm they were actually supervised.

If your apprentices were paid as electricians but worked unsupervised on jobs where state law required a master's involvement, the audit may reclassify their payroll into a higher-rated code, or the carrier may apply an audit penalty for misclassification. The exposure is not theoretical — it is one of the most common audit bills in electrical franchising.

The prevention is documented supervision. A job log that shows which master electrician supervised each apprentice on each job creates the audit evidence. Without it, every apprentice payroll dollar is a potential audit bill.

What the Mr. Electric FDD says

The 2025 Mr. Electric FDD requires four core coverages — general liability, commercial auto, workers' compensation, and cyber liability — at the limits described in the compliance section above. The FDD also requires A.M. Best A-VIII or better carriers, primary and non-contributory language, and waiver of subrogation in favor of additional insureds. There is no separate "Recommended but not required" section in the Mr. Electric FDD.

The Item 7 insurance cost estimate in the Mr. Electric FDD reflects initial deposit and first-year amounts, not the annual cost of a fully staffed operation. Use the FDD figure as a starting point — not as a budget. The actual annual cost for a single-territory Mr. Electric franchise with three to five electricians, two service vans, and standard residential operations typically runs $12,000 to $20,000 in Rikor's benchmark for electrical home services. That range moves based on the variables below.

The five variables that determine your actual number

Your state — both general liability filed rates and workers' compensation rates for NAICS 238210 and NCCI 5190 vary significantly. Your state is the single largest variable in your premium.

Your revenue and payroll — general liability scales with revenue; workers' compensation scales with payroll. Growth means higher premium at renewal if estimates were set low at inception.

Your fleet — each service van adds commercial auto premium based on vehicle type, age, and the driving records of everyone who operates it. A Mr. Electric franchise with four service vehicles carries materially more commercial auto premium than one with two.

Your claims history — one significant injury claim or completed operations claim affects both your general liability and workers' compensation renewal rates for three to five years. A clean loss run is worth real money at renewal.

Your apprentice ratio and supervision documentation — apprentices paid as electricians without supervision documentation create the most common audit exposure in electrical franchising. Operations with clean supervision records and well-classified payroll renew at meaningfully lower workers' compensation cost.

No published estimate accounts for all five. Your actual premium is built from your specifics — not an industry average.

The Mr. Electric FDD sets a substantial coverage floor: GL with full P/CO and PI/AI included, commercial auto at $1M minimum, workers' compensation regardless of state law, cyber liability at $500K, primary and non-contributory language, waiver of subrogation in favor of additional insureds, and A.M. Best A-VIII carrier rating. Where experienced Mr. Electric operators go beyond depends on the franchisee's specific operational profile: revenue, payroll, subcontractor expenses, years in business, vehicle count, and whether the operation pursues commercial accounts. The recommendations below are Rikor's baselines for newer franchisees doing primarily residential and light commercial electrical service. As your operation scales — past $1,000,000 in revenue, past 10 employees, into commercial tenant improvement work — these scale with you. Benchmarking is relative to your exposure. The numbers below are starting points, not universal prescriptions.

General liability on an occurrence form. The Mr. Electric FDD does not specify occurrence form versus claims-made. Rikor recommends occurrence form for every trades franchise without exception. For electrical work — where a circuit installed today can produce a claim three years from now — the occurrence form is what stays with you through the entire tail of your completed operations. A claims-made policy leaves you exposed every time you change carriers, every time a policy lapses, and every time the business is sold. The premium difference is small. The coverage difference is the difference between paid claims and denied claims.

Additional insured endorsements for both ongoing operations AND completed operations. The FDD requires AI status for Mr. Electric SPV LLC but does not specify which endorsements satisfy the requirement. Rikor recommends both ongoing and completed operations additional insured coverage. The completed-operations component is critical for electrical work — most electrical claims surface after the job closes.

Employers Liability — $1,000,000 each accident / per employee / policy limit. The Mr. Electric FDD does not separately specify EL limits — only WC at state-required levels. Rikor strongly recommends carrying EL at $1,000,000 across each line. EL is the lawsuit ceiling when an injured worker sues the employer, separate from the state's WC benefit structure. For electrical work where electrocution and arc-flash injuries can produce serious bodily injury claims that exceed statutory WC benefits, the EL coverage is what responds when an injured electrician sues.

Contractors Errors and Omissions — $1,000,000 each claim / $1,000,000 aggregate, exposure-gated. Covers professional judgment errors — diagnostic mistakes, inspection oversights, equipment specifications, advice given to customers — that standard general liability explicitly excludes. For Mr. Electric franchisees performing service work, diagnostics, and inspections every day, the professional advice exposure is real and continuous. Operations taking on commercial tenant improvement work or design-build electrical scope should treat this coverage as required, not optional.

Inland Marine / Equipment Floater. Sized to actual replacement value of electrical field equipment, ACV basis. The FDD does not address tools and equipment. Specialized test equipment — thermal cameras, wire tracers, panel analyzers, megohmmeters — runs $15,000 to $30,000 per van for a fully equipped service operation. Standard commercial property does not follow equipment off-site. Inland Marine does.

EPLI — $250,000 baseline, scaling with headcount. The Mr. Electric FDD does not require EPLI. The Rikor home services benchmark recommends $250,000 each occurrence and $250,000 aggregate as the baseline for newer franchisees, scaling to $500,000–$1,000,000 once you cross 10 employees or $750,000 in revenue. Add Third-Party EPLI endorsement (covers harassment or discrimination claims filed against your electricians by customers — a real exposure when crews work inside customer homes) and a Co-Defendant or Franchise Endorsement that extends your EPLI coverage to defend Mr. Electric SPV LLC in joint-employer claims.

Commercial Crime — $250,000 minimum with third-party crime endorsement. The FDD does not address crime coverage. Rikor benchmark: $250,000 with Third-Party Crime / Theft of Customer Property endorsement and Loss Discovered form. For an electrical franchise where technicians work inside customer homes — often unsupervised, often in rooms the customer is not occupying — third-party crime coverage is the primary exposure. Standard crime policies cover theft from your own property only; without the third-party endorsement, theft from a customer's home is uncovered.

Independent Contractors Liability endorsement on GL. Electrical franchises commonly use 1099 sub electricians for specialty work, overflow, or commercial scope. Most standard general liability policies do not automatically cover damage caused by uninsured subcontractors. Rikor recommends an Independent Contractors Liability endorsement on the GL policy so that work performed on your behalf by 1099 electricians is covered without dispute when a claim arrives.

Umbrella — indifferent for newer residential operations, contract-driven for commercial. The Mr. Electric FDD permits an umbrella to satisfy required limits but does not require umbrella as a standalone coverage. The Rikor home services benchmark stance on umbrella for newer residential franchisees is indifferent — neither required nor recommended for operations below approximately $2,000,000–$3,000,000 in annual revenue. 

Umbrella becomes appropriate when commercial accounts require $2,000,000+ certificates of insurance (most commercial property managers and general contractors do), when revenue scales past $2,000,000–$3,000,000, or when the operation pursues high-value commercial tenant improvement work with single-job exposure that could approach underlying GL or auto limits. For most newer Mr. Electric franchisees doing residential service, umbrella is contract-driven rather than benchmark-driven — let the contracts you want to win determine the limit you need.