A method for isolating voltage sensor errors from contactor errors in an electrical system includes measuring a voltage between ground and a voltage bus rail when a contactor is open, and comparing the measured voltage to a first threshold voltage corresponding to a calibrated voltage reading that is expected when the contactor is closed. A first diagnostic code is recorded with a stuck-in-range status for the sensor when the measured voltage is greater than 0 and less than the first threshold voltage. A second diagnostic code is recorded with a stuck-closed status for the contactor when the measured voltage is equal to the first threshold voltage. The measured voltage may be compared to a second threshold voltage that exceeds the first threshold voltage, with a third diagnostic code recorded with a shorted value for the sensor when the measured voltage exceeds the first threshold voltage or is less than 0.