For a cleaning business, difficulties in handling client property damage, third-party bodily injury, employee injury, and potential theft of client possessions can affect your company’s profitability if you don't have adequate insurance. Insurance for cleaning businesses covers your business for the ramifications of adverse incidents, helping you mitigate financial strain and keep your enterprise profitable.
Business Insurance for a cleaning company can help you deal with risks you may face as a business owner, from a customer slipping on a recently mopped floor to being accused of damaging someone’s property. Being insured against accidents or threats to your business is crucial in keeping your business afloat when mishaps occur.
Who Needs Cleaning Business Insurance?
Types of businesses that need cleaning business insurance include:
- Carpet Cleaning
- House Cleaning
- Laundry Services
- Janitorial Services
- Construction Cleaning
- Office Cleaning
- Commercial Cleaning
Recommended Cleaning Business Insurance Coverage
General Liability Insurance
General Liability insurance for cleaning businesses often covers common business risks such as customer injuries, customer property damage, and advertising injuries. It safeguards your business against high legal costs and is usually required to be able to lease commercial space, bid on a job, or execute a contract.
Many cleaning service business owners typically purchase general liability insurance before seeking other coverage. This policy provides liability coverage related to the following:
- Third-party bodily injury
- Customer property damage
- Personal & Advertising injury
Third-party Bodily Injury
General Liability insurance for cleaning companies pays for repairing or replacing your customer’s belongings which are accidentally broken by one of your employees on a cleaning job. An employee could very easily break an expensive figurine or vase while dusting. If there is a disagreement about the cost associated with a repair, and the client files a suit, the General Liability insurer would defend your business and pay what the court awards for covered claims.
- Third-party damages
- Attorney's fees
- Court-ordered judgments
- Negotiated settlements arranged outside of court
This policy does not cover employee injuries, workers’ compensation insurance covers employee injuries.
Third-party Property Damage
General Liability insurance for cleaning businesses pays for repairing or replacing your customer’s belongings property which is accidentally broken by one of your employees on a cleaning job. An employee could very easily break an expensive figurine or vase while dusting. If there is a disagreement about the cost associated with a repair, and the client files a suit, the General Liability insurer would defend your business and pay what the court awards for covered claims.
Personal & Advertising Injury
Copying another company's logo or slogan could result in a lawsuit, which is why a careful review is necessary before releasing your advertisements. What you or your employees say about people or businesses can also get you into trouble with personal injury claims. Legal defense is covered by General Liability insurance for covered occurrences, as well as Personal and Advertising Injuries, which include:
- Defamation of character, both libel (written) and slander (spoken)
- False arrest
- Invasion of privacy
- Wrongful detention
- Copyright infringement
Workers’ Compensation Insurance
Workers' compensation insurance pays the associated medical costs and a portion of lost wages statutorily required for employees hurt on the job. Illnesses may be covered, but a disease has to be a direct result of the job to be compensable; think of black lung disease suffered by coal miners years ago-this disease was only caused by the work done in the mines. Workers' compensation insurance is required in most states, depending on the number of employed staff a company has. Check the requirements in your state before you forgo this coverage. Penalties and fines can be stiff.
Employee injury benefits
When a job-induced injury occurs, workers' compensation insurance helps compensate employees and provides coverage for the following:
- Immediate medical costs, such as an ambulance ride and emergency room expenses
- Ongoing medical costs, such as medications and physical rehabilitation
- Partial lost wages while the employee is unable to work
- Death benefits for fatal incidents
Employers’ liability coverage is typically included with a workers’ compensation policy and provides defense when an employee sues their employer for negligence in causing their injury. If the court agrees, this coverage would respond to the awarded compensation.
In one situation, one of your window washers may complain about vertigo and require a reduced or modified workload. If you don't accommodate the request and that employee falls off the scaffold, you will most likely face a lawsuit. In that case, employers’ liability insurance for cleaning business covers:
- Court costs
- Settlements or judgments
- Witness fees
Without Workers' Compensation coverage, you will pay for your own defense and damages awarded.
Commercial Auto Insurance
Your employees most likely depend on your cleaning company's vans to travel to customers. If an employee gets into an at-fault accident and injures another driver, it could cause serious financial problems for your company. An automobile accident liability lawsuit could result in enormous debts for your company, and maybe put it out of business, particularly if another party is injured.
Commercial Auto insurance covers third-party injury and property damage when your employee driver causes an accident. The costs related to car crashes have steadily been increasing in recent years with people on their phones while driving (more accidents) and the extensive electronic equipment now standard in most vehicles, increasing the costs of repairs. Comprehensive and collision physical damage covers business-owned vehicle damage, less the deductible.
Your cleaning business insurance policy can be adapted to match your company’s needs. For instance, a pool cleaning service may only serve clients within a certain-mile radius, reducing risk. Heavy trucks, like septic tank cleaning services, need higher liability limits on their business auto policies because of the amount of damage or injury they could wreak.
Statutory and optional coverage is also purchased on a business auto policy; besides auto liability, you may opt for medical payments, personal injury protection (aka no-fault), uninsured motorists coverage, rental reimbursement, towing, and permanently attached equipment.
Business Owner's Policy
A Business Owners Policy (BOP) comprises business property insurance and General Liability insurance. It typically costs less than buying the policies separately. It is a requirement for many cleaning businesses. General liability is usually required in most premises lease agreements.
A Business Owner's Policy can help cover the costs of:
- Lawsuits involving third-party injuries or property damage.
- Lost or stolen business equipment
- Damage to owned assets, building, contents etc. by covered perils
- Libel, copyright infringement, and other types of advertising-injury lawsuits.
Commercial cleaning often entails heavy-duty cleaning and waxing machines that are very expensive to replace and may cause significant damage if incorrectly used. Therefore, this policy is vital for house cleaners, housekeepers, carpet cleaners, and window cleaners.
General Liability Insurance
Customer Injuries or Property Damage
The Business Owner's Liability insurance can cover medical expenses, legal fees, and other costs associated with injuries sustained by customers or third parties from business operations, such as:
- Accidental damage caused by your cleaning crew
- A homeowner tripping over cleaning equipment used by your staff
- A client injury at your office
General Liability is also a part of a BOP that covers injuries resulting from cleaning services, including:
- Defamation, including libel (written) and slander (spoken)
- Copyright infringement
For example, if you slander a rival's work at a business event and are sued, liability insurance coverage may help cover legal costs.
Damage to your cleaning equipment and other business property
Commercial Property insurance in a BOP can protect you from the unforeseen financial loss of:
- Business equipment, such as vacuums, shampooers, ladders, etc.
- Office furniture and fixtures
- The building if you own it
If your equipment was stolen or a fire occurred at your business, your Business Owner's insurance policy will assist with the replacement of lost items or the costs of repair.
If your cleaning business must close because the building was damaged by a covered peril (fire, tornado, hurricane, riot/civil commotion) and you cannot conduct normal business operations, Business Interruption insurance for cleaning business can prevent a financial disaster by replacing net income. Your company will be able to pay ongoing expenses.
Commercial Umbrella Insurance
Once the insurance limit of a policy has been paid out in claims, Commercial Umbrella insurance provides an additional layer of coverage up to the limit purchased. An umbrella policy can be written in conjunction with the General Liability, Commercial Auto Liability, or Employer's Liability policies.
Your legal costs can quickly add up to the point that your insurance coverage isn't enough to cover them. Umbrella liability insurance, similar to excess liability insurance, may pay for claims that exceed the liability limit on your underlying insurance policy.
The policy can boost the coverage limits of your insurance for commercial cleaning business:
- General Liability insurance
- Commercial Auto insurance
- Employer’s Liability insurance (part of workers' compensation insurance)
Many cleaning businesses choose Umbrella insurance policies to satisfy their customers' contracts that may require limits in excess of $2,000,000.
Janitorial Service Bond
A third-party services bond is often required before people or businesses hire a cleaning company. Because cleaning companies have access to residences or commercial spaces often when unoccupied to perform their work, there is always a chance that an employee may steal something from a client location. Or, it’s possible that a break-in could occur later if a door were “accidentally” left unlocked. Although you may trust your employees, their access to private homes and offices may be a temptation.
This cleaning service bond provides coverage related to the following:
- Employee theft of money or property
- Client contracts
How Much Does Cleaning Business Insurance Cost?
The precise amount of premium you will pay will vary according to the following:
- The types of cleaning services you offer
- The kind of facilities you clean
- Employee payroll and the kind of work they do
- If you have business-owned vehicles
- Claim history
- Have a brick-and-mortar location
Frequently Asked Questions (FAQ) about Cleaning Business
1. What is bonding for cleaning businesses?
Insurance policies and bonds for cleaning businesses are similar as both protect the Insured from different loss types occurring from operations. But that is where the similarity ends. Bonds are not insurance, if a bond pays out, the bonding company looks to the person or business which caused the loss, for reimbursement of what the bond paid. Restitution from the liable party is collected. Insurance pays claims without reimbursement from any source (unless subrogation to an at fault party is an option).
Consider the case of a disgruntled cleaning employee who steals property from a client. If that were to happen, a third-party employee dishonesty bond guarantees reimbursement to a client for theft by your employee up to its maximum limit. Most cleaning business service bonds have limits between $5,000 - $10,000
General liability insurance pays for litigation defense and awarded damages, for claims from third parties for bodily injury and property damage caused by your business. If your team causes any damage to the customer’s home, general liability responds. The business service bond will hopefully never be needed, but having it in place to pay for dishonest acts of employees is a good idea.
2. How much does liability insurance cost for a cleaning businesses?
A liability insurance policy’s cost for a cleaning business starts between $1,000 to $5,000 annually, but this premium depends on your company’s annual revenue and the cleaning services offered. Many factors go into determining the General Liability premium.
3. How much does carrying Workers’ Compensation insurance for a small cleaning company cost?
In most states, businesses with employees must comply with the state requirements where the business operates to avoid penalties. For an annual Workers' Compensation policy, cleaning companies pay an average rate of $2.50-3.50 per $100 of payroll.
4. What type of insurance does a small cleaning company need?
The type of insurance for small cleaning business is General Liability, Workers’ Compensation, Commercial Property, Business Owner’s Policy, Commercial Auto Insurance including Hired and Non-Owned liability, Commercial Umbrella insurance, and a Janitorial Services Bond.
5. How much is a business services bond for a cleaning company?
It is usually inexpensive to purchase a janitorial bond, also called a business services bond. Most homeowners and companies often ask for evidence of this bond from their cleaning companies. 78% of small residential cleaning businesses pay $100 to $150 per year, which is $8 a month.
6. What type of insurance is required for a duct cleaning company?
A duct cleaning company requires the same types of insurance as a cleaning company needs, General Liability insurance, Workers’ Compensation, Business Auto, a Business Services bond, Commercial Property, and a Commercial Umbrella policy.