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Insurance for cleaning business
Cleaning Business Insurance: Cost & Coverage for Janitorial Insurance
Cleaning business insurance (aka janitorial insurance or janitorial services insurance) includes general liability, commercial vehicle insurance, workers’ compensation, and more. Janitorial insurance coverage costs range from $375 – $5,000+ per year. Every cleaning business, from residential maid services to full-service commercial janitorial companies will need cleaning business insurance.
Janitorial insurance covers a wide range of companies, from large to small, from high risk to low. Hiscox understands the many risks and needs of the cleaning industry and can make sure you get the coverage you need at an affordable price. You can get a no-obligation quote online in minutes.
Types of Cleaning Business Insurance Coverages
Cleaning businesses come in many different shapes and sizes, and so does cleaning business insurance coverage. The most fundamental insurance coverage you’ll need is general liability insurance. Depending on the size and scope of your cleaning business, there are other insurance coverage types you may need, especially if your business has employees and owns vehicles.
Cleaning Business Insurance Coverage Types and Janitorial Bonds
General Liability Insurance
General liability insurance coverage protects against third-party claims for bodily injury or damage to property. Therefore, a GL policy will cover your cleaning business for damage to a client’s property while doing your work. Since a liability lawsuit may be your greatest financial risk, general liability is the most important coverage type for most cleaning businesses.
According to John Espenschied, Agency Principal, Insurance Brokers Group:
“Every cleaning business should own general liability insurance, especially when they will be working on the premises of a client’s place of business or personal residence. The potential for damage to a third party’s property, even if you are not at fault, may result in expensive court costs and lawyer fees. Also, most companies you do business with will ask for proof of insurance or a certificate of liability insurance.”
Commercial Property Insurance
Commercial property insurance covers assets of your cleaning business other than your vehicle(s). These assets may include building space, cleaning equipment and supplies. You will choose to insure either at current value or replacement cost. Current value replaces at market value and has lower premiums, whereas replacement cost replaces with new property but has higher premiums.
Business Owners Policy
A business owners policy (BOP) can be a smart way to combine insurance for cleaning business or janitorial insurance coverages into one bundled package. A BOP usually combines general liability and property insurance and this two-policy bundle is almost always lower in premium compared to buying the two coverage types separately. When possible, get the BOP package.
Commercial Vehicle Insurance
If your cleaning business owns a car, truck, van, or combination of vehicles, and one of your vehicles is involved in an accident, commercial vehicle insurance will cover you for repairs and lawsuits and can cover you for damage caused by an uninsured driver. Coverage is similar to personal auto policies, although premiums may be higher.
Most states require workers’ compensation coverage when you have employees, who may frequently face several work hazards, such as wet floors, stairways, and dangerous chemicals. A business owners’ policy will not always include workers comp insurance, which covers work-related injuries, medical bills, wage replacement and more for your employees.
Umbrella insurance provides coverage above the limits of your liability insurance. A common way insurance claims rise above standard liability limits is from a lawsuit. For example, if you have a general liability limit of $2 million and your cleaning business has legal fees of $2.5 million, umbrella insurance can cover the $500,000 excess.
In addition to the types of coverage listed above, it’s common for larger janitorial services companies to be bonded. Surety bonds work differently than liability insurance but are often discussed at the same time. A janitorial surety bond insures fulfillment of your contract and can cover theft from your employees. Click here to learn more about janitorial bonds.
Cleaning business insurance is unique to each company and will depend upon the size of your business, number of employees, types of jobs you take on, and more. To get an idea of what coverage your janitorial business, obtaining a quote is a good place to start. If you’d like to get a free, no-obligation quote online, Hiscox can help.
Cost of Cleaning Business Insurance
The cost of cleaning business insurance can range from about $375 – $5,000. Small cleaning business needing only general liability coverage can typically expect costs of $375 – $800 per year. On the other hand, a full-service cleaning company that needs a robust business owners’ policy and addition coverage (with a building, commercial vehicles, and employees) should expect to pay several thousand dollars per year.
Cost of Cleaning / Janitorial Insurance and Surety Bonds
At a minimum, the cleaning business and janitorial insurance coverage needed is general liability. If you use equipment that is so expensive to replace that it could hurt your business, you’ll definitely want property insurance coverage as well. In this case, you are wise to package the two policies into one business owners’ policy.
How to Buy Insurance for a Cleaning Business
Buying insurance that is industry specific like janitorial insurance is not like buying other forms of insurance that are standardized and easy to find, such as life insurance or health insurance. Before shopping for insurance policies, there are a few important things to know that can help you get the best policy for your cleaning business.
Here are the primary documents and information you’ll need to gather when shopping for insurance:
- Business contact information
- Revenue estimates for the year
- Number of employees
- Number and type of vehicles used for the business
- Details about the nature and risk exposures of your work (to what extent you work with the public, hazardous materials, etc)
- Claims history (at least the past 3 years)
- Insurance requirements (lease requirements, license requirements)
Here are three things to know to help you buy business insurance:
1. Know Your Risk Exposures
Every business has risks that are inherent to that business. In the cleaning business, risks include injuries to you or your employees from slips and falls or exposure to dangerous chemicals, damage to your client’s property, and accidents occurring while traveling to and from work locations. Even a minor injury can turn into costly lawsuits.
2. Look for Value, Not Price
You don’t want to be underinsured or over-insured. The cheapest policies with minimal coverage limits will not likely be the best policies for your business. The most expensive policies with too much coverage can unnecessarily cut into your financial bottom line. If you combine coverage into a business owners’ policy, you can maximize coverage while minimizing price.
3. Use an Agent or Broker That Knows Your Business
It’s important that you work with someone that knows your industry, which means they’ll be able to understand the risks involved and how to cover them sufficiently to protect your business. Since you know your business better than anyone else, you’ll know after a brief discussion whether or not an agent or broker specializes in covering cleaning businesses.
“Cleaning companies have very specific needs when it comes to insurance and there are only a handful of companies who specialize in working with them. This is especially true when it comes to workers compensation. In my first few years of business, I used three or four insurance companies instead of one. Once I found a company that specialized in insurance for cleaning companies, I consolidated coverages and saved about $6,000 per year. Spend the time and do the research. Find someone who knows about your niche.”
It’s wise to speak with insurance professionals that are knowledgeable of your business. Done right, the process of buying insurance should be simple, affordable and tailored. If you’d like to get a free, no obligation quote to accurately estimate the costs of your cleaning business insurance in a matter of minutes, the experts at Next Insurance can help.
Where to Get Cleaning Business Insurance
There are two primary sources of obtaining insurance for cleaning businesses: agents and brokers. It’s wise to get at least three quotes before buying an insurance policy. It’s also wise to find an A-rated agency. You can search for top-rated insurance agencies through rating services like A.M. Best or Fitch Ratings.
1. Insurance Agents
When searching for cleaning business or janitorial insurance through an agent, you are typically dealing directly with one insurance company. This means you’ll need to do some shopping and get quotes through at least three different agents representing three different insurance companies to get a good idea of the right coverage at the right price for you.
2. Insurance Brokers
Insurance brokers represent multiple insurance companies, which means they can help you find the best cleaning business insurance coverage for you by searching the marketplace for the best value and for top-rated agencies. When selecting a broker, be sure to find one that has experience working with several different insurance companies with knowledge of the cleaning business industry.
Getting the right insurance for a cleaning business doesn’t need to be a difficult process. During your search for cleaning or janitorial insurance, be sure to speak to a reputable insurance agency, like the experts at Hiscox. You can get a free, no hassle, no obligation quote online in minutes.
What Janitorial Bonds Are & Who Needs Them
A janitorial bond is a three-party agreement between the cleaning business, the client, and the insurance company (or surety). The agreement states that you, the cleaning business, will pay a certain amount if you don’t deliver on your contract. Rather than you paying the client out of pocket, the surety will pay the client and you will pay the surety back over an agreed upon term.
As you can see, Surety bonds work more like loans than conventional insurance products. Because of that, getting a janitorial bond is a little more like qualifying with a lender. They want to see more established companies with good track records and owners with good finances. That can make getting a janitorial bond difficult for startups. Janitorial bonds typically cost $100 to $200 per year for up to $100,000 in coverage.
Being a “bonded” cleaning company can help you acquire more lucrative contracts. Larger companies that can’t afford major disruptions often require commercial cleaning businesses to obtain a janitorial bond to ensure they’re not left in the lurch if your business fails to deliver. According to a recent study, office buildings comprise the largest segment (31%) of the commercial cleaning contracts. But to land an office building, you’ll often need to be bonded.
According to Jeremy Schaedler, President, Schaedler Insurance Agency, Inc:
“While often an afterthought to business liability insurance, cleaning businesses should strongly consider buying a janitorial bond as well. A janitorial bond is a great form of advertising for cleaning businesses because it tells potential customers their business is trustworthy. The bond serves the purpose of protecting clients in the event of theft by the business’s employees. This bond typically can be purchased for amounts ranging from $10,000 to $100,000 in coverage and is very affordable most of the time with premiums starting in the low $100 range per year.”
Bottom Line on Purchasing Cleaning Business Insurance
Every cleaning business, whether it’s a sole proprietor house cleaning service, a full-service janitorial cleaning company, or even a cleaning service franchise, needs a good small business insurance policy. Even if you don’t have business assets or expensive equipment to cover, you may still be liable for third-party damage or theft. Fair or not, everyone always blames “the help” when something goes missing.
Purchasing the right insurance for your janitorial services company can be a relatively inexpensive way to prevent a loss so severe it’d put you out of business. If you need a quick, no-hassle quote on cleaning business or janitorial insurance, a good place to start is with the expert agents at Hiscox.
About the Author
Kent Thune specializes in small business insurance, small business finance, and personal finance for small business owners. Kent holds the distinction of holding a CFP(R) and an MBA, along with 20 years’ experience in finance and 12 years as a small business owner. When not writing or advising clients on their finances, Kent spends time with his wife and two young boys at his home in Hilton Head Island, SC.
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