Types of Insurance Policies for Cleaning Businesses
Real-Life Cleaning Business Insurance Examples
Janitorial Service Bonds vs. Insurance
How Do Claims Work?
Cleaning Business Insurance Recap
It’s well known that many businesses can benefit from insurance, but did you know that cleaning businesses can as well? Not only can businesses benefit from cleaning insurance and bonds, but they are legally required to have them in many cases. This is why we will be delving into the different types of cleaning business insurance, letting you know when each type is needed and discussing the difference between insurance and janitorial service bonds.
A cleaning business consists of individuals or groups paid to clean anything from residential homes to office buildings. Mistakes happen, and cleaning business insurance can protect an organization's property and employees.
General Liability Insurance: This is a type of business insurance that offers coverage for bodily injury and property damage. With it in place, you will have coverage for items like court bills and medical expenses if an incident occurs while cleaning a person's property.
General liability insurance can go by many other names, such as business liability insurance, commercial general liability insurance, commercial liability insurance, general liability business insurance, and more. Although there may be minor differences between these, they all generally refer to the same thing.
This coverage is essential for cleaning business insurance as it protects against accidents that can occur while working on someone else's property. What if, for example, a cleaner slips and injures themselves while cleaning a washroom, a sculpture gets knocked over by a vacuum, or the wrong cleaning solution strips the floors? These are all examples of cases where general liability insurance would offer essential protections.
Workers Compensation Insurance: This insurance covers items like missed wages and medical expenses if employees get injured while working. In most states, this cleaning business insurance is non-optional for businesses with employees. Sole proprietors can also benefit from this insurance policy as it can cover workplace injury medical bills that health insurance might not.
Workers compensation insurance, sometimes called workers comp, is helpful for situations like a cleaner slipping on a wet floor, having an asthmatic reaction to cleaning products, or developing a repetitive strain injury from movements like scrubbing. These are just a few examples of why a cleaning business should, and often legally is required to, purchase workers compensation insurance.
Commercial Property Insurance: This type of insurance protects your business’s commercial properties against potential damages. It is highly recommended for companies that own commercial property. This house cleaning business insurance is essential to protect against things like property damage due to fires or damaged or lost assets. For example, this would include items such as cleaning solutions, industrial vacuums, and carpet cleaners. Commercial property insurance even protects against theft, making it crucial for protecting cleaning businesses that own property.
Commercial Auto Insurance: Theft, accidents, vandalism, and vehicle damage are covered by commercial auto insurance. In case of an accident, this insurance protects the vehicle, driver, property, and other people involved. Commercial auto insurance is generally required if your business has a company vehicle and can even cover employees' vehicles if used for work. It is invaluable if an employee gets into a car accident while driving to a client's property or a company vehicle is stolen or vandalized while parked at your commercial property.
Janitorial Service Bonds: This is a type of surety bond designed to protect clients of cleaning companies from dishonest behaviors such as stealing. Janitorial service bonds ensure that customers will be reimbursed if their property is stolen. They are typically not required by law, but most larger clients seeking cleaners require cleaning companies to have the bond in place in order to bid on their contracts. Furthermore, a janitorial service bond is a strong signal of credibility for cleaning companies. A janitorial service bond is highly recommended if you’re a cleaning company that wants to win larger jobs. Janitorial service bonds are designed to protect clients from theft, therefore clients feel more at ease hiring a cleaning company with a janitorial service bond in place.
There are many questions about the right bond amount to have for a janitorial service bond. This generally comes down to the number of people you employ, the types of places your company cleans, and your particular insurance company. For example, your bonding limit will probably be lower if you clean private residences instead of places with more valuables, such as banks or museums. The bond amount is the maximum amount that would be paid out in the event of a theft. For example, if your cleaning company had a $1M bond in place, but $2M worth of goods were stolen, then the surety company would only cover up to $1M.
ABM Industries: Having been around since 1909, this is the largest cleaning company in the world. They utilize innovative cleaning technologies and are a single-source commercial janitorial contractor in aviation, business and industry, education, healthcare, technology, and manufacturing.
With a large client base across multiple sectors, ABM needs general liability insurance to protect themselves against employee medical bills if someone gets injured on the job or if an employee accidentally damages property while cleaning. This is especially important if cleaners work with expensive aviation or healthcare equipment, as some of ABM’s do.
As such a large employer, ABM Industries would also be required to have workers compensation insurance. If any of their employees injure themselves on the job, workers comp will cover their missed wages and medical insurance. This is especially important when you have many employees because the more people you employ, the greater the likelihood of accidents.
ABM Industries is also likely required to have commercial property and auto insurance. This is because they run their business out of commercial properties and have company vehicles. ABM would especially gain value from commercial property insurance because they invest in innovative high-tech cleaning equipment that would be expensive to replace if damaged.
ABM is a perfect example of a company that would benefit from a large janitorial service bond amount. This is because they have a large number of employees who work on a large number of projects that often involve expensive equipment. Having a large bond amount means they would receive more money in coverage if, let's say, an employee stole an expensive piece of equipment from a facility they are cleaning.
Joe’s Cleaning Services: In contrast to a large company like ABM, Joe’s Cleaning Service is a small cleaning company as it is a sole proprietor run by a single person. This means that Joe is not responsible for any employees and likely doesn’t run his business out of a commercial property. Regardless, small businesses like Joe’s still benefit from home cleaning business insurance and sometimes require it.
Even though Joe runs a small cleaning business, he would still be required to have general liability insurance. This insurance coverage is especially important for a sole proprietor because, without it, all the financial responsibility would rest on him if he were to damage something expensive in a client's home. This house cleaning insurance is also vital because it would cover Joe’s medical bills that he might otherwise have trouble affording if he gets injured on the job.
Small business owners like Joe do not require worker's compensation insurance because they don’t have employees. It also doesn’t require commercial property insurance unless he operates out of a commercial office. Joe would, however, likely need commercial auto insurance because he would likely use his personal vehicle for work. This way, he would be protected if he got into an accident travelling to and from client's houses.
As a sole proprietor, Joe’s Cleaning Service would require a smaller janitorial service bond amount. This is because he has no employees and performs fewer jobs than a large company would.
General liability, commercial property, auto insurance, and workers comp all protect commercial cleaning businesses in similar yet different ways. A janitorial service bond, on the other hand, behaves differently. Therefore, we feel that it’s important enough to call this out. The critical difference is that cleaning service bonding insurance protects the cleaning company's customers, whereas insurance policies protect the cleaning companies themselves.
Janitorial service bonds, also sometimes known as “business service bonds”, ensure clients can be reimbursed if their property is stolen. This is why some potential customers only hire cleaners if they have janitorial service bonds. All of the other types of insurance listed above are designed to protect the cleaning company in cases of property damage, injury, or theft.
Janitorial service bonds also differ from insurance in that they often come with a ‘conviction cause.’ This means the cleaning company only pays for a claim if a court of law has formally convicted the accused cleaner. This requirement is specific to janitorial service bonds and does not apply to the aforementioned insurance policies.
With regard to claims, a janitorial service bond works similarly to that of other insurance policies. In both cases, a third party (surety company or insurance company) would come and investigate the claim. If they deem the claim valid, the third party will pay the affected party to remedy the situation. For the janitorial service bond, the cleaning company's customer would get paid; for insurance policies, the cleaning company would receive the payment.
In this article, we discussed the different types of insurance that cleaning companies are required or recommended to obtain. We also covered the importance of janitorial service bonds in protecting clients.
When running a commercial cleaning business, business owners must protect their assets and employees from damage, theft, and injury with commercial cleaning insurance. It is, however, just as important to be up to date on which kinds of insurance are legally required for your business. This is why learning about the different types of insurance and bonds is crucial to protect your business and your clients.
