Insurance for Cleaning Service Businesses
Whether your business is a maid service, janitorial, or carpet cleaning, having the right insurance will protect it from costly lawsuits if something goes wrong. There are certain insurance policies that every business needs, these types of businesses included. The two main policies are general liability insurance and property insurance which can be purchased separately or packaged together in a policy called a business owners policy. As these types of businesses have vehicles involved another necessary insurance policy is commercial auto insurance coverage.
If you employ maids, carpet cleaners, janitors, or other personnel in your business you will need to purchase workers compensation insurance coverage. Another type of insurance policy to consider is a commercial umbrella policy which extends the liability coverage on both the general liability and commercial auto policies. Finally, these types of businesses should be bonded, especially those that provide their services to other companies where having a surety bond is a requirement of the contract.
General Liability Insurance
General liability insurance financially protects the business if it can be held responsible for bodily injury and/or property damage to a third party. This is especially important in a cleaning services business as they regularly come in contact with their customer's belongings which can be damaged. The business could also be blamed if a recently washed and/or waxed floor causes someone to slip and fall as well as a large variety of other claims. General liability insurance protects the business from these types of lawsuits up to the liability limit on the policy.
For a more in depth description of commercial general liability, please click here.
A commercial property insurance policy protects the property used in the business. The necessity of this policy depends on how much value the equipment has you work with in your business. Janitors, carpet cleaners, and maid services can have expensive equipment to insure such as tools to clean floors like buffers, vacuums, and carpet cleaners. Some businesses of this type also have offices where the business property can include items like computers and furniture. The cost of commercial property insurance depends on what the property limit is on the policy so if you do have a minimal value of property used in the business the cost of this coverage will be inexpensive.
Business Owners Policy
In order to make things easier for small business owners, the insurance industry came up with the business owner's policy or BOP as it commonly called. This combines both a general liability policy and commercial property policy into one discounted package. It also includes business interruption which covers the loss of income incurred in the event of a covered loss. Business interruption provides coverage for lost profits, fixed costs, and extra expenses required to get the business operating again among other costs involved.
Commercial Auto Insurance
In order to reach their client's locations maid services, janitors, and carpet cleaners make use of vehicles. Carpet cleaning companies also usually have specialized equipment in their vans which enables them to do their cleaning. These commercial auto insurance policies, like a regular car insurance policy, provide a number of protections for the business owner.
The most important coverage is liability which provides coverage if the operator of the vehicle is held at fault for an accident. Other coverages include uninsured motorist, comprehensive, collision, plus a number of optional coverages like towing and roadside assistance. Of particular interest to carpet cleaning companies is the specialized equipment installed in their vans; this can be added to the insurance policy with proper documentation showing how much it cost to install.
Commercial Umbrella Policy
A commercial umbrella policy sits on top of a general liability policy and the commercial auto insurance policy. If a large claim were to occur which exceeded the liability limit on one of these underlying policies the commercial umbrella policy would then kick in its coverage. Commercial umbrella policies start with a liability limit of $1,000,000 and can be further increased if needed.
In most states if you have employees you are required to have a workers compensation policy. This type of policy protects employees by covering them if they are hurt on the job. It covers their medical expenses and a portion of their lost income while they are recovering, typically two-thirds of their pay. If the injury is such that they can no longer work as a janitor, maid, or carpet cleaner they will also have their retraining costs covered by workers compensation.
If your business includes cleaning other company's properties like their offices they will require that you have a surety bond. Many homeowners also want to see that the professional cleaner they are working with is licensed, bonded, and insured. Many states and local jurisdictions also require businesses of this type to be bonded. A bond is an agreement between the business owner, his customers, and the insurance company.
A bond usually comes into play if you're not able to fulfill the service you contracted for with the customer. If, for example, a carpet cleaning company can't complete the job and can't pay the customer back their money the customer can go to the bonding company in order to be reimbursed. The bonding company will pay the customer and then collect from the cleaning company what they had to pay out. This is unlike other types of insurance where the insured company after being held liable does not have to pay back the amount of the claim.
Having a bond makes your company more marketable as it is an assurance that the customer will be covered if you don't do the job you promised. It also shows that you run a good business as bonding companies only want to insure well run companies with little to no claims activity.
What Insurance Will Cost For Your Cleaning Company
Commercial general liability rates vary across the United States. In general, the owner of a cleaning company will pay around $350-700 a year for this vital type of coverage. As indicated, the commercial property insurance policy depends on what the value is of the property used for your business but the average small business owner will pay roughly $300 to $450 a year. As a BOP is a discounted package it will cost less than these two combined totals, or about $600 to $1000 a year.
The typical janitorial and maid company will pay about $1500-2500 a year for a commercial auto insurance policy assuming the business owner and any driver have a clean three-year driving record. Carpet cleaning companies will pay a bit more due to the value of their specialized equipment being insured under their comprehensive and collision coverage.
Most cleaning services businesses will pay $400 to $600 a year for a $1,000,000 commercial umbrella. A workers compensation policy's cost depends on the payroll of your business. It is calculated at a cost per $100 of each employee's salary. The average cost per year depends on what state the business operates in but around $1500-$3000 a year is typical if the small business employs a number of people.
Finally, when quoting a surety bond the insurance company will do a credit check on the owner(s) of the business before deciding whether to even offer a quote. People with bad credit can be denied a bond and if approved will definitely pay more than someone with good credit. With good credit, a $5,000 bond could be as little as $100 a year.
Where to Obtain Your Commercial Insurance Policies
The vast majority of insurance agents are more than happy to provide you with a quote for any of these types of insurance policies. All of the policies should be purchased through the same agent as sometimes these policies need to work together plus it is logistically much more convenient. All of the major insurance carriers offer these types of policies besides bonds. Many agents get quotes for bonds through local bonding companies.