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Janitorial & Cleaning Business Insurance

The Downside of Starting a House Cleaning Service

Lawsuits against cleaning industry workers are not uncommon. In one notable case, a cleaning company was sued when a worker was accused of scratching glass in a custom-built residence. The suit was for over $300,000 in damages and legal fees. When you're dealing with the property of others, there can be serious legal ramifications for even the smallest mistake.

You may be a sole proprietor who cleans residences, the owner of a small to midsized carpet cleaning business or the owner of a larger commercial cleaning operation with many employees. If you run a house cleaning or janitorial business, you may need a cleaning business insurance package that will cover your risks.

Some Cleaning Industry Statistics

The following data is from a recent Facility Cleaning Decision magazine survey.

  • Facility cleaning respondents reported:
    • They were responsible for cleaning an average of 34 buildings each
    • They were responsible for cleaning an average of 1,291,858 square feet of space
    • They had an average of 68 employees
    • They bought about a quarter of a million dollars worth of supplies each year

What Cleaning Business Insurance Do I Need?

A cleaning or janitorial service will need to cover a range of business exposures. Your package may include some or all of the following:

  • Real property if you own your business premises
  • General liability to cover your responsibility for bodily injury and property damage to others
  • Automobile coverage for liability arising from the use of your vehicles and for damage to the vehicles themselves
  • Workers compensation to cover your employees' work-related injuries or illness
  • Umbrella liability to provide extra limits
  • Employee fidelity coverage to cover theft by employees, both from you and from your customers
  • Employee benefit programs for life, health and retirement

Why Janitorial and Cleaning Businesses Need Special Coverage

While some aspects of the insurance plan you will need for your home, industrial or carpet cleaning business resemble that of all businesses, there are also some specific risks of your trade. Because you work on property belonging to others, this creates a unique range of exposures that many other businesses do not have.

For example, you or one of your employees could potentially damage expensive property belonging to another person or business while on the job. A computer damaged in the course of cleaning might be worth only a few hundred dollars, but the cost to restore the data in that computer could be very costly.

Another risk is employee theft, as workers have access to customer equipment and property. The employee might be responsible for the crime, but you could be held responsible for the loss.

The right insurance program will protect you against these concerns and give you the janitorial and cleaning business insurance coverage you need to protect your business investment.

Insurance Considerations for Janitorial and Cleaning Businesses

Here are some of the important cleaning business insurance and bonding considerations to cover with your commercial insurance agent:

  • General liability: How much liability coverage you need? If you carry only the minimum liability coverage, you may not have the coverage you need to cover a substantial loss.
  • Bonds: Do you need janitorial insurance bonding? A standard fidelity bond will cover theft by an employee from the employer. To cover an incident such as an employee stealing from a customer, the bond must be specially endorsed; many bonding companies will not do this because of how difficult it is to measure the risk. You need an experienced insurance professional to handle this issue for you.
  • Commercial vehicle coverage: Do your employees drive their own vehicles while on the job? If employees drive from one assignment to the next, particularly if they carry your cleaning equipment and supplies with them, you could be held responsible if they cause an accident. The solution to this is to be sure your automobile insurance policy is endorsed to include "hired and non-owned autos." Liability arising from a non-owned auto deemed to be on company business will then be covered.

Understanding General Liability Exclusions

All janitorial insurance programs will start with a general liability policy, and it is important to know about the care, custody and control exclusion. Simply, the exclusion reads that the carrier is not responsible for damage to the personal property of others which is in the care, custody or control of the insured. This is especially important to those in janitorial and house cleaning businesses because almost everything they do involves working on the property of others.

The logic behind the exclusion is that you must know how to conduct the basic functions of your business and, if you do not, the insurance carrier does not want to be the guarantor of your work. In other words, when a loss is due to events within your control, the business insurance company is not responsible.

For example:

  • If an employee is cleaning a bathroom and accidentally spills bleach onto a nearby carpet, your general liability policy will most likely cover the damage because the carpet was not in your direct care, custody or control.
  • If an employee is cleaning a carpet and destroys it with a chemical solution, the exclusion will most likely apply, as the carpet was in the direct care, custody or control of the worker.

Do I Need Professional Liability?

Whereas your general liability policy will cover injury to another person or damage to another's property, a professional liability policy is designed to cover errors and omissions. Examples would be an attorney missing a filing date, an accountant missing a tax deduction or an insurance agent failing to cover an obvious exposure.

Whether you need professional liability depends on the nature of your business. If you confine your activities to straightforward janitorial and cleaning work you probably do not need this coverage. If you give your customers advice on what to clean, how to clean it or when to clean it, then professional liability insurance will protect you if your advice turns out to be wrong and your customer suffers a monetary loss.

Whether you need the protection of professional liability is an important topic to cover with the insurance agent designing your commercial cleaning insurance program.

House Cleaning and Carpet Cleaning Business Insurance

Your cleaning business insurance and bonding plan must match the specific risks you face.

For example, if you are in the house cleaning business, you have some business risks that are unique to your line of work. You might be responsible for washing dishes or cleaning chandeliers. You and any staff members you hire may have access to personal possessions and valuables belonging to home owners. Additionally, certain employers may require that you and your employees be bonded as an additional precaution. You will need a cleaning service insurance policy that matches your business risks and concerns.

Likewise, if you clean carpets, you will need a carpet cleaning business insurance policy that provides the right professional protection for you. You will also want to ensure that you and your employees are aware of the care, custody and control exclusion in a general liability policy, as your insurance company will not cover damage you cause to the carpets you are entrusted to clean.

Finding Cleaning and Janitorial Insurance

Janitorial, house cleaning and carpet cleaning companies have risks that are unique to the specific work they do. If you run such a business, your risks can be significant. Fortunately, a well designed insurance program can protect you against the financial risks of your trade.

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