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Companies in the cleaning services industry face a number of risks and liabilities. Accidents can happen, and when you are working on-site at clients’ homes or offices, performing physically intense work, you want to make sure you, your employees, and your company are adequately protected with the right business insurance coverage.
General liability insurance provides protection for your cleaning services business if someone suffers bodily or personal injury or if their property is damaged when you are conducting your business. This type of insurance is important for cleaning services companies as much of the work that is done happens at clients’ homes or offices, which may mean elevated risk for third-party injury or property damage. If a third party sues your firm for accidental injury or damage, general liability insurance can cover the costs of legal fees, settlements, or judgements against your company.
- You own a gutter cleaning company, and at a recent client’s home, one of your employees accidentally knocked over a ladder that shattered an expensive stained glass window. Your general liability insurance would cover the damages to the customer’s home.
Commercial auto insurance can protect your company from financial losses if your business vehicles are involved in accidents. Your company may be held liable if an accident occurs and your business is found to be at fault. Injuries to other drivers and damage to third-party property can result in financially draining lawsuits. In addition, damage to your own company vehicles from accidents, natural disasters, or other perils can be costly. Commercial auto insurance can provide the coverage your business needs to recover from any accidents that may occur.
- Your housekeeping business owns three vans that are used frequently for your employees to travel to and from client homes. One of your employees takes a company van out to purchase supplies for the company. On the way to the store, he makes an illegal left turn and crashes into another moving vehicle. The driver of that vehicle is injured and his car is totaled. Your commercial auto insurance would cover damages to the vehicles as well as medical fees for the injured driver.
Commercial property insurance covers your business property, including buildings and the contents of those buildings. If you own or rent an office or retail space for your cleaning services business, commercial property insurance can provide protection against physical hazards to the building, such as fires, storms, and vandalism. Additionally, property insurance provides coverage for business property stored at your offices, including items such as furniture, computers, and equipment.
- The fire sprinklers in your office building break, leaking water and damaging the floors, furniture, and equipment in your office. Commercial property insurance would provide funds to repair and replace any damaged items or structures.
Workers’ compensation insurance provides financial benefits for employees who are injured or fall ill on the job. This type of insurance also provides death benefits to an employee’s dependents in the case of a work-related death. Workers’ compensation is required in almost every state, and this critical coverage can provide partial wage or income replacement and coverage for medical costs while an injured employee is unable to work. For companies in more physically demanding industries like the cleaning services industry, workers’ comp is particularly important as employees may be more prone to injury or illness.
- While cleaning the windows on the second floor of an office building, one of your employees slips and falls to the ground floor, breaking his leg and injuring his back. He requires medical treatment, physical rehabilitation, and is unable to return to work until he fully recovers. Workers’ compensation insurance would cover medical and rehabilitation expenses and a portion of his lost wages.
A business owner’s policy (BOP) bundles general liability, commercial property, business income, and extra expense coverage together into a single policy. This type of plan has the benefit of a lower premium than buying each policy separately. BOPs are available only to qualified small businesses, typically requiring that your business have less than 100 employees, make less than $5 million in annual sales, and operate from a physical location or office. Smaller cleaning services businesses should consider taking advantage of this type of plan, as it affords a broad range of coverage at reasonable rates.
There are several other types of insurance that can provide additional coverage for your cleaning services business, depending upon your business’s circumstances.
- Inland marine insurance is a type of coverage that provides financial protection for property that does not remain at a fixed location. Coverage could include a variety of equipment, tools, goods, and other items that a company may need to transport from location to location or store at client sites. This insurance will protect your property no matter where it is. For certain cleaning services businesses that regularly transport high-value property, such as specialty carpet cleaning equipment, an inland marine insurance policy may make sense to protect the value of your business property.
- A fidelity bond can protect your business if an employee commits theft, fraud, or other dishonest acts. Cleaning services companies are typically employed to send workers into private homes and offices to perform their services. This means that they could have unmonitored access to valuable property. Although ensuring that no theft occurs is doubtless a top priority for your company, you can’t completely eliminate the possibility that an employee will commit a crime. A fidelity bond can provide protection for your clients and show them that your business has their best interests in mind.
As an employer, your company can sponsor group insurance plans for your employees. Providing a generous benefits package can help your company protect the well-being of its employees and also attract and retain talent.
Group health insurance helps your employees pay for medical and healthcare expenditures, including everything from primary care to hospitalizations and surgeries. Offering health insurance to your employees can not only keep your employees in better health, but it can also help to retain your employees.
Group life insurance provides a financial payment to an employee’s family or other survivors if the employee unexpectedly dies. The death does not have to be work-related. Although individuals can purchase life insurance on their own, as an employer-sponsored group, you can usually obtain better rates than an employee could get on their own.
Group disability insurance provides income to employees who cannot work as a result of non-work-related injuries.
Every cleaning services business can benefit from some form of insurance protection, and basic liability coverage may simply be a requirement of doing business. Whether you are a small independent provider or a large organization, the right business insurance coverage can help you effectively manage risks to your business and provide you, your employees, and your clients with important financial safeguards. Depending on your risk exposures and the specific services you provide, there are a number of basic coverage types you’ll want to investigate, from commercial auto insurance to general liability insurance. Ensuring that your business has comprehensive coverage is an important step in protecting your investments and building for the future.
If your cleaning services business meets any of the following criteria, you should consider purchasing business insurance:
- You work at customer homes or offices
- You handle or work with customer property
- You own or lease office or retail space
- Your business owns or leases vehicles
- Your business owns valuable property, such as specialized cleaning equipment
- You employ others
Commercial insurance can cover a wide variety of personal care businesses. Some common businesses and professions that need insurance include:
Choosing an Insurance Company
Choosing the right insurance company is the most important step in purchasing insurance for cleaning services businesses, and several factors should be included in your decision.
Factor 1 – the financial strength of the insurance company: While you may think getting the best-priced policy should be your main goal, it is more important to ensure you purchase insurance from a financially stable provider. It’s worth remembering that insurance claims are paid directly from the finances available to the insurance company. In other words, if the insurance provider is financially stable, they will be able to fulfill their claims commitment. When an insurance company does not have financial stability, it may collapse and be unable to support you.
While this is rare, it does happen. You want to know your company is always secure and certainly don’t want the surprise of finding out your insurance provider cannot cover your losses when you make a claim.
Of course, this leads to the obvious question: how do you know your insurance company has financial strength? Unfortunately, it is not as simple as just purchasing a policy from the biggest industry names because even giant insurers go through periods of financial instability. Luckily, there are rating agencies that grade insurance companies in terms of their financial strength. Some of the major rating agencies are Fitch, Standard & Poor’s, AM Best, and Moody’s.
Factor 2 – Choosing the right price: Cost is important for any business, but the price of insurance is not the only factor. Instead, your cleaning services business will be better served by looking for the policy that is the most affordable but also meets all your requirements.
Different insurers have different methods for determining the premium you will pay, although there are some industry standards. For insurance companies, pricing is all about determining how much risk your business presents. The key to finding the best deal that meets your company needs is to shop around. Speak to insurers, use online quote engines, and work with brokers to ensure you get the coverage you require to protect your business.
Factor 3 – Choose an insurer with a reputation for strong customer service: While you want your insurance provider to be financially stable and priced competitively, it is also important that you can engage with the company. It is possible you will need to make a claim, change policy details, or update personal information. In these cases, you want to deal with a company that has good customer care. While most major carriers have good customer service records, some spend more time and effort on ensuring their customers are taken care of. This may seem unimportant, but dealing with welcoming, qualified, and thoughtful professionals will be vital during a claims process.
Direct writers, agents, and brokers
When looking for insurance for your cleaning services business, you have several options for finding the best deal: brokers, direct writers, and agents.
- Direct writers work independently and sell insurance without the use of a middleman, such as a broker or agent.
- Insurance agents work with insurance companies to sell their products but are still independent businesses that can represent more than one insurer. Some agents are called “captive” and work specifically for a single insurance provider.
- Insurance brokers are arguably your best friend when shopping for coverage. While brokers are independent like agents, they work for you instead of the insurance company. This means a good broker should have your best interests at heart and help you find the most desirable policies and prices.
Insurance policies are sold on a fixed term where the insurer provides coverage to your company for a predetermined fee called a premium. Policy lengths vary, but the most common insurance lifecycle lasts for one year and must be renewed annually.
Through each renewal period, you are free to shop around for new insurance companies, while your existing provider will offer you a new premium. How much the new premium costs can depend on various factors; it could be more expensive if you have made a claim during the policy term, or it could be cheaper if you have made no claims and always paid on time.
Businesses can typically cancel an insurance policy at any time, although most insurance companies will demand advance notice of between one and two months. Importantly, all details of your insurance coverage are noted in the policy contract, including price, notice periods, and protection benefits. If your company has prepaid any premiums before canceling a policy, the insurance company will provide a refund for the already paid coverage.
It is very important to keep up-to-date with the insurance policy for your cleaning services business as the insurer can cancel the policy for missed payments. However, most policies will provide a grace period that protects you from missed periods. It is worth noting the grace period in your contract as it can vary, being as short as 24 hours or up to 30 days.
Limit of insurance
Perhaps the most important thing to consider when buying an insurance policy for your cleaning services business is determining how much coverage you need. Insurance policies have a limit, which is the maximum amount the insurer will pay your business for loss claims during a coverage period. This limit can be settled between you and the insurance company when you are purchasing the policy, but the insurer may set some framework based on the specifics of your cleaning services business and calculated risks.
Commercial insurance policies usually carry two limits—one “per occurrence” and another “aggregate” limit. These are important to understand: an “occurrence” limit is for a specific type of situation detailed in the policy, while an “aggregate” limit is the total an insurance company will pay during the lifespan of the policy.
- You have a per-occurrence limit of $1 million per occurrence and $3 million per year aggregate. The insurer will only pay out up to $1 million for a single successful claim and a maximum of $3 million for multiple successful claims through the year.
As you explore the types of insurance coverages that your cleaning services business may need, keep in mind that business insurance is an investment, not only in yourself but also in your employees and the future of your business. Accidents and catastrophes are unpredictable, and unfortunate incidents can happen at any time, especially as your business interacts frequently with clients and clients’ property. Making sure your company is protected in any situation is the best way to secure your business’s financial viability.