What is cleaning business insurance?
Insurance is a layer of protection that not only covers you and your employees from damage, liability, and theft but also gives your cleaning business credibility and your client's peace of mind.
Here are some common insurance terms that you'll run into when getting quotes for you cleaning business:
Policy - the agreed upon contract between you and the insurance company
Premium - the monthly cost of the insurance policy. Some things that will affect your premium are industry risk, how long you've been in business, bundling, and location.
Per Incident - the max amount of coverage the insurance company will pay for a single accident. The average is around $1 million. Higher limits will cost more, but will provide more coverage
Per Year - the max amount of money the insurance company will pay for annually. The average for this is around $2 million. Higher limits will cost more, but will provide more coverage.
Deductible - the max amount "out of pocket" money that you will pay for damages. Typically ranges from $500-$1,000
Certificate of Insurance (COI) - this is your proof of insurance. If you're working with property managers, they'll typically asked to see your COI and even ask if they can be added as an "additional insured." Skeptical homeowners have been known to ask for proof of insurance as well.
Additional Insured - anyone, other than the policyholder, with a business relationship who is covered by the policy.
How important is insurance and bonding as a house cleaner?
Being insured and bonded is the minimum standard across the cleaning industry. It's like a seatbelt. Yea, it might be uncomfortable to wear sometimes, but you'll be glad when you need it.
The images above are just 3 examples of what can happen.
You'll notice a lot of solo cleaners wearing their uninsured status like a badge of honor, "I've been cleaning for [X] years and have never been injured or had any issues." Their risk tolerance is much higher than mine.
Not only are they exposing themselves to preventable damages, but what about all the potential customers that didn't hire them because they weren't insured?
Whenever a customer calls our cleaning company they ask 2 things:
- "What are your cleaning rates?"
- "Are you insured?"
If you answer "no" to the second question, then your answer to the first question better be extremely low or your lead will move on to the next cleaning service on their list.
Having insurance establishes your cleaning business as a credible and legitimate operation. It shows your customers that you're willing to invest in your company to protect their home.
What type of insurance do I need and how much will it cost?
Types of insurance and their costs will vary depending on a lot of variables, like...
- Types of cleaning services you offer
- Facilities you clean
- If you have any employees
- The number and types of commercial vehicles
General Liability - The most basic and essential coverage you will need. It provides financial protection from customer injuries and property damage, along with advertising injuries (i.e. slander and libel). The main factor in determining this price is your level of risk and typically average around $45 per month with a $1,000 deductible.
Worker's Compensation - Covers the cost of medical treatment when an employee suffers a work-related injury or illness. It also provides part of the wages lost while the employee is recovering and unable to work. Sole proprietors and independent contractors aren't required to carry workers' comp, but they can opt to buy it. Even when it's not required, it's a good idea to carry this coverage. It protects against work injury costs that health insurance might deny. required by most states if you have employees. Costs depend on how many employees you have. The average for this is less than $150 per month.
Errors and Omission (professional liability) - Provides financial protection if your client claims you didn’t do a good job or if you’re accused of making a mistake that causes someone to lose money. Accurate or not, you could have to pay to defend your business if they take legal action. Professional liability coverage will cover legal expenses or to amend the mistake for around $20 per month.
Tools and equipment - Covers the cost of repairing or replacing your cleaning equipment. Includes stolen, lost, borrowed equipment and even covers clothing. Averages around $15 per month
Commercial Auto - This policy can pay for third-party property damage and medical bills related to accidents involving your cleaning business vehicle. It can also cover vehicle theft, vandalism, and weather damage. Costs vary depending on the type and number of vehicles.
Business Owner's Policy (BOP) - customized package that includes multiple pieces of coverage for your business. Great for cleaning companies with a physical location. typically recommend this over a standalone general liability policy. A BOP combines general liability insurance with commercial property insurance to protect your specialized cleaning equipment and other property, and typically costs less than purchasing each policy separately.
Janitorial Surety Bond - Not required, but highly recommended. Surety bonds act as a contract between a business, a client, and an insurance company. They guarantee the insurer will reimburse the client if the business fails to deliver contracted services. This protects against losses from an employee's dishonesty. If you or an employee steals something from the customer's home. They have to prove that you stole in order for the bond to pay. If you are one person and you know you're honest, then you probably don't need it. This does not work like insurance. This amount must be paid back by you. Typically costs around $8 per month.
Inland Marine Insurance - Covers all of your assets while you're transporting them from your office to customer's homes. Averages around $35 per month.
Data Breach - Used to respond to hackers that expose your customers private information. Most modern cleaning companies can benefit form this type of insurance. Especially if you're dealing with customer's credit card information. Make sure you request a quote for "Data Breach" insurance and NOT "Cyber Liability" insurance.
Source | Insureon
For a more accurate quote you should reach out to one of the professional providers we recommend at the bottom of this article. We are not insurance underwriters nor do we play one on the internet. Always speak with a professional agent about your companies needs.
What if I operate with Independent Contractors as opposed to Employees?
While independent contractor compliance can vary by state, the best practice is to require all your contractors to carry their own general liability insurance and worker's compensation.
As an additional layer of protection you can request that your contractors list your cleaning business as an "additional insured."
Keep their COI on file and up to date.
Pro-tip: Set an annual reminder in your phone or schedule an automated email to remind your contractors to send over their updated COI.
What is covered with my cleaning business insurance?
This is the most important question of all. You don't want to end up in this position:
One of our contractors fell prey to this same situation when her team member cleaned a stainless steel oven top with steel wool. She ended up scratching the surface of the oven drastically and it needed to be replaced.
After starting the claim, they found out that their type of insurance would not cover the damage and had to pay for the $1,400 stovetop out of pocket.
Nothing is more frustrating than paying a monthly premium to find out that it was a waste of money.
You can avoid this situation by doing your homework. Spend some time vetting a few different insurance companies.
They should be transparent with what is and is not covered. Work with your agent to customize a bundled insurance package that fits your cleaning business' needs.
When do I need to get insurance coverage?
As soon as you become a professional - start taking money in exchange for house cleaning. Even if you're a solo cleaner.
No matter if you're just cleaning for family members or you manage a couple employees with a large cleaning operation, you should have some type of protection against the unknown.
How do I get cleaning insurance?
It's actually a lot easier than it seems - it took us less than 30 minutes when we first got started. The majority of your time should be spent researching and comparing insurance providers.
But once you're ready to pull the trigger, it's as simple as a phone call.
Popular Cleaning Business Insurance Providers
These are some of the most common cleaning business insurance providers on the market.
Also, check with your current personal insurance provider. Most large insurance agencies have a commercial branch that can work with you. They might even be able to give you a loyalty or umbrella discount.