Like all businesses, your cleaning company needs basic insurance coverages like general liability and commercial property. While many insurers offer these coverages, some have developed specialized programs designed explicitly for janitorial businesses. Some programs are intended for commercial cleaners while others are directed at businesses that clean residences. By choosing the proper program, your cleaning business can obtain broad coverage at a competitive price.
Risks Faced by Cleaning Businesses
Cleaning companies perform virtually all of their operations at customers' premises. Employees often travel to multiple job sites throughout their workday. Each job requires cleaning equipment and sanitizing products to so workers must transport these items from site to site. The nature of janitorial work creates risks that can generate claims. Here are some of them:
- Damage to (or Theft of) Customers’ Property: While working at the customer's premises, cleaning personnel may cause damage to your customer's building or personal property. For instance, an employee is dusting a shelf when she accidentally knocks a statue onto the floor, shattering it. Employees may also steal valuables owned by the customer.
- Trip-and-Fall Injuries to Third Parties: Negligence by cleaning personnel can lead to slip-and-fall accidents that injure customers or other third parties. For example, building visitors could slip on a wet floor or trip over a vacuum cleaner cord.
- Damage to cleaning equipment: Company-owned janitorial equipment such as like vacuum cleaners and pressure washers might be damaged while in use, during transport, or while in storage. Your business may incur both the cost of repairs and the expense of renting replacement equipment to use until the repairs are completed.
- On-the-Job Injuries Sustained by Employees: Janitorial workers are prone to sprains, strains, and slip-and-fall injuries. They may also be injured in auto accidents that occur while they are traveling to or from a work site.
- Auto-Related Injuries or Property Damage to Third Parties: Employees or company principals may cause auto accidents that injure third parties or damage their property.
- Loss or Damage to Clients’ Keys: Workers may lose or damage customers' keys.
- Pollution-Related Injuries or Damage: Cleaning businesses may use harsh chemicals that can injure workers or third parties or cause damage to customers' property if handled improperly. Cleaning products may also contaminate land, water or property at your premises or at a customer's location if they spill or escape from a storage container.
- Advertising-Related Claims: Whether you use the Internet or traditional media to promote your business, your company faces various advertising-related risks. For instance, you could be sued for defamation or invasion of privacy. You could also be fined by the Federal Trade Commission for violating a fair trade law.
Property and Liability Coverage
Small and mid-sized janitorial companies can obtain both general liability and commercial property coverage by purchasing a business owners policy (BOP). The property section covers your building and its contents, including equipment stored inside.
The liability section covers third-party claims against your business for bodily injury, property damage, or personal and advertising injury. A BOP can be customized by adding endorsements. Here are some coverage enhancements to consider:
I. Property Coverages
- Equipment Floater: Covers your equipment while it's away from your premises (e.g., at a job site or while in transit). This coverage is important since a typical BOP affords only minimal coverage for personal property away from your premises.
- Employee Theft Coverage: Covers theft of your property by employees.
- Theft of Customers’ Property: Covers theft of clients' property committed by your employees. This coverage may be provided by an endorsement to employee theft coverage.
- Rental Reimbursement: Covers the cost of renting equipment to use while your damaged equipment is being repaired.
II. Liability Coverages
- Care, Custody or Control (CCC) Coverage: This coverage is provided by modifying the care, custody or control exclusion. It covers damage to customers' property that occurs while you're working on it. For instance, an employee is polishing a valuable statue when he accidentally scratches.
- Property Damage to Real Property: Covers accidental damage to a building that occurs while you are working on it. For example, an employee accidentally damages a customer's wood floor while cleaning it.
- Lost Key Liability Coverage: Applies when the insured has lost or damaged a customer's key. Covers the cost of re-keying, adjusting or replacing the customer's lock.
- Limited Pollution Coverage: A standard liability policy (including a BOP) excludes claims arising out of the release of pollutants. This extension covers third-party bodily injury or property damage caused by a short-term "pollution event, " meaning a pollution release lasting less than 48 hours. Some endorsements limit coverage to "pollution events" that result from certain perils.
- Automatic Additional Insured: When you sign contracts for new jobs, customers may require you to insure them as additional insureds under your liability policy. This coverage will enable you to comply with such requirements automatically.
Besides liability and property insurance, your janitorial business will likely need business auto coverage. A commercial auto policy includes auto liability and physical damage coverages. Be sure to purchase non-owned auto coverage if your workers drive their personal autos on behalf of your business.
Workers compensation laws vary from state to state. Some states require you to buy workers compensation insurance if you have even one employee. If you aren't familiar with the law in your state, ask your insurance agent or contact your state's workers compensation authority.