What types of insurance do you need when starting a cleaning business?
When you're first starting your small cleaning business, it can be easy to get swept up in all the things you have to do before you can get to work. What business structure will you choose? Has all that small business loan paperwork been filed? And what about your cleaning business's name? With all the puns to choose from, insurance may be the furthest thing from your mind.
Buying cleaning insurance should be a top priority
Insurance protects the business you're building
Chances are, you'll start your maid or janitorial business as a sole proprietorship – the easiest business structure for first-time entrepreneurs. But that means all your business's losses pass through to you. Imagine, for example, that someone sues your business over a slip-and-fall accident, and the court orders you to pay $32,000 in damages. Without small business insurance, you'd have to pay it all out of pocket. Do you want to take that risk?
Insurance helps you market your business
Want to distinguish yourself from the competition? Insurance demonstrates the stability of your business, and janitorial bonds show clients they can trust your business with their valuable property.
Your next question may be, "But what coverages do I really need when I'm first starting out?" Good question. Let's go over the four cleaning insurance policies that can protect your business at any stage of its development.
General liability insurance: The slip-and-fall lifeline
You've probably heard this policy called "slip-and-fall insurance" before, and for small cleaning businesses, that's one helpful way to remember its importance. As you know, in your line of work, the risk of falls, trips, and slips is very real. And if your client's visitor is the one who slips on your freshly waxed floors, your client could be sued for damages. In turn, that client may shift the blame to your janitorial business.
That's where general liability insurance can help. This policy steps in when your business is sued over:
- Third-party bodily injuries (those sustained by a non-employee)
- Property damage caused by your work (e.g., an employee uses the wrong solution on a surface)
- Advertising injuries (e.g., you publish a defamatory statement about a competitor on social media)
Business owner's policy: Because two policies are better than one
You've likely invested some capital in your business already. You've probably purchased commercial cleaning equipment (e.g., vacuum cleaners, buffers, personal protective equipment, and cleaning supplies). Maybe you've even purchased a commercial office. If any of this rings true for you, know that you have physical investments that need protection.
Property insurance pays to replace or repair your insured gear when it's lost or damaged because of:
- Certain weather events
You can purchase property insurance on its own, but because you own a small business, you may be able to bundle your property and general liability coverage together in a business owner's policy (BOP), which can save you some money on your premiums.
Workers' compensation insurance: Care for employees and comply with state laws
It takes manpower (or womanpower!) to run a successful cleaning business. Just think of all you count on your employees to do. Unfortunately, injuries are pretty common for cleaning employees, and it's your business's responsibility to make sure hurt workers get the medical care they need.
You can make sure those medical costs don't come out of your wallet by carrying workers' compensation insurance. In fact, most states require that you carry this coverage even if you only have one employee. It can help pay for:
- Lawsuits over worker injuries
- Employee medical bills and replacement wages related to workplace accidents
Note: this is the coverage you'd turn to if your employees were hurt in a slip-and-fall accident.
Janitorial bond: Proof of your cleaning business's trustworthiness
Janitorial bonds (a type of surety bonds) show prospective clients that you have an insurance company vouching for your work. When a client sees the word "bonded" on your website or marketing material, they know that if your employee steals or breaks something, your bond provider can cover the replacement costs. To learn more about the benefits of being bonded, read "What to know about cleaning business licenses and bonds"
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