Business Insurance for Cleaning Companies

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Business insurance is designed to protect a business owner's financial assets and is an essential investment for a cleaning company.

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About General Liability Insurance

All businesses, regardless of industry, face risks that should be covered by insurance. The most common and comprehensive type of policy business owners invest in is general liability insurance (or CGL).

Some of the risks CGL insurance covers are:

  • Bodily injury
  • Property damage
  • Medical payments
  • Legal defense and judgment
  • Personal and advertising injury

While businesses aren't legally required to carry general liability insurance, operating without it is extremely risky. If your business is sued, you could end up facing fees totaling hundreds of thousands of dollars (or more). Having a sufficient CGL policy in place to help compensate for these damages is the only way to prevent this type of event from devastating your business.

Learn more about the risks covered by general liability insurance.

COMMON SITUATIONS THAT GENERAL LIABILITY INSURANCE WOULD COVER FOR A CLEANING COMPANY

Example 1: One of your employees is cleaning a local recording studio when he spills a cleaning agent all over a deck of some expensive electronics. The client demands that you pay for replacements. Your general liability insurance will cover this expense.

Example 2: An employee is loading the van with cleaning supplies when she accidentally knocks a client over. The client breaks her wrist and asks that you pay for her medical treatment. Your general liability insurance policy will likely cover the cost of her medical bills.

Example 3: A competing cleaning company sends you a letter telling you that they are suing you for libel. While you are not certain how you could have libeled them, you know you need an attorney. Your general liability insurance will pay for your legal expenses.

Of course, this is not an exhaustive list of perils a general liability insurance policy will cover, and some conditions may result in a particular peril not being covered. It's always best to talk to your agent in-depth about the specifics of your policy to avoid blind spots in coverage.

Cost of General Liability Insurance

On average, cleaning companies in America spend between $500 - $1,500 per year for $1 million in general liability coverage.

Check out the chart below for a snapshot of average CGL expenditure across a variety of industries:

Graph showing average price of general liability insurance prices per industry

Several factors will determine the price of your policy. These include your:

  • Location
  • Deductible
  • Number of employees
  • Per-occurrence limit
  • General aggregate limit

You may be able to acquire general liability insurance at a discounted rate by purchasing it as part of a business owner's policy (BOP) rather than as a standalone policy. A BOP is a more comprehensive solution that includes multiple forms of coverage, such as business interruption and property insurance.

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Other Types of Coverage cleaning companies Need

While general liability is the most important type of insurance to have, there are several other forms of coverage you should be aware of. Below are some other types of insurance all cleaning companies should obtain:

 

Professional Liability Insurance

Professional liability insurance will cover negligence claims due to alleged mistakes or failure to perform. It will protect your cleaning business in the event that a client sues you claiming your services or a mistake you made caused them injury. It will pay for your legal fees and the cost of a settlement if one is necessary.

 

Commercial Auto Insurance

When you have a vehicle that you use primarily for business, you need commercial auto insurance. This will protect your vehicle, the driver, and others on the road. If you are involved in an accident, it will pay for repair and replacement costs as well as for medical treatment for the injured.

Types of Coverage Some cleaning companies May Need

In addition to the policies outlined above, there are a few other types of coverage your cleaning company may require depending on certain aspects of your operations. Some of these might not apply to you, so be sure to ask your agent which policies are right for your business.

 

Commercial Property Insurance

You have probably invested a significant amount of money in your cleaning equipment and supplies. If you were to lose it in an unexpected event, like a fire, it would be expensive to replace. Commercial property insurance would help cover replacement costs as long as the loss was caused by a covered event.

 

Workers’ Compensation Insurance

If you have employees, you need workers’ compensation insurance to protect them, and your business, in case they are injured on the job. Most states require workers’ comp insurance for employers. This policy will pay for an employee’s medical bills if they are hurt performing word duties. It will also help cover the cost of lost wages if they are unable to work while recovering from their injury.

Additional Steps to Protect Your Business

Although it's easy (and essential) to invest in business insurance, it should not be your frontline defense. Yes, insurance will compensate for your business' financial losses after an incident occurs, but it's much better to avoid losses altogether.

 

With this in mind, here are three things you can do to better protect your business:

  • Use legally robust contracts and other business documents. (We offer free templates for some of the most common legal forms.)
  • Set up a limited liability company (LLC) to protect your personal assets. (Refer to our guide for step-by-step instructions on how to form an LLC in your state.)
  • Streamline your business' internal processes. This will remove unnecessary variables from common tasks and create a safe, consistent environment for conducting business.

Frequently Asked Questions

What is included in a business owner’s policy?

A typical business owner's policy includes general liability, business interruption, and property insurance. However, BOPs are often customizable, so your agent may recommend adding professional liability, commercial auto, or other types of coverage to your package depending on your company's needs.

What is the difference between business insurance and general liability insurance?

"Business insurance" is a generic term used to describe many different types of coverage a business may need. General liability insurance, on the other hand, is a specific type of coverage that business owners need to protect their assets.

Do I need insurance before I start a business?

You should invest in coverage for your business before your first interaction with a customer. Although the cost of insurance may seem high for a brand new business, it's best to be proactive when it comes to protecting your assets. After all, you can't buy insurance to cover a loss that has already occurred.

Will insurance protect my business from everything?

Not necessarily. Certain exceptions may be written directly into your policy, and some perils may be entirely uninsurable. Be sure to discuss the scope of your policy in-depth with your agent to avoid being blindsided by holes in your coverage.