Does a cleaning company need liability insurance?

A friend of mine was thinking about starting a cleaning business and she asked me what types of liability insurance she should consider. This is the advice I gave her…

Since she started out on her own, she would probably be considered an independent contractor. Contractors need insurance just like any other business that deals with clients and customers, and a janitor or even a cleaning service needs commercial liability insurance. Determining what level of liability insurance a cleaning company needs varies from state to state, but in general there are a few common issues.

Considering all the risks a concierge business faces helps determine the required level of liability coverage. A cleaning company must protect itself against damage to a customer’s property, damage to equipment and vehicles, personal injury and even crime. In addition, a concierge company may consider insuring against other issues, such as damage caused by clogged drains and sewers, lost or damaged keys, and damage to business records.

If the company plans to eventually hire others, more coverage may be needed, possibly even workers’ compensation insurance, if you provide your services in a state that requires workers’ compensation or some form thereof. Think of scenarios of an employee damaging an expensive wooden floor, or a dishonest employee pocketing something small but expensive, such as a cell phone or necklace from a client’s office. Without liability insurance to cover damaged property, employee theft, etc., a concierge business could end up on the wrong side of a costly lawsuit.

To avoid costly out-of-pocket expenses, it is important that cleaning companies have liability insurance that meets their needs. It is usually best to start with General Liability Insurance. In addition to general liability insurance, an umbrella policy can be a good idea for expensive claims that exceed the limits of a GLI policy.

The best thing to do is to contact an insurance company that offers cleaning or concierge business insurance packages and see what the agent recommends. Many insurers now offer deals specific to certain industries, and cleaning services is one of them. You can also ask them to build a relationship, which will help you get more customers. In fact, many larger companies only allow bonded cleaning companies to bid on their available contracts, so adding a surety bond to your insurance portfolio is a good idea if you want to grow your business.

Which brings me to all the positive side effects of getting the right coverage…

Most potential clients will only want to hire cleaning companies with adequate liability coverage. In the event of damage or theft, they want to know that their property is protected. Customers also want to avoid costly lawsuits if a concierge service employee is injured on their property. Therefore, a company with good liability coverage is much more attractive to potential clients than an underinsured or uninsured company. Sharing with potential clients the amount of liability coverage your concierge company has can give you an edge over other companies that don’t have the right coverage or simply don’t advertise it effectively.

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While it may seem like a hassle and additional cost to purchase insurance for a business that seems as simple as cleaning, it’s worth looking around online and comparing rates. You can also contact your existing agent and see if they offer business insurance and have them quote you as well. The time it takes is well worth it to protect yourself and your new business.