Cleaning Business Insurance and Bonding: What you need to know [2023 Guide] (2023)

February 22, 2023 in Business

Last Updated on March 2, 2023 by The ZenMaid Team

As you know, starting a residential cleaning company is a big undertaking, and protecting your business from potential risks is essential to its success. Understanding cleaning business insurance and bonding is your first step. Buying policies for your cleaning business to become bonded and insured is your second step.

Before we get started, it’s important to note that bonding and insuring a company are two different forms of protection for a business. (read on below)

What is the difference between bonding and insurance?

Bonding is a type of guarantee that protects your clients from financial loss if you fail to complete a job as agreed upon in your contract. For example, if a cleaning business is bonded, their client is protected if the cleaning business fails to complete the job as agreed or causes damage to the client’s property. The bond acts as a third-party guarantee, with the bond issuer guaranteeing payment to the client if a claim is made.

Insurance is a type of financial protection that protects a business from potential losses. For example, liability insurance protects a cleaning business from financial loss if they are found responsible for damaging a client’s property. Workers’ compensation insurance protects a cleaning business from financial loss if an employee is injured on the job.

It is recommended that cleaning businesses have both bonding and insurance in place to provide comprehensive protection for their business and clients.

How do I get insurance for my cleaning business?

Having your cleaning business bonded and insured can also help you attract, retain, and build trust with customers. Many customers prefer to work with businesses that have insurance, as it demonstrates that you take your business seriously and are committed to protecting their personal assets, which enhances their customer experience.

In this article, we’ll cover everything you need to know about getting insurance for your cleaning business, including the different types of insurance to consider, how to get your business bonded, estimated costs, and tips for finding the best insurance provider for your business.

Source: Andres Canchon at UnSplash

Insurance for your cleaning business — does it really matter?

Essentially, business insurance acts as a safety net for your business, helping you weather financial storms and recover from losses. As a cleaning business owner, you face a number of risks every day, from property damage and theft to accidents and lawsuits. These risks can come from a variety of sources — like customers, employees, and contractors — and can result in significant financial losses for your business.

By purchasing business insurance, you can protect your cleaning business against these potential losses. With business insurance in place, you won’t have to worry about covering the costs of lawsuits, property damage, or other financial losses out of your own pocket. Ultimately, business insurance gives you peace of mind and security over your assets — can you really put a price tag on that?

What business insurance can protect you from

When you’re in the early days of starting a cleaning business, expenses seem endless! After the expense of cleaning supplies, marketing, employees, software, and not to mention paying yourself, one more cost might feel painful. But trust us, it’s worth it.

Without business insurance, you could find yourself in a difficult financial situation if faced with unexpected events or legal liabilities. If you find yourself thinking, “yeah, but that won’t happen to me,” consider the following scenarios:

Legal Liabilities: Cleaning business owners may find themselves in trouble if a customer or employee is injured on the job. Without business insurance, you may be held personally responsible for covering the cost of medical bills and other damages. Business insurance can help protect you from these legal liabilities.

Damages to Customer’s Property: Cleaning business owners may be held responsible for damages to a customer’s property, such as broken furniture or ruined carpet. Business insurance can help cover the cost of these damages, so you don’t have to pay out of pocket.

Loss of Income: Without business insurance, cleaning business owners may not be able to recover from losses caused by a natural disaster, theft, or other unexpected events. Business insurance can help cover the cost of lost income and help you get your cleaning business back up and running as quickly as possible.

Employee Injuries: Cleaning business owners may be held responsible for covering the cost of medical bills and lost wages if an employee is injured on the job. Business insurance can help cover these costs, so you don’t have to pay out of pocket.

Lawsuits: Cleaning business owners may face lawsuits if a customer or employee alleges that you or your employees have acted negligently or committed fraud. Business insurance can help cover the cost of legal fees and settlements, so you don’t have to pay out of pocket.

Source: Tingey Injury Law Firm at UnSplash

Are you required by law to have cleaning business insurance?

The requirement for business insurance varies by state, but most states do not have a specific requirement for businesses to carry insurance. However, there are certain circumstances where insurance may be legally required. For example, if a cleaning business has employees, they may be required to carry workers’ compensation insurance in most states.

Additionally, if a cleaning business is bidding on government contracts, it may be required to carry certain types of insurance, such as liability insurance. Some states also have specific requirements for bonding for businesses that provide certain services, such as construction or home services.

It is important for cleaning business owners to research their specific state’s requirements for business insurance and bonding, as well as to consider the risks associated with their business when determining what types of insurance to carry. Consulting with an insurance agent or attorney can also be helpful in understanding your state’s requirements and in making informed decisions about insurance for your cleaning business.

Looking to start a cleaning business and would love a guide specific to your state? Search for your state in our online magazine right here.

When you might not need cleaning business insurance

While we recommend insurance for all cleaning businesses, not all states require business insurance. There may be some circumstances where it’s not 100% necessary. Here are some instances when you might not need business insurance:

Sole Proprietorship: If you own a sole proprietorship and don’t have any employees, you may not need business insurance. It is, however, recommended that you have liability insurance to protect yourself in case of a covered event.

Working with a Reliable Partner: If you work with a reliable partner who has comprehensive business insurance, you may not need to purchase your own insurance. However, it’s still essential to verify that your partner’s insurance covers all potential risks associated with your cleaning business.

No High-Risk Activities: If your cleaning business doesn’t involve any high-risk activities, such as using chemicals, you may not need business insurance. However, it’s still recommended that you have liability insurance to protect yourself in case of a covered event.

Source: Brooke Cagle at UnSplash

How to get business insurance in five simple steps

Getting business insurance for your cleaning business can seem daunting, but it doesn’t have to be. We’ve simplified the process into five steps below:

Step 1: Assess your business needs. Consider the type of cleaning services you offer, the equipment and supplies you use, the number of employees you have, and any other factors that may impact your business’s insurance needs.

Step 2: Once you have assessed your business’s insurance needs, it’s time to shop around for insurance policies. You can start by getting quotes from multiple insurance providers, either directly or through an insurance agent. Compare policies and coverage options, as well as costs, to find the best policy for your business.

Step 3: After you have compared quotes and coverage options, choose a policy that meets your business’s needs and budget. Make sure you understand what is covered under the policy, as well as any exclusions or limits.

Step 4: Once you have chosen a policy, it’s time to purchase it. This typically involves filling out an application, paying the premium, and receiving a policy certificate. Make sure you have a copy of the policy certificate for your records.

Step 5: Review your policy regularly, especially after any significant changes to your business, such as adding employees or expanding your services. Update your policy as needed to make sure it continues to meet your business’s needs.

Another option is to find an insurance agent before you choose a policy. Registered agents can help you understand some of the legal jargon that comes with insurance contracts before you sign anything. Just remember, most agents are motivated to sell because they get a commission from policyholders. If you’re having trouble finding an agent, ask a question in our free ZenMaid Mastermind Facebook group to get feedback from other cleaning business owners.

What kind of insurance should I consider for my cleaning business?

When it comes to protecting your cleaning business, there are several types of insurance to consider. Let’s take a look at the most common ones:

General Liability Insurance: This type of insurance protects your business against third-party claims of bodily injury or property damage. It covers medical expenses, court costs, and damages, up to the policy limit. For cleaning businesses, this insurance is especially important as it covers accidents that might occur while cleaning someone else’s property.

Product Liability Insurance: Cleaning supplies insurance, also known as product liability insurance, provides protection for your cleaning business in case of damages or injuries caused by your cleaning products. This type of insurance can cover legal fees, medical expenses, and other costs associated with product liability claims.

Workers’ Compensation Insurance: If your cleaning business employs one or more people, it is mandatory to carry workers’ compensation insurance. This insurance covers medical expenses and lost wages for employees who get injured on the job.

Commercial Property Insurance: This insurance covers your business’s physical assets, such as equipment, supplies, and inventory, in case of damage or theft. For cleaning businesses, this insurance can also cover loss of income due to a fire or other covered event that disrupts operations.

Commercial Auto Insurance: If your cleaning business uses company vehicles, it is important to have commercial auto insurance to protect your business from financial loss in case of accidents, theft, or damage to the vehicle. Commercial auto insurance can cover both the vehicle and the driver, as well as any damages to other people or property. This insurance can also provide coverage for rental vehicles and employees’ personal vehicles used for business purposes.

Hired and Non-Owned Insurance: Hired and non-owned insurance is an add-on rider to a general liability policy that provides coverage for cleaning employees or contractors who use their own vehicles or rental vehicles for business purposes. Whether you have W-9 employees or 1099 contractors working for you, if they are using their personal vehicle during your company’s time, your company may still be held liable. Please note, however, that Hired and Non-Owned Insurance is not a replacement for personal auto insurance. If an employee or contractor causes an accident while driving their own vehicle, their personal auto insurance will still be the primary coverage for the accident.

Business Interruption Insurance: This insurance provides financial compensation for lost income if your cleaning business is unable to operate due to a covered event such as a natural disaster. It can also cover expenses related to relocating the business temporarily.

Professional Liability Insurance: Also known as Errors and Omissions Insurance, this type of insurance covers claims of negligence or errors made by your cleaning business while providing services.

Source: Micheile at UnSplash

How much does cleaning business insurance cost?

The cost of insurance for your business varies depending on several factors, including the size of your business, the number of employees, the types of insurance you choose, and the coverage limits you set.

It’s important to understand that paying for insurance is an investment in the protection and future success of your cleaning business. While it may seem like an added expense in the short term, insurance can save you thousands of dollars in the long run by protecting you against potential lawsuits, property damage, and other financial losses.

So, let’s say one of your cleaners has just mopped the floor of a client’s home, and the client trips over it and sues you for medical expenses and lost wages. Without liability insurance, you would be responsible for covering these costs out of pocket, which could be tens of thousands of dollars or more. But, with liability insurance, your insurance company would step in and cover these costs, protecting you from financial ruin.

Similarly, property insurance can protect your cleaning business’s physical assets, such as equipment and supplies, in the event of theft, damage, or loss. This can save you thousands of dollars in the long run, as you wouldn’t have to pay out of pocket to replace damaged or stolen items.

Paying a reasonable fee for insurance now is an investment that can protect your cleaning business against potential financial losses and ensure its long-term success. While it may seem like an added expense in the short term, it’s can be worth its weight in gold for the long run.

Average costs of business insurance

The average cost of general liability insurance for cleaning businesses ranges from $500 to $1,500 per year. Workers’ compensation insurance costs an average of $1 to $2 per $100 of an employee’s salary. Commercial property insurance costs an average of $500 to $1,000 per year, depending on the coverage limits and the value of the assets being insured.

When shopping for business insurance, be sure to compare quotes from multiple insurance providers (we’ll share some examples in just a minute)! This will help you find the best deal that meets your business’s insurance needs.

Best insurance provider for cleaning businesses

The best companies to get business insurance from for cleaning businesses will vary depending on your specific needs and budget. However, here are some well-known and reputable companies that offer business insurance for cleaning businesses. Here’s a round-up of the top ones:

The Hartford:The Hartford is a well-known insurance company that offers comprehensive business insurance for cleaning businesses, including liability insurance, property insurance, and workers’ compensation insurance.

State Farm:State Farm is another well-known insurance company that offers business insurance for cleaning businesses. They offer a wide range of insurance options, including liability insurance, property insurance, and workers’ compensation insurance.

Nationwide: Nationwide is a leading insurance company that offers business insurance for cleaning businesses, including liability insurance, property insurance, and workers’ compensation insurance.

Allstate: Allstate is another well-known insurance company that offers comprehensive business insurance for cleaning businesses. They offer a wide range of insurance options, including liability insurance, property insurance, and workers’ compensation insurance.

Farmers Insurance: Farmers Insurance is a leading insurance company that offers business insurance for cleaning businesses. They offer liability insurance, property insurance, and workers’ compensation insurance.

Chubb: Chubb is a global insurance company that offers comprehensive business insurance for cleaning businesses, including liability insurance, property insurance, and workers’ compensation insurance.

Travelers: Travelers is a well-established insurance company that offers business insurance for cleaning businesses, including liability insurance, property insurance, and workers’ compensation insurance.

Liberty Mutual: Liberty Mutual is a leading insurance company that offers business insurance for cleaning businesses, including liability insurance, property insurance, and workers’ compensation insurance.

The Hanover Insurance Group: The Hanover Insurance Group offers a range of insurance options for cleaning businesses, including liability insurance, property insurance, and workers’ compensation insurance.

CNA Financial: CNA Financial is a well-known insurance company that offers business insurance for cleaning businesses, including liability insurance, property insurance, and workers’ compensation insurance.

Insurance for cleaning businesses on a tighter budget

When you’re just starting out, the initial cost of everything you need can be overwhelming — we get it! If you’re on a tighter budget, these two insurance providers may be able to give you a lower rate:

GEICO: GEICO is a well-known insurance company that offers a range of insurance options for cleaning businesses, including liability insurance, property insurance, and workers’ compensation insurance. They are known for offering competitive pricing and flexible coverage options.

Progressive: Progressive is a well-established insurance company that offers business insurance for cleaning businesses at competitive prices. They offer liability insurance, property insurance, and workers’ compensation insurance.

Source: Towfiqu Barbhuiya

What does it mean to get bonded for a cleaning business?

Bonding is another important aspect of protecting your cleaning business. A bond is a type of insurance that guarantees payment if a specified obligation is not fulfilled. In the context of a cleaning business, a bond is a guarantee that your business will fulfill its obligations, like completing a job or properly handling customer property.

Getting bonded for your cleaning business can be an important step in protecting your business against potential financial losses. For example, if a customer alleges that your business did not complete a job as agreed, or if the customer’s property is damaged or goes missing, a bond can provide a source of funds to pay for damages or make restitution.

The most common bond protects against work that does not get done. However, another type of bond residential cleaning services should consider is a theft bond. This type of bond is designed to protect against the risk of employee theft. In the course of their work, cleaners may have access to valuable personal possessions. If an employee were to steal something and be convicted of a crime, a theft bond would cover the cost of the missing item. Theft bonds are not always included in standard bonding packages, so check with your insurance provider to see if this type of coverage is available and if it can be added to an existing policy.

Bonding can also be an important factor in attracting and retaining customers. By getting bonded, you can demonstrate to potential customers that you take your business seriously and are committed to fulfilling your obligations. This can help build trust with customers and increase the likelihood that they will choose your business over others.

How to get your cleaning business bonded

Cleaning business owners can get bonded through an insurance agent, broker, or bonding company. These professionals can help you understand the bonding process and find a bonding solution that fits your business’s needs.

Bonding is typically purchased as a separate policy from business insurance. While some insurance providers may offer bonding as part of a broader business insurance package, it’s important to understand that bonding and business insurance serve different purposes and protect against different risks.

When looking for a bonding solution, it’s important to consider factors such as the type and amount of bond you need, the cost of the bond, and the underwriting criteria of the bonding company. An insurance agent, broker, or bonding company can help you understand these factors and find a bonding solution that fits your business’s needs and budget.

Best providers for cleaning business bonding

Many insurance providers offer bonding as part of their insurance packages, so to keep things simple, it may be helpful to consider bundling a bonding option with your main business insurance provider. That said, here are a few providers that specialize in bonding:

1. Surety Solutions Insurance Services
2. AmeriSure
3. ProSure Group
4. Contractors Bonding and Insurance Company (CBIC)
5. Insurance Office of America (IOA)

Source: Edwin Hooper at Unsplash

Red flags to look out for when shopping for cleaning business insurance

For the right insurance for your cleaning business, be mindful of potential red flags. These warning signs can indicate that an insurance provider may not be a good fit for your business. Here are some red flags to look out for:

Unclear Policies: If an insurance provider’s policies are unclear or hard to understand, it’s a sign that they may not be trustworthy. It’s essential to choose an insurance provider that is transparent and has clear policies that you can easily understand.

High Deductibles: High deductibles can increase the cost of insurance and leave you with significant out-of-pocket expenses in case of a claim. If an insurance provider’s deductibles are significantly higher than others, it’s a red flag.

Limited Coverage: Some insurance providers may offer limited coverage, which may not fully protect your cleaning business in case of a covered event. It’s essential to choose an insurance provider that offers comprehensive coverage that meets your business’s unique needs.

Poor Reputation: Before choosing an insurance provider, it’s essential to research their reputation. Read reviews and ask for referrals from other business owners. If an insurance provider has a history of denying claims or providing poor customer service, it’s a red flag.

Unreasonable Prices: If an insurance provider’s prices seem too good to be true, they probably are. Unreasonably low prices can indicate that the insurance provider is offering limited coverage or has high deductibles. It’s essential to choose an insurance provider that offers fair prices and comprehensive coverage.

It is always best to conduct your own research and compare coverage options, customer reviews, and costs before making a decision. That being said, some insurance companies may not be a good fit for cleaning businesses due to limited coverage options, high costs, or poor customer service. Do your due diligence and research the insurance company you’re considering thoroughly to ensure they’re a good fit for your cleaning business.

You can start by checking the financial stability of the insurance company through organizations such as A.M. Best, which rates insurance companies based on their financial stability and ability to pay claims. You can also read customer reviews and check the insurance company’s complaint record with your state’s insurance department to get an idea of their level of customer satisfaction.

Wrapping up

Whether you’re looking to protect your business against lawsuits, property damage, or financial losses, there is a type of insurance that can help. By understanding the different types of insurance available, estimating costs, and doing your research, you can find the best insurance provider for your cleaning business.

Remember, paying for insurance is an investment in the protection and success of your business, and can ultimately save you thousands of dollars in the long run.

Your next step

If you found this article helpful for your maid service, you may also like:

• Residential and commercial cleaning services: how to do both
• How to Use Customer Reviews to Grow Your Maid Service
• Seven steps to build your seven-figure cleaning business
• Scale Your Cleaning Business: Save 30+ Hours a Week on Marketing, Scheduling and Hiring
• How to Build a Luxury Cleaning Business That Attracts Elite Clientèle

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