Janitorial Insurance: Coverage, Bonds, Costs and Gaps

Janitorial insurance is a set of business policies that pays when your cleaning work injures someone or damages a client's property. It can also pay when one of your workers gets hurt or steals. For most commercial cleaning companies, the core coverage is general liability, workers' compensation once you hire, and often a janitorial bond. Commercial clients often want proof of these before they'll sign a contract. The exact rules depend on your state and your contracts.

What janitorial insurance usually includes

You won't find a single policy called "janitorial insurance." It's a label for the mix of coverage a cleaning company buys. TechInsurance describes it as protection against client injuries, property damage and employee theft. A client slipping on a freshly mopped floor is the classic example.

The table below shows the common pieces. Exact terms vary by insurer, so treat the "usually excludes" column as a list of things to ask about, not a promise.

TechInsurance notes that small janitorial businesses can usually get a BOP, which bundles general liability and commercial property insurance at a discount. For more on the first row, see this guide to general liability insurance for a cleaning business.

Which coverage the law requires, and which clients require

There's no single national law telling every janitorial company what to buy. The U.S. Small Business Administration says the law may require certain types of business insurance, and once you have those, you can add coverage for other risks.

Workers' compensation depends on your state

Workers' comp is the coverage the law most often requires once you have employees. Insureon notes that state laws typically require janitorial businesses with employees to carry it. But the rules vary widely from state to state.

In New York, the New York State Workers' Compensation Board says virtually all employers in the state must provide workers' comp coverage for their employees, and they must post a notice of coverage at their place of business. Texas takes a different approach. The Texas Department of Insurance says private employers can choose whether to carry workers' comp, and in most cases it isn't required. Employers who go without it must report to the state that they don't have coverage.

Texas also shows why "optional" doesn't mean "skip it." TDI explains that having coverage limits your liability if an employee sues your business, except when gross negligence leads to a death. Rules for owners, part-timers and family members vary too, so check with your state's workers' comp agency.

California adds a janitorial registration rule

California has a rule aimed squarely at this trade: the Property Service Workers Protection Act. Under it, the California Labor Commissioner requires janitorial employers to register. You count as an "employer" if you employ at least one covered worker, or if you use contracts, subcontracts or franchise deals to provide janitorial services.

Registration comes with a $500 nonrefundable application fee and has to be renewed every year. The state also runs a public search tool, so clients can check whether a cleaning company is registered. Registration isn't insurance, but commercial clients in California may ask for it along with your insurance paperwork.

Contracts often matter more than the law

Even where the law asks for little, your clients can ask for a lot. TechInsurance notes that many commercial clients require proof of insurance and janitorial bonds before they sign. Property managers, office parks, medical offices and government buyers often spell out the exact coverage types and limits they want in their bid documents.

How a janitorial bond differs from insurance

A janitorial bond protects your client, not you. Insureon explains that it pays clients back for employee theft. Unlike an insurer, the bond company expects you to repay it after it pays a claim.

That repayment rule catches a lot of owners off guard. A bond works more like a line of credit that makes sure your client gets paid quickly. Your business still pays the final cost of the theft.

Bonds don't cover much beyond theft, either. Insureon notes that a janitorial bond covers only theft, not damage to a client's property. It also says the law doesn't require you to carry a cleaning business bond, though clients may ask for one.

Performance Surety Bonds lists other limits that matter in this trade. The bond covers only the cleaning company's paid employees, not independent contractors. By default, it doesn't cover the company's owner unless the bond says so. For a claim to qualify, the act has to be illegal where the work was done. Many also require the employee to be tried and convicted before a claim can be filed. Indirect losses, such as income lost because items were stolen, aren't covered. And janitorial bonds typically have deductibles.

If you use 1099 subcontractors, ask directly whether the bond covers them. Plenty of owners assume it covers everyone on the crew, but it may not.

How much janitorial insurance costs

Prices depend on your payroll, revenue, location, claims history, type of work and chosen limits. As TechInsurance notes, more coverage generally means higher costs.

For a rough benchmark, the online insurance broker Insureon publishes these average premiums for janitorial businesses:

• General liability: $60 per month, or $725 annually
• Workers' compensation: $114 per month, or $1,362 annually
• Janitorial bonds: $10 per month
• Commercial auto: $234 per month, or $2,810 annually
• Commercial umbrella: $87 per month, or $1,040 annually

These are one broker's averages across its own customers, not a quote, and your price could land well above or below them. Insureon also notes that insurers see janitorial businesses with more revenue as riskier, which means higher premiums.

Workers' comp is usually priced on payroll and the type of work, so it grows as you hire. Auto costs depend on your vehicles, your drivers and their driving records.

Common gaps in janitorial coverage

Most claim surprises in cleaning come from a handful of gaps. Ask a licensed agent about each one before you sign a contract.

Damage to the thing you are cleaning. Many general liability policies limit coverage for property in your "care, custody or control," meaning property you're handling or working on. A floor you strip, a carpet you deep clean or a marble counter you treat may fall into this gap, so ask how your policy handles it. If you do floor and carpet care, the carpet cleaning insurance guide covers related issues.

Lost keys and access cards. Commercial janitors often hold keys, key fobs and alarm codes. If a key ring goes missing, the client may need to rekey a whole building. That cost isn't an injury or typical property damage, so general liability may not pay. Ask whether the insurer offers lost key coverage as an add-on.

Theft without a bond. General liability is built for accidents, not deliberate acts. If a worker steals, you usually need a bond or crime coverage, and even then the bond limits above apply.

Subcontractors and misclassified workers. You may call workers independent contractors, but if you control their schedules and methods, your state may treat them as employees for workers' comp. Bonds may also exclude them. Ask your subcontractors for their own certificates of insurance.

Personal vehicles. A personal auto policy may not cover business driving between job sites. If staff use their own cars for work, ask about hired and non-owned auto coverage.

Chemicals and mold. Cleaning products, fumes and water damage can lead to claims that some policies limit or exclude. Ask how yours treats chemical exposure and mold.

Contracts and certificates of insurance

A certificate of insurance, or COI, is a one-page summary that proves you have coverage. Clients usually want one before your first shift and again each time your policy renews.

Read the insurance section of every cleaning contract before you sign. Here's what clients commonly request:

• Additional insured: The client is added to your general liability policy, so your coverage can defend the client against claims tied to your work.
• Waiver of subrogation: Your insurer agrees not to seek repayment from the client after paying a claim.
• Primary and noncontributory: Your policy pays first, before the client's own insurance.
• Notice of cancellation: The client wants to be told if your coverage ends.
• Hold harmless or indemnity clause: You agree to cover certain legal costs for the client. Your policy may not cover every promise in this clause.

Most of these need an endorsement (a written change to your policy), and some cost extra. Send the contract to your agent before you sign, not after. If you also clean homes, the business insurance for a cleaning business guide explains how residential work changes things.

Checklist: what to ask an agent and check in your contracts

Use this list when you talk to a licensed insurance agent and when you review a cleaning contract. The SBA suggests working with a reputable licensed agent to find policies that fit your business.

• What does my state require for workers' comp, and does it cover me as the owner?
• Does my general liability policy cover damage to property I'm cleaning or treating?
• Is there a lost key add-on, and what does it cover?
• Does my janitorial bond cover owners, part-time workers and subcontractors?
• Will the bond company expect me to repay any claim it pays?
• Do my staff drive their own cars for work, and do I need hired and non-owned auto coverage?
• How does the policy handle chemical exposure, fumes and mold?
• Can you add my client as an additional insured, and does that cost extra?
• Does the contract ask for a waiver of subrogation or primary and noncontributory wording?
• Does the contract's indemnity clause go beyond what my policy covers?
• What limits does each contract require, and do I need an umbrella policy to meet them?
• If I work in California, is my janitorial registration current?
• How fast can I get a certificate of insurance for a new client?
• Which work does the policy exclude, such as high windows, floor stripping or biohazard cleanup?