Cleaning Insurance, Part I
IntroductionIt may not be an absolute requirement that you have insurance when you start your cleaning business but it's an awfully good idea. Many businesses will require that you show proof of certain types of insurance before they will let you bid on their accounts. Even if you stick to doing residential work some homeowners will ask you about insurance as well. Plus nothing can replace the peace of mind that a good insurance policy can give you. The best way to learn about your insurance needs and the cost is to check locally. Ask your banker, lawyer or other advisers; and call around to local insurance agents or brokers. The information on the rest of this page will give you the basic facts about your insurance needs as a cleaning service owner. General Liability InsuranceThis is the most important type of insurance you will have, in fact it may be the only insurance you will ever need. It's also known as PL/PD insurance or Property Liability/Property Damage insurance. It protects you and your customers if you damage something of theirs either due to your business activities or negligence. It also covers injuries due to your business activites or negligence. The cost of this type of insurance is dependent on the number of employees you have and your business track record. Various services you might provide can drive the costs of your General Liability insurance way up. These include such services as window cleaning, especially above the first floor, also disaster cleanup, or accident/crime scene cleanup where there are bio-wastes to deal with. Ask around locally among insurance companies for price and ask them to provide you with Proof of Insurance that you can supply to customers. Bonding InsuranceFidelity BondingA fidelity bond has one purpose, to protect the people you are doing business with if you or someone working for you is caught stealing from them. In general there must be some sort of trial or court hearing in which you or your employee is proven to be guilty for the insurance company to pay out on a fidelity bond. While they all do the same thing, you can buy different varieties of fidelity bonds to cover different situations. You can buy a fidelity bond just to cover yourself, or a blanket bond to cover your whole staff, or a schedule bond that only applies to certain listed members of your staff. You use this last one if one company that you work for insists on a fidelity bond. You buy the bond only to cover the people who work on that one account. Although cleaning people have been known to steal things it almost never becomes a matter for the courts. So fidelity bonds as a practical matter are almost useless. Never buy fidelity bonds for their value as insurance, just buy them to keep your customers happy. The only criteria you should use for judging fidelity bonds is their price. Always buy the cheapest you can find. Surety Bonds -- also called Performance BondsYou are much less likely to ever need a surety bond but there are some cases when janitorial companies do buy them so we'll go over them briefly. A surety bond guarantees your customer that you will carry out the terms of your contract. In other words, if you fail to do a job which you have covered with a surety bond the insurance company will step in, hire someone else, and finish the job for you. They will also collect any funds due you as partial reimbursement for their costs. Surety bonds are occasionally required for big jobs for the government or private business. If you do a large construction clean up job you may have to get a surety bond to guarantee the contractor that the building will open on time. If you ever need a surety bond make sure you find out how much it will cost before you bid on the job so you can include its cost in your price.
Liability InsuranceLiability insurance covers the policy holder (the cleaning business owner) when he or his company is responsible for injury or property damage to a third party. Usually you will need a comprehensive general liability package to cover your responsibility. Certificate of InsuranceA certificate of insurance is proof that you have liability insurance. To get one you need to contact your insurance agent or broker and have all your customers listed as 'additionally insured' on your policy. You can then have a certificate mailed directly to them by your agent. If a potential customer asks for proof that you are insured this is what he wants. Vehicle Liability InsuranceThis is another type of liability insurance on your cars and trucks. Most states require that you have a certain amount of insurance on any vehicle you use in your business. This protects other people not you. Umbrella InsuranceUmbrella coverage is a form of supplemental liability insurance. It covers you for claims that are larger than your regular liability policy will pay for or for claims that your regular insurance doesn't cover at all. It is often used by people with large potential future earnings and people with large estates. With luck and effort many people in our business end up in those categories. So you might want to think about getting it. It is a supplemental insurance so it is generally very inexpensive. Property - Insurance that Protects YouProperty insurance covers you in case of damage or theft of your property. This is the basic coverage you need to protect your business. Boiler and Machinery InsuranceThe name is a little misleading but boiler and machinery coverage protects you in case of the breakdown of essential equipment. If you move into a specialized field like carpet cleaning you might want to get this kind of protection for your steam cleaning units. Vehicle InsuranceVehicle insurance does exactly what you think it does. It insures you for damage to your vehicles. It's very easy to end up with a small fleet of cars and trucks in this line of work so you definitely want to shop around for the best possible deal. Worker's CompensationWorker's compensation pays for medical expenses from on-the-job accidents and work-related illnesses for your employees, not for you. Exactly what your worker's comp insurance must cover is determined by each state. Your policy may pay for medical benefits, disability income benefits, rehabilitation benefits, and death benefits as well. Worker's comp insurance can be expensive for small businesses but laws created in the late 1980's allow the use of "preferred providers" to curb medical care costs, they also feature a faster back-to-work process, greater fraud detection, and better price competition among worker's compensation insurers. So this is another insurance field where it pays to shop around. Click Here to go to Insurance, Part II
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