Budget in proper business insurance before an accident wipes out your cash flow.
Most owners of cleaning and sanitation businesses are more concerned about revenue than insurance – in fact, most business owners feel this way. But cleaning professionals who go without insurance (or who have insurance that doesn’t fit their current needs) risk wiping out any revenue they make when something goes wrong unexpectedly.
5 Major Risks of Running a Cleaning Business
Here’s a look at five of the most significant risks that face cleaning businesses without insurance (and how to reduce those risks to keep the business strong).
Injury to Your Employees. Whether your business offers commercial/janitorial, window, or residential cleaning, your work is physical. Bending, lifting, and repetitive motions can lead to a variety of injuries, and that’s before you consider slipping on a just-waxed floor or inhaling toxic cleaning chemicals. Medical bills aren’t cheap, and if your employees are hurt on the job, your business is responsible for those bills. Luckily, occupational injury doesn’t have to bankrupt your business: Workers’ Compensation Insurance, required by most states, covers both the cost of treating workplace injuries and a portion of the wages your employees lose if they have to take time off to recover.
Damage to Your Clients’ Property.
Think of the classic knocking-over-the-priceless-vase-while-dusting scenario. Or the client who forgets to mention that the parquet floors need special care. A lot of things can go wrong when you spend most of your time on other people’s property. If your client suffers a major financial loss because of your work, an honest mistake could trigger a lawsuit. Even if the judge rules that you’re not responsible for the damage, you’ll face hefty legal expenses. The US Chamber Institute of Legal Reform puts the cost of a dismissed lawsuit at between $2,000 and $5,000, thanks to legal fees. A General Liability Insurance policy can cover those costs as well as any damages you have to pay. And this coverage is affordable: GL policies for small carpet cleaning businesses start at less than $400 per year.
Without equipment, a cleaning business can’t function. But professional-grade gear is expensive and can be hard to replace on short notice, especially if you don’t have a lot of cash on hand. The good news: Property Insurance can help keep cleaning businesses in the black when gear is stolen or damaged by fire, some storms, and certain other events. Even better? Many small cleaning businesses qualify for a Business Owner’s Policy (BOP), which bundles Property with General Liability. The magic of bundling lets you save on both policies.
Client Building Closure.
Picture this: you’re getting ready for the nightly cleaning at your main client, an office building, when you get a call from the building manager that there’s been a serious fire. The building is badly damaged. Repairs will start immediately, but the building will be closed for at least two months. Would you be able to keep your business afloat without its biggest client for two months? As a cleaning business, you have a unique risk exposure: because most of your work is performed at client locations, you’re vulnerable to property damage on multiple properties rather than a single office location. But most Property policies only cover damage to a primary business property. That’s why it’s a good idea to find a Property policy (or BOP) that includes the SPICE endorsement (Special Property Insurance Coverage Endorsement). The SPICE offers protection for property damage that happens at third-party locations, as well as up to $25,000 in Business Interruption Insurance if you’re unable to work at a client site.
Finally, because you work on others’ property, there’s a good chance someone might overlook your “Wet Floor” sign and take a nasty spill. If that fall leads to a doctor’s visit or ER trip, your business could be asked to cover the medical bills. In a worst-case scenario, the injuries might be serious enough to prompt a lawsuit against your business. Either way, you’ll be protected with a General Liability policy in place. This trusty insurance pays for claims of third-party injury so you can focus on doing your job rather than finding the funds to send someone else to the doctor.
Keeping Your Business in the Black
Savvy financial management and planning are crucial to keeping your business healthy. But even the strongest business can be undone by an unexpected lawsuit or property loss. To find out the specific risks that threaten your business, talk with a risk advisor or insurance agent familiar with cleaning businesses.
Ted Devine is the CEO of Insureon, the nation’s leading online insurance provider for small businesses.