Get Insured And Bonded: House Cleaning Business Guide

House cleaning services don't need to be licensed and bonded unless they work with local government or corporate entities. However, obtaining a business license and a bond gives you an edge when marketing to new clients. Potential customers gain more confidence knowing a cleaning company has taken extra steps to protect customer belongings. There are two basic types of bonding: fidelity and surety. Fidelity bonding covers the loss of money, property, or valuables due to theft by employees, while surety bonding ensures the company can hire another cleaner to finish the job if the original employee is unable to.

Fidelity bonding vs. surety bonding

While both fidelity and surety bonds are types of surety agreements, they have distinct purposes and mechanisms.

A fidelity bond, or employee dishonesty insurance, is a type of business insurance that safeguards a company and its customers from financial losses due to dishonest or fraudulent acts by its employees. This includes theft, embezzlement, and forgery. It is typically purchased voluntarily by the employer to protect themselves from their own employees. Fidelity bonds are not legally required but can provide peace of mind for both the business and its clients. The cost of a fidelity bond depends on factors such as the type of business, the number of employees, and the desired coverage amount.

On the other hand, a surety bond is a legally binding agreement that guarantees the fulfilment of a contract or task according to industry standards and deadlines. It primarily protects the client or project owner from financial losses by ensuring that the contractor or business owner fulfils their contractual obligations. If the contractor fails to meet their obligations, the surety bond provider will step in to compensate the client and then set up a repayment plan with the contractor. Surety bonds are often required, especially in the construction industry, and their cost is influenced by factors such as the contractor's qualifications, the type of bond, and the project's size and duration.

In the context of a house cleaning business, a fidelity bond would protect the business owner from financial losses caused by their employees' dishonest acts, such as theft or fraud. Meanwhile, a surety bond would ensure that the clients are compensated if the cleaning business fails to meet its contractual obligations, providing reassurance and confidence to potential customers.

To summarise, the key difference between fidelity and surety bonds lies in their focus: fidelity bonds protect businesses from their employees, while surety bonds protect clients from businesses. Both types of bonds are important risk management tools that can enhance the credibility and financial stability of a house cleaning business.

Why bonding is important

Bonding is important for house cleaning services as it provides extra protection for clients and their possessions. It is a type of insurance that covers clients in the event of theft or damage to their property. This is particularly important for house cleaning services as employees often spend significant amounts of unsupervised time in clients' homes.

Bonding gives clients peace of mind that their possessions are safe and secure, and that they will be compensated in the event of any loss or damage. This can include coverage for injuries and accidents, meaning that the property owner will not be held liable for any safety issues that occur while the cleaning staff is on their property.

In addition, bonding can help to protect both the client and the cleaning company from any liability due to loss and damages. It also demonstrates that the company is reputable, honest, and transparent, and has taken the necessary steps to secure its business.

While bonding is not typically required to run a house cleaning business, it can give companies a competitive edge when marketing to new clients. It shows that the company has taken extra steps to protect its clients and their belongings.

Overall, bonding is important for house cleaning services as it provides financial protection, peace of mind, and helps to build trust and confidence between the company and its clients.

How to get bonded

House cleaning services don't need to be bonded unless they work with local government or corporate entities. However, getting bonded gives you an edge when marketing to new clients. Potential customers are more likely to trust a cleaning company that has taken extra steps to protect their belongings.

To get bonded, you need to apply for a janitorial bond, a specific type of surety bond. This process does not require any credit checks. To get your janitorial bond issued, you need to provide the following information:

• Bond amount of coverage
• Business information (name, type of business, and address)
• Number of employees
• Type of cleaning offered (residential or commercial)

The cost of a surety bond is a small percentage of the total coverage amount, less than $200 in some cases. The fewer the employees, the lower the bond amount needs to be. For example, a company with 2-3 cleaners might get $10,000 in coverage, while a company with 50 cleaners will need much higher coverage.

You can obtain a bond through a local insurance or surety bond company. You can also get a quote online and follow through by talking to a live person before signing and paying for anything.

How much bonding costs

Bonding and insurance for a cleaning business are essential to build trust with your clients and safeguard your company's assets. The costs for bonding and insurance will depend on the size of your cleaning business and the type of work you do. For instance, window cleaning is likely to be deemed riskier than house cleaning, and so will be more expensive to insure.

The median price of general liability insurance for a cleaning business is $48 per month or $580 per year, according to Insureon. This can vary depending on the size of your business, how often you interact with customers, and your business revenue. For example, a house cleaning company will pay, on average, $44 per month or $525 annually. In contrast, a pressure washing business can expect to pay $75 per month or $895 annually.

Workers' compensation insurance is required by most states for businesses with employees. This covers medical expenses and provides disability benefits for employees injured on the job. The average cost for this is $136 per month or $1,627 annually.

Commercial auto insurance covers vehicle theft, vandalism, and accidents. This is required by most states for business-owned vehicles. The average cost is $173 per month or $2,075 per year.

A business owner's policy (BOP) bundles general liability insurance with commercial property insurance at a discount. The average cost is $76 per month or $907 per year.

Commercial umbrella insurance boosts the protection of your general liability insurance and is available in $1 million increments, at an average of $67 per month or $801 annually.

A janitorial bond, or surety bond, is a type of employee dishonesty coverage. This reimburses your client if an employee steals from them, and the cost must be repaid to the insurer by the employer. The median price for this is $11 per month or $126 per year.

The total cost of your insurance and bonding policies will depend on the specific needs and nature of your cleaning business.

The difference between bonding and insurance

Bonding and insurance are both forms of financial guarantee, but they are not the same thing. A bond serves only one party, while insurance can protect both the policyholder and claimants.

Saying you are bonded means you purchased a surety bond that offers a limited guarantee to a customer. A surety bond is a legally binding agreement between three parties: the principal (the person doing the work), the obligee (the person requiring the work), and the surety (the company providing the bond). The bond guarantees that the principal will fulfil the terms of the contract. If they don't, the obligee can file a claim against the bond to recover their losses from the surety.

Having insurance means you have purchased an insurance policy, which usually has a higher limit than a bond and protects against losses and liabilities. Insurance is a contractual arrangement where an individual or entity, known as the policyholder, pays a premium to an insurance company in exchange for protection against financial losses or liabilities arising from specified risks. In the event of a loss, such as an accident, injury, or property damage, the insurance company compensates the policyholder or their beneficiaries as per the insurance policy's terms.

While bonding and insurance each have their own benefits, having both gives you an edge when marketing to new clients.

Frequently asked questions