Cleaning Business Bonding: What Is It and How to Get Bonded
- November 30, 2019
- By: Vonigo
Here we’ll explain cleaning business bonding, from what it is, to how it works and how to get it.
What Is Cleaning Business Bonding and How Does It Work?
By “cleaning business bonding,” we really mean a janitorial services bond, which is a type of fidelity bond. What does that mean? Here’s a simple explanation.
A janitorial services bond involves three parties: your cleaning business, your client, and your insurance company. Your cleaning business buys the bond from your insurance company to protect your client.
The bond expires after some time, so you’ll usually pay your insurance company on a yearly basis to renew the bond. Thankfully, bonds cost less than their actual coverage amount, which makes them much cheaper than insurance.
If one of your cleaning business’ employees steals money or property from your client—or is falsely accused of stealing—then your client can make a claim against your bond.
If your cleaning business’ employee is found guilty, your insurance company pays your client the value of the stolen goods up to the bond amount. Afterwards, you’ll need to pay your insurance company that amount back, but not necessarily immediately or all at once.
This way, the bond protects your clients from employee theft and protects you from being forced to make sudden payouts to your clients. Bonds also tend to pay clients faster and more smoothly than insurance.
But you might be thinking, “this seems like it might be complicated and expensive… do I really need a cleaning business bond?”
Do You Need a Cleaning Business Bond?
Whether you need cleaning business bonding depends on your state and local laws, but there are other reasons to consider getting a cleaning business bond too.
Some state and local laws require cleaning business bonds.
Other states require cleaning businesses to be licensed. Since licensure requires a cleaning business bond, it make a cleaning business bond indirectly required.
Some state and local laws don’t require a cleaning business bond at all.
However, it’s not all just about laws, it’s also about your clients.
If you’re working for local government agencies, you may be required to have a cleaning business bond. And some types of clients, especially large businesses, might require you to have a bond before they’ll even consider you.
So do you need a cleaning business bond? Not necessarily, but it is definitely recommended. Here’s why you should really consider getting a cleaning business bond.
What are the Benefits of a Cleaning Business Bond?
There are many benefits to having cleaning business bonding.
Being a licensed, insured, and bonded cleaning business means you are trustworthy and credible as a business. This can help you build your brand, build trust, and attract more clients. It also gives you one more bullet point for your marketing.
Speaking of marketing, having a cleaning business bond helps you beat your competition. With a cleaning business bond, you level the playing field against other bonded cleaning businesses and you get a leg up over unbonded cleaning businesses.
Being bonded matters to clients. Some clients, like local government agencies and large businesses, specifically require you to have a cleaning business bond before they’ll even consider hiring you.
And, in the unfortunate event that one of your employees steals (or is falsely accused of stealing) from your client, your bond mitigates the risk of a sudden and large payout. You’ll still pay your insurance company that amount back, but at least it’s not so sudden.
How Much Does a Cleaning Business Bond Cost?
First, we should clear up that a cleaning business bond has two different amounts of money associated with it: the premium you pay your insurance company, and the amount the bond covers.
The premium, or price, of the bond, is how much you pay your insurance company, usually on a yearly basis. The premium depends on how much coverage you want.
The amount the bond covers is how much money the bond can pay to clients. If a claim is made against the bond, your insurance company will pay your client the value of the stolen property up to the maximum amount covered by the bond. You’ll need to repay that amount later.
Usually, the premium is much lower than the amount covered. But if you want to cover a higher amount, you’ll end up paying a higher premium.
So how much will a cleaning business bond cost you? Well, that depends on a few things.
First, how many employees do you want to cover? If you have more employees, you’ll probably need to cover a larger amount.
Second, how many clients do you have? Multiple clients can make claims against your bond at the same time, meaning if you have a larger client base then you might need to cover more.
Third, what types of clients do you have and how valuable is their property? If you’re cleaning up banks and businesses, their property is worth more, and their claims could be bigger.
So what pricing should you expect?
As an example, SuretyBonds.com offers the following:
For 1-5 employees
$125 premium for $10,000 amount
$175 premium for $25,000 amount
$250 premium for $50,000 amount
$350 premium for $100,000 amount
For 6-10 employees
$145 premium for $10,000 amount
$200 premium for $25,000 amount
$300 premium for $50,000 amount
$450 premium for $100,000 amount
For 11-20 employees
$185 premium for $10,000 amount
$250 premium for $25,000 amount
$400 premium for $50,000 amount
$650 premium for $100,000 amount
So SuretyBonds’ prices range between $125-$625 for coverage amounts between $10,000-$100,000. But those are prices from just one insurance company.
Of course, you should spend some time shopping around, looking at different insurance companies, and comparing prices. Unfortunately, most insurance companies won’t advertise their prices outright and will require you to contact them for a quote.
So, where to go shopping for a cleaning business bond?
Where to Go Next to Get a Cleaning Business Bond
The easiest place to start looking is online. You can find several insurance companies advertising cleaning business bonds as janitorial service bonds online. Here are a few:
- SuretyBonds.com’s Janitorial Service Bond
- Insureon’s Janitorial Bonds for Cleaning Businesses
- JW Surety Bonds’ Cleaning Business Insurance with a Janitorial Bond
- Surety1’s Janitorial Surety Bond
- NFP Surety’s Janitorial Service Bond
Of course, you can also look around for local insurance companies. And if you already have an insurance company, you can always talk to them and discuss a cleaning business bond.
But if you don’t have an insurance company yet, here are some things you might want to look into.
Operating a Cleaning Business? Here Are Some Other Things to Consider
First, do you need a cleaning business license or permit? This depends on your state and local laws, but you might need a license to operate legally.
Second, does your cleaning business need insurance? And which types? You should consider General Liability, Professional Liability, Workers’ Compensation, Commercial Auto, and Commercial Property Insurance. You could also consider a Business Owner’s Policy.
Third, are there any tools or software that could help you manage your cleaning business?
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