California Janitorial Insurance: Protect Your Business and Employees

As a janitorial business owner, you understand the importance of a clean and safe environment for your clients and their customers. However, accidents happen, and when they do, they can be costly.

That's where janitorial insurance comes in. Janitorial insurance protects your business and employees from financial losses due to property damage, liability claims and workplace injuries.

What Is Custodial Insurance?

Custodial or janitorial insurance describes insurance policies specifically designed for janitorial, cleaning and custodial service providers. It provides coverage for accidents, injuries and damages that may occur while providing cleaning services to clients. This coverage ensures that your business assets and employees are protected, giving you peace of mind.

Top Risks to Cleaning Companies in California

Cleaning services encounter a range of hazards that could potentially result in insurance claims. Here are some of the most frequent claims and risks to be mindful of:

• Slip and fall incidents: Damp floors or litter on the surface can cause customers or employees to trip and fall, leading to injuries and possible liability claims.
• Damage to property: Inadvertently harming a client's property, such as shattering a window or damaging a piece of furniture, could lead to a liability claim.
• Theft or misplacement of equipment: Cleaning businesses often utilize costly equipment, like floor polishers and carpet cleaners. Should this equipment be stolen or misplaced, it can result in a substantial financial setback.
• Injuries to employees: Workplace injuries can impose significant expenses on any business.
• Theft by employees: Regrettably, theft by employees can happen in any business. This could involve cleaning materials or equipment, like vacuum cleaners or floor polishers, and can considerably affect the business's financial health, as it may necessitate the replacement of costly equipment. It can also interfere with the cleaning schedule if the stolen items are crucial for completing certain tasks.

What Unique Risks Do California Janitorial Business Owners Face?

• Climate and Weather: California's diverse climate and weather patterns can pose unique challenges for janitorial business owners. From heavy rains and flooding in certain areas to wildfires and droughts in others, these environmental factors can increase the risk of property damage, disruptions to operations, and potential liability claims.
• State Legislation Impacting Business Owners: California has specific legislation that can impact janitorial business owners. For instance, AB5, a labor law, reclassifies some independent contractors as employees, potentially affecting workers' compensation coverage and other employee benefits. Staying informed about changing regulations is crucial for compliance and managing insurance needs.
• High Insurance Costs: California is known for its relatively higher insurance costs compared to other states. Janitorial business owners in California may face increased premiums due to various factors, such as the state's higher cost of living, increased litigation risks, and specific industry challenges. It is essential to find an insurance provider that offers competitive rates tailored to the janitorial industry.
• Natural Disasters: California is prone to natural disasters, including earthquakes, wildfires, and mudslides. These events can cause significant damage to properties, disrupt business operations, and result in potential liability claims. Having comprehensive insurance coverage that includes property damage, business interruption, and liability protection is crucial for mitigating risks.

Types of Janitorial Insurance

There are different types of janitorial insurance policies available. Below are the most common ones.

Janitorial Liability Insurance in California

Janitorial liability insurance, also known as general liability insurance, is designed to protect your business against third-party claims of bodily injury or property damage. This policy covers damages or injuries that occur while you or your employees are providing cleaning services. For example, if you or an employee accidentally break a client's window while cleaning, this policy would cover the damages.

California Workers’ Compensation Insurance for Cleaning Companies

Workers' compensation insurance is essential for janitorial business owners in California to protect their employees in case of on-the-job injuries or illnesses. This type of insurance provides coverage for medical expenses, lost wages, and other related costs resulting from workplace injuries or illnesses.

It is important to note that workers' compensation insurance is a legal requirement in most states, including California. Failure to have this coverage can result in hefty fines and legal penalties.

California Workers' Compensation Insurance Requirements:

If you have any employees working in California, you are required to carry workers' compensation insurance. Independent contractors may not be covered by the hiring company's insurance policy and may need to provide proof of work comp. Sole proprietors have the option to include themselves by clearly stating this inclusion on the policy or adding a coverage endorsement. Directors and officers must be included in coverage unless the corporation is fully owned by them.

AB5 and Gig Economy Workers:

In September 2019, California passed AB5, a labor law extending wage and benefit protections to "gig economy" workers. Some previously classified independent contractors, such as those at app-based tech companies like Uber, Lyft, and Doordash, are now considered employees and eligible for benefits like workers' compensation coverage. Large corporations like Amazon are also under scrutiny, and employers must ensure compliance with the state's workers' compensation laws.

Remember, employers must comply with the state where employees work, not necessarily where the business is located. If employees are in multiple states or temporarily working out-of-state, additional coverage may be necessary.

Understanding Your Legal Obligations as an Employer in California

Do you have employees or subcontractors? It’s important to ensure the safety of your workers, protect your business from potential liability claims and maintain compliance with state workers’ compensation laws. That’s where workers compensation insurance comes in.

If you have employees, most states require that you provide workers’ compensation insurance to cover any injuries that may occur while on the job. However, if you are self-employed or work with subcontractors, it is important to check your state's workers' compensation laws to determine your coverage requirements.

Workers’ comp insurance is especially important in the janitorial industry, as many tasks can be physically demanding and may put workers at a higher risk for injuries such as sprains, strains and repetitive stress injuries. Exposure to harsh chemicals in cleaning products can also cause tissue or respiratory damage, making it crucial to provide your employees with proper training and protective equipment.

Custodial Services Professional Liability in CA

Professional Liability insurance offers protection against claims that might emerge from professional services delivered by you or your employees. For example, if the cleaning staff mistakenly uses an inappropriate cleaning product on a sensitive piece of furniture, the customer might lodge a claim against the cleaning company for the cost of mending or replacing the damaged item. Professional liability insurance can cover such claims, shielding the cleaning company from financial losses and potential litigation.

Janitorial Bond Insurance in California

Janitorial bond insurance provides coverage for theft or damage inflicted by your employees while working at a client's property. This policy offers reassurance for clients who may be wary of engaging a cleaning company, especially if the cleaning team will have access to the building outside of regular business hours.

Janitorial Services Business Owners Policy

A Business Owners Policy, or BOP, is an all-encompassing insurance policy that merges multiple coverages into one. This policy generally incorporates general liability, business property, and business interruption coverage. Consolidating these policies into one results in cost savings for the business owner, as well as equipping the company with a more inclusive coverage package.

Umbrella Insurance for Janitorial Services Businesses in CA

Umbrella insurance is a crucial coverage option for janitorial businesses. It delivers additional liability protection over and above the limits of your primary insurance policies. If a claim surpasses the limits of your general liability or workers' compensation policy, an umbrella policy can assist in covering the excess costs.

For instance, imagine your janitorial services business is sued for $2 million in damages, but your general liability insurance policy only covers up to $1 million. In this situation, umbrella insurance can cover the additional $1 million, preventing you from having to pay out of pocket or face insolvency.

This coverage can assist in safeguarding your business assets and provide you and your employees with peace of mind. When choosing an umbrella policy, it's crucial to consider the coverage limits and ensure that the policy offers protection against the particular risks your business might encounter.