How might your business benefit from a BOP?

There are many aspects a commercial cleaning or janitorial services business owner should consider when deciding to buy commercial insurance. First and foremost, a business owner should consider partnering with an independent insurance agent to save them time and money when shopping coverage. Independent agents can shop your policy around to multiple carriers for you and get multiple quotes with only one phone call. They also can give you unbiased opinion on the positives and negatives of each particular carrier. An additional aspect of purchasing commercial insurance is to secure a Business Owners Package (BOP).  A BOP can make sure your business has no gaps in coverage, maximize savings, and  a BOP can be customized to your specific business needs.

A BOP Prevents Gaps in Coverage

The first reason a commercial cleaning or janitorial services business owner should purchase a BOP is that it prevents gaps in coverage. What a gap in coverage is a situation where you have an accident happen within your business that is not covered by the insurance policies your business has purchased. A good example of this for a commercial cleaning or janitorial services business is if you have an employees who drives to multiple  locations throughout the work day. The business has a commercial auto policy that covers the driver when they are operating a company owned vehicle, but one day an employee asks to drive their own car to work one day. The supervisor approves the employee driving in their own vehicle one day and that day the employee causes an accident on their way to work. The liability to the other driver involved in the accident is the liability of your business, not the employee. The damage to your employees vehicle is covered by their personal auto insurance policy, but the property and bodily injury damage of the other person involved in the accident is the liability of the business. Unless the business purchased an additional Hired and Non-Owned Auto Insurance Policy the damages have to be paid out of pocket. If your business did not secure this policy this would be an example of a gap in coverage. Purchasing a BOP policy with one insurance carrier is the best way to prevent a gap.

A BOP can Maximize Savings

Maximizing savings is another huge benefit of going with a BOP as opposed to purchasing each policy separately from multiple carriers. Insurance companies are much more likely to dig deep for deeper discounts and additional credits, if they know they are going to get multiple policies from your business. Most businesses need anywhere from three to seven policies depending upon the specifics of your business. If an insurance carrier knows they are going to be quoting multiple policies, they are hungrier to quote your business and more likely to offer additional savings.

A BOP can be Modified to fit your needs

Commercial Cleaning and Janitorial Services Companies come in many shapes and sizes. Some businesses have few or no employees.  Other businesses have more than a hundred employees. Most businesses in this industry fall somewhere in the middle. Some businesses have employees who come to one location, clean that facility and go home from the day. Other businesses have employees who drive to two or more locations throughout the day. Some businesses, like window washers, have employees who climb high into the air to clean remote areas of a property. Other businesses do not allow their employees to even step on a ladder.  All of these aspects of your business make your business unique when it comes to purchasing commercial insurance. A BOP is ideal for this industry because, depending on the size and scope of your business, a BOP can be tailored to meet your businesses unique needs.

Common Coverages Included in a BOP for Commercial Cleaning and Janitorial Services Companies

✓ General Liability Insurance
✓ Business Personal Property
✓ Hired and Non-Owned Auto
✓ Workers Compensation Insurance
✓ Employee Dishonesty
✓ Inland Marine Coverage

General Liability Insurance

General Liability is a particular type of insurance that protects a business from most liability exposures other than automobile and professional liability. One thing to keep in mind is that General Liability is not all encompassing. Consult with your insurance professional to determine what additional coverages your business may need.

Business Personal Property

Business Personal Property Insurance is the most basic form of property insurance coverage that is offered to businesses and and non-profit organizations. It is similar to Personal Property Insurance in a Homeowner’s Policy.  Business Personal Property covers nearly all items of value that aren’t considered a structure, fixture, automobile, watercraft, or aircraft. For a commercial cleaning or janitorial services company, this would include items such as desks, chairs, tools, equipment, appliances, furniture, etc.

Hired and Non-Owned Auto

When a Small Business has employees who operate a vehicle as part of business operations, it is necessary to secure some form of commercial auto insurance. If the business owns and operates the vehicles being used, a standard commercial auto policy is all that is needed. If the business has employees who drive rented vehicles or their personal vehicles for business tasks, the business needs to secure additional auto insurance coverage. This coverage is called Hired and Non-Owned Auto Insurance. It can be purchased as a stand alone policy or as an addition to a commercial auto policy.

Workers Compensation Insurance

Workers Compensation Insurance is frequently referred to as the ‘Exclusive Remedy’ because it provides a mutually beneficial situation for employee and employer when injuries occur on the job. Employers gain the peace of mind that they cannot be sued for injuries that occur as a part of normal business operations and employees get medical costs and some lost wages covered in return for the promise not to sue for damages that occur naturally as a part of the job.

Employee Dishonesty

Employee Dishonesty Coverage is designed to deal with situations where employee theft of money, securities, or property occur within your business. These policies are typically written with either a per loss limit, a per employee limit, or a per position limit.

Inland Marine Coverage

Inland Marine Insurance is a form of Property Insurance that is designed specifically for property in that is frequently in transit over land.  Some policies also include certain types of movable property; instruments of transportation like bridges, roads, and piers; and instruments of communication such as television and radio towers.  This policy is frequently referred to as ‘Floater Coverage’ because the policy provides coverage without regard to the location of the covered property.

Common Class Codes for Commercial Cleaning and Janitorial Services Companies

 

SIC Business Insurance Codes:

• 7349: Building Cleaning and Maintenance Services

Business ISO General Liability:

• 96816: Janitorial Services

NAICS Liability Classifications:

• 561720: Janitorial Services
• 561210: Facilities Support Services
• 561790: Other Services to Building and Dwellings

Common Workers Compensation Class Codes:

• 9014: No Window Cleaning Above Ground Floor
• 9008: California only. This is a state special class code and applies to to similar operations indicated above.
• 9170: Includes window cleaning above ground level. This class is similar in most aspects to class code 9014, however, it specifically includes the inside and outside cleaning of windows above ground.

Why a Business needs Workers Compensation Insurance and how it can benefit

Workers Compensation Insurance is required by law in 48 out of 50 states. For this reason, it is usually where business owners start their insurance buying process. Each state has exclusions for some businesses depending upon the size, industry, and scope of the work the business does. Even if you are not required to carry this coverage, it is almost certainly an insurance policy your business should secure to properly protect your business. Talking with an Independent Insurance Agent can help you determine how to best insure your business from the risks it faces related to injured employees.

Workers Compensation History

The Workers Compensation System in the United States developed over the first half of the 20^th century.  Wisconsin was the first state to adopt such legislation in 1911 and Mississippi was the last state to adopt a formal workers’ compensation program in 1948. Prior to workers compensation legislation, employees who were injured on the job had no formal system to compensate them for their injuries. Injured employees only form of recourse was to sue their employer. Each state has a different way of administering the Workers Compensation System within its state, but they each provide employees with medical costs and some lost wages, while also providing employers with the peace of mind that they cannot be sued for injuries that occur as a part of normal business operations. Because of this mutually beneficial system, workers compensation is frequently referred to as the ‘exclusive remedy’.

Workers Compensation as the ‘Exclusive Remedy’

The ‘Exclusive Remedy’ comes from the mutually beneficial system for helping injured employees and businesses deal with the costs associated with employees being injured on the job. When an employer purchases workers comp coverage they cannot be sued for injuries that occur as a part of normal business operations. They can be sued under some narrow circumstances where the employer was willfully negligent or intended to cause the injury. The injured employee gives up the right to sue, but recoups some lost wages (60% in most states) and medical costs that result from the injury. The idea behind the exclusive remedy is to provide some compromise between both employee and employer.

Statistics about Workers Compensation Insurance 

In 2015, the last year for accurate data, workers compensation systems in the United States covered more than 135 million workers throughout the country at a cost to employers of $61.9 billion.  According to the Bureau of Labor and Statistics, Commercial Cleaning and Janitorial Services Companies employ more than 2 million employees each year.  Employers pay anywhere from 75 cents to $2.74 per $100 in employees’ wages. This amounts to an enormous cost to the businesses in this industry, but that cost is offset by the peace of mind business owners get from not having to suffer the burden of medical costs when employee is injured on the job.

Why your business needs Workers Compensation Insurance

Most businesses are not financially secure enough to withstand the burden of providing medical costs and lost wages to employees when they are injured on the job. Workers Compensation Premium may seem burdensome to your business. It seems even more of a burden when the policy is not used frequently, but the one time your business experiences a serious injury to an employee can cover the cost of several years if not decades of insurance premium.

Accidents happen, even to the most safe companies. If a business sticks around long enough they are going to experience a situation where they are going to have an employee injured and need to collect workers comp benefits. Unless your business is extremely financially secure, purchasing coverage is always the better financial decision.

Additional Workers Compensation Information

Monopolistic States in the Workers Compensation System

The Monopolistic States include North Dakota, Ohio, Washington, Wyoming, as well as Puerto Rico, and the U.S. Virgin Islands. What being a monopolistic state means is that the state workers’ compensation system does not recognize workers comp coverage purchased in another state. If a business operates in multiple states, and one of those states is a monopolistic state, the business much purchase additional coverage for their employees while they are doing business within the jurisdiction of that state. This comes in to play for trucking companies and businesses in states that border a monopolistic state. Partnering with a national independent insurance agency can help you maneuver the tricky landscape of operating in a monopolistic state.

States with Workers Compensation Opt-out Provsions

Two states currently offer some businesses the ability to opt-out of workers compensation system if they meet certain criteria. Those states are Oklahoma and Texas. Texas has had an opt out provision in place for several years. Oklahoma implemented a limited opt out provision in 2013. Texas requires businesses to apply for and if they meet certain criteria they can opt out of workers compensation coverage altogether. The businesses are required to meet a bare minimum amount of coverage that is similar to what is provided within the workers comp system. The way Texas has implemented the opt out provision allows large companies with strong safety records to opt out if they are financially secure. The way Oklahoma is implementing this provision is quite different and does not require companies who opt out to meet as much criteria or to provide as many benefits if they are approved to opt out.  In addition to the opt out provision in Oklahoma, the system was changed in 2013 to the Oklahoma System. One of the main changes impacting the Oklahoma Workers Compensation System is that all injuries must be reported within 24 hours of the injury or they are not covered. In this system, if an employee is injures their back on Friday afternoon and reports it to their boss first thing Monday morning, they are not covered under the workers compensation system in the state of Oklahoma.

Independent Insurance Agent

Partnering with an Independent Insurance Agent is the best way for a Commercial Cleaning or Janitorial Services Small Business Owner to get the best possible coverage at the lowest rate possible. An Independent Insurance Agent is better because they interact with multiple insurance carriers. IN some cases as many as twenty or thirty,  in an attempt to get business owners more options for their unique insurance needs. If you are a business owner who is about to look for insurance to protect your prized investment, here are four ways an Independent Insurance Agent can help your small business.

An Independent Insurance Agent Only Works for You

When you partner with an agency who is not independent (A Captive Agent)  the agent has a partnership with the carrier they represent. Yes they work for you too, but the carrier is who signs their check. An independent agent works for you, the business owner. Because the independent agent is the middle man who is trying to get you the best deal possible, they are incentivized to get you the best policy for you and your needs. They are not looking out solely for what is in the best interest of the insurance carrier.  An independent insurance agent, who partners with multiple carriers, has more of an incentive to keep you the business owner satisfied in order to continue to win your business in the future.

An Independent Insurance Agent gives you more choices

When you partner with an independent insurance agent your business will have the choice between multiple insurance carriers. When you partner with a captive agent you will get quotes from one or a select few carriers. If you want to shop around your policy, you have to do it yourself. With an independent agent you can get multiple quotes interacting with one agency because the agent can shop your policy around for you.  They can get quotes for general liability alone compared to if it is purchased as part of a business owner’s policy.  Most independent agencies partner with between 10 and 40 insurance carriers. This means more options and in most cases more comprehensive coverage. Also, because of the relationships an independent agent has established, they tend to know which carriers are actively looking to quote particular industries. They also know which carriers offer better claims service. Because of this knowledge they can not only tell you honestly which coverage is better, which price is the best value, and also which insurance company is better to work with.

An Independent Insurance Agent can be an Advocate

An independent insurance agent can give your business unbiased advice about the insurance coverage you are looking to secure. Because they do not work for only one insurance carrier, they can tell you which policy is better and why. A captive agent can only tell you what the benefits and prices are for the insurance they carrier. Like most things in life, when you purchase insurance you get what you pay for.  For this reason, it is not wise to decide on insurance only on price. An independent agent can tell you which carrier has the best claims process, which company is most likely to raise your rates after a claim, which company is actively looking to quote your industry, and which industry is more likely to dig deep for discounts and credits. Also, an independent insurance agent can be your advocate mid-term. If you have a large claim, an independent agent knows the only way to keep your business is to keep your premium as low as possible. They can attempt to use your well-documented safety program to show the carrier this claim is a one time occurrence and not a sign of how your business operates.  Plain and simple, an independent insurance agent is more likely to negotiate on your behalf to limit the increase in premium. If they are not successful, they have the ability to find coverage with another carrier.

An Independent Insurance Agent can save you time and money

No matter what you value during the insurance buying process, an independent agent can usually save you time and money.  For many successful business owners, time is a precious commodity.  If this is the case for you, it is important to express this concern with your agent at the beginning of the quoting process. They usually will only need to ask you a few questions over a period of not more than 5 minutes and get back to you within a day or two with multiple quotes. On the contrary, partnering with a captive agent means you have to call each carrier individually yourself if you want to shop around your policy.

For many business owners, their time is better spent running their business than attempting to save a few dollars on an aspect of their business they do not understand as well as an specialist does. In many cases, the amount of premium they pay is not worth an enormous amount of time trying to save. Take for instance a 5 % savings on a $1000 policy. In the end this would save the business $50. On the other end of the spectrum, a large business with a $750,000 policy may block out as much time as a half a day or even multiple days to find the best insurance policy for their business. In this instance a 5% savings would add up to $37,500, which is a years salary for one of their employees. It could be a $500 bonus for 75 employees, or even a down payment on a second home in Florida for the owner of the company. No matter what you as a business owner value, an independent agent can save you time and money by having them do the searching for you all at one stop.

General Liability Insurance issues for Commercial Cleaning and Janitorial Services Companies

What is General Liability Insurance?

General Liability Insurance is the first policy most Commercial Cleaning and Janitorial Services Companies buy because it is required by law for most businesses in most states. This coverage protects businesses from the liability faced to third parties for lawsuits and other claims related to both bodily injury and property damage as well as advertising injuries. Some common claims it covers include simple slips, trips, and falls related to areas open to the general public, but it also covers obscure claims like invasion of privacy or even assault to the customers’ employees.

Does your Business Need Liability Insurance?

In today’s business environment, we are operating in a litigious society.  Because of this litigious business environment that we operate in, most businesses need some form of liability insurance.  Even if you think you’re business is unlikely to face a lawsuit, getting insurance is a wise investment in the unfortunate event your are sued. In most cases, insurance is rather affordable compared to the damage to your business if you choose to go without proper coverage and need it. 

General Liability Insurance is also needed for most Commercial Cleaning and Janitorial Services Companies because in most states it is required by law. It is important to check with the proper governing body in the state your business operates in to make sure you are complying with the law. Because of the legal requirement in most states general liability and workers compensation insurance are the two policies most business owners start with. These are not the only two coverages most business owners need. Most businesses need additional coverages because a General Liability Policy is not all encompassing.

A General Liability Insurance Policy can be purchased separately or as a part of a business owner’s package. Purchasing the coverage as a package is a positive for two reasons. One it helps to ensure there are no gaps in coverage because all of the policies are purchased through one carrier. This can help with the time to process a claim because there is only one underwriter and one insurance carrier involved in the claim.  Buying coverage as a package also incentives the the carrier to dig deeper for more credits and discounts to help you lower your overall premium.

What level of coverage do I need?

There are many things about a commercial cleaning and janitorial services companies that determine how much general liability coverage each business needs. A good example of this is, a restaurant gets sued for $300,000 in medical costs associated with a slip-and-fall injury. The policy this business has in place are $250,000. If this happens to your business, you will be responsible to cover the difference of $50,000.

What does General Liability Insurance Cost?

Most carriers have a minimum premium that starts at as little as around $350 per year.  Most annual premiums for small businesses range from $750 to $2,000 depending on your industry, type of work, and coverage needs. This may sound like a significant amount, but it is significantly less than the thousands or millions you might need to spend to cover a claim.

What Factors Impact General Liability Insurance Rate?

The size of your business

The size of your business includes both the number of employees and the revenue of the business. The number of employees is taken into consideration because the larger the number of employees, the harder it is for managers to keep tight control on the actions of all employees. The revenue of the business is considered because the severity of claims rises with the amount of revenue a business takes in.

Class Code

Most states partner with the National Council on Compensation Insurance to determine recommended premium rates for businesses based upon certain industries. Currently there are more than 700 specific classification codes depending upon the industry and scope of your business. Each industry has anywhere from five and twenty classification codes depending upon the operations of your business. It is important to take adequate time to talk with your insurance agent to make sure you are classified properly. Not being placed in the proper classification code can cost your business significantly in additional premium.

Loss History

A businesses loss history is a term referring to the historical amount of claims a business has made over a period of time. Insurance carriers typically ask for five years worth of claims when they are determining whether to offer coverage and what to charge a particular business for that coverage. Now the loss history is one of a number of factors that are taken into consideration during the underwriting process, but it is one of the few aspects a business has direct control over.

Frequency vs. Severity 

In the insurance industry, frequency refers simply to the number of claims a business or individual makes throughout the year.  High frequency means that a large number of claims are expected to come in. On the contrast, severity refers to the amount of a claim.  High severity claims are more expensive than average estimates and low severity claims tend to be less expensive on average.

Medical-Only Claims

Medical-only claims do not have a dramatic impact on the experience
modification rating of a business because most states use what is called an approved Experience Rating Adjustment (ERA). The ERA limits the amount of these types of claims in the experience modification calculation.  This ERA is designed to decreases the incentive for employers to pay medical-only claims without reporting them to the carrier. The carrier wants all claims reported so they can track them to determine what industries have the most claims and what types of claims are common in those industries. The insurance carriers use this information to determine what industries they want to work with, what to charge industries, and how to help industries that have a high frequency or severity of claims history.

What is Inland Marine Insurance and how does it impact the cleaning industry?

According to the International Risk Management Institute (IRMI), Inland Marine Insurance Coverage is for specialized property that is frequently in transit over land, certain types of movable property, and property that is stored at a third party location. For Janitorial Services and Commercial Cleaning Companies this coverage is necessary because of the remote nature of the work and the specialized nature of the equipment employees work with. For this reason, it is important to partner with an experienced independent insurance agent and speak with them long and honestly about the equipment your business has and the value of that equipment.

Any business that uses specialized equipment, especially equipment that is transported to or stored at a third party location, needs to consider purchasing an inland marine insurance policy. Many business owners make the mistake of thinking their general liability policy is all encompassing. For most businesses, general liability and workers’ compensation insurance are required by law. Many business owners only secure these policies when they are a start-up because of funding.

Many owners of Janitorial Services and Commercial Cleaning Companies assume all the equipment being hauled on a trailer, in a van, or being stored at their clients location is covered by their general liability or commercial auto insurance policy. In most cases, that assumption is incorrect.  The vehicle is covered by a commercial auto policy, but the trailer and anything carried on the trailer are not a covered peril unless you have an additional inland marine policy. The same goes for property, like an expensive vacuum, stored at the third party location. Assuming all of your equipment is covered by a basic insurance package may be a devastating mistake when your business has an accident. This is why it is important to periodically track all the equipment your business owns and talk about that equipment with your insurance agent.

As any business grows, the business more than likely acquires more equipment and may be taking on additional risk. If this is your business, it may be a good time to sit down and make a list of all the equipment your business uses on a daily basis. Once you have made this list it is important to consult with the decision makers within your organization and determine if you have the ability to replace that equipment without an insurance policy. If you can, you may not need to secure an inland marine insurance policy. If your business cannot afford to replace the equipment out of pocket and the equipment is necessary for your employees to do their job, than you may need to expand the amount of insurance coverage you purchase.

This is the type of decision that could use the help of an experienced independent insurance agent. Speaking with an independent insurance agent is best because the independent agent is not tied to one or a select few insurance carriers. An independent agent is truly a middle man working between the insurance carrier and you the business owner to get the most comprehensive coverage at a value you as a business owner can live with. A captive agent does not truly have the businesses best interests at heart because at the end of the day, the insurance carrier is the entity writing their check.

In short, the role of an independent insurance agent is to get you the business owner the type of insurance coverage that best meets you and your businesses needs. In order to get the best coverage for your unique business is to take an adequate amount of time to speak with an independent agent about all of the tasks your employee do on a daily basis and what you value in an insurance policy. If you do this, an independent agent will be able to quote a policy with several different carriers and make them compete for your business.  This will ultimately get your business better coverage and lower rates on premium.

Common types of equipment covered under an inland marine insurance policy.

• Vaccums
• Carpet cleaning machines
• Truck Mounts
• Carpet extractors
• Tile and grout cleaners
• Rotary extractors