Just Bought a Commercial Cleaning Company? Your Insurance Review Checklist

After you buy a commercial cleaning company, first check how you would pay if an employee stole from a client or damaged a client's property. General liability is not built for employee theft and limits coverage for property in your care, and many janitorial bonds carry conditions that surprise new owners. Then check workers' compensation classes and payroll, chemical exposures, keys and after-hours access, and what your facility contracts require. This checklist is for searchers, Small Business Administration (SBA) loan buyers and holding companies that just closed on a janitorial, office cleaning, medical facility cleaning or facility services business.

What does a janitorial bond actually cover?

Less than many owners think, and it varies a lot. In this industry, a janitorial bond usually means a third-party fidelity bond that pays a client when one of your employees steals from it. It is different from a license or permit bond that some cities require, and from a performance bond on a public contract. The table sorts out the common types.

The 2022 Insurance Services Office (ISO) crime forms include employee theft of clients' property within the fidelity coverage, but it applies only if a limit for it is shown in the declarations, and older and carrier forms vary. Read whether the coverage is blanket for all employees, whether temporary or leased workers count, and whether subcontracted cleaners are covered (usually they are not your employees). Bonds usually do not move automatically to a new owner, especially in an asset purchase; ask the surety. See whether surety and license bonds transfer, the new owner review of crime insurance and, for screening and controls when you do not know the team yet, employee theft when you do not know the team.

Who pays when a cleaner damages a client's property?

General liability is the starting point, but several standard exclusions bite cleaning companies. The standard form excludes damage to the particular part of a property you are working on, damage to property that must be restored because your work was done wrong, and damage to personal property in your care, custody or control. A ruined stone floor, a stained carpet or a scratched glass wall can fall into those gaps. Many policies written for janitorial businesses add some coverage back by endorsement, often with a sublimit (a smaller cap inside the main limit). See care, custody or control.

A hypothetical example. Two months after closing, a night crew uses the wrong stripper on a lobby's stone floor. Restoration costs $80,000. The general liability policy excludes damage to the part of the property being worked on, but a janitorial endorsement adds back $25,000 for client property. After a $5,000 deductible, the company pays $60,000 itself and risks losing the account. The lesson: ask what floor care, carpet and specialty work the business actually does, then match the endorsement limit to it.

A more everyday liability claim in this business is simpler: an occupant slips on a wet or freshly waxed floor. General liability generally covers that kind of injury, subject to the policy terms, and it is one reason facility contracts ask for additional insured status. Keep wet floor signage and incident logs, because they shape how those claims are defended.

Also check what happens if a crew knocks over a client's electronics or leaves water running. The damaged equipment is physical property, but general liability usually excludes the loss of electronic data on it, and some policies limit water damage. See exclusions that quietly kill coverage.

How should I check workers' comp for a cleaning company?

Start here for cash flow, because workers' comp is often the largest premium in this business. Premium is a rate per $100 of payroll for each class code, times payroll, adjusted by the experience modification (the factor that compares your claims history with similar businesses). Check four things:

• Class codes. Codes classify the business, not each job. Janitorial work has its own classes, and window cleaning above ground level is generally rated separately and higher. Eleven states, including California, New York and Pennsylvania, use independent rating bureaus with their own rules. Three of them (California, Pennsylvania and Delaware) also use their own classification systems. Ohio, Washington, North Dakota and Wyoming require coverage through a state fund.
• Payroll and turnover. The premium is an estimate. The insurer audits actual payroll after the policy ends and can review records for up to three years afterward. High turnover, overtime and part-time staff make estimates drift.
• Contractors and subcontracted crews. If a subcontractor did not carry its own workers' comp, the audit can charge its workers to your policy. Classifying cleaners as 1099 contractors can also create wage and misclassification risk; ask employment counsel. Most employment practices liability policies exclude wage and hour claims or offer only a small defense sublimit, so do not count on insurance for them.
• Experience and reporting. Under the rules of the National Council on Compensation Insurance (NCCI) and most state bureaus, the seller's payroll and claims history generally follows the business, including in an asset purchase. NCCI and many state forms also require you to report the ownership change to your insurer within 90 days. Confirm the rule in your state. In Ohio, Washington, North Dakota and Wyoming, follow the state fund's own process.

See the workers' comp review, payroll estimates and audit bills and 1099 contractors and the workers' comp audit.

What extra risks come with cleaning chemicals and medical offices?

Cleaning chemicals create two exposures: injuries to your staff and claims from building occupants. Federal Occupational Safety and Health Administration (OSHA) rules require hazard communication, including labels, safety data sheets and training, and crews that clean medical offices may handle sharps and bodily fluids covered by OSHA's bloodborne pathogens standard. Carriers ask about training, so keep the seller's programs running.

On the liability side, the standard general liability form excludes most pollution, and an occupant who claims fumes made them sick can raise that question. Some janitorial programs add limited coverage back. If the business does disinfection, biohazard cleanup, mold work or restoration, treat that as a separate exposure: those services often need pollution coverage, and some policies exclude communicable disease claims. See the new owner review of pollution liability.

What about keys, alarm codes and after-hours access?

Cleaning crews often hold keys, badges and alarm codes and work when buildings are empty. That creates exposures the standard policies may not address:

• Lost keys. Rekeying a building after a lost master key is usually not property damage, so general liability may not pay. Some janitorial policies offer lost key coverage by endorsement.
• Theft at night. If something goes missing after hours, the client looks at your crew first. That is where the bond or crime coverage, and your hiring and supervision records, matter.
• False alarms and lockouts. Fines and call-out fees are usually business costs, not insured losses.
• Driving between sites. Supervisors and crews often use their own cars. Hired and non-owned auto coverage can protect the company against liability claims when that happens, usually in excess of the driver's own policy; it typically does not pay for damage to the employee's car. See hired and non-owned auto.

Background checks help with theft risk, but they come with federal and state rules on how you run them; ask employment counsel before changing the process.

What do facility contracts and property managers require?

Property managers, office tenants, schools and medical facilities usually write insurance terms into cleaning contracts. Expect minimum general liability and umbrella limits, additional insured status for ongoing work, primary and noncontributory wording, waivers of subrogation, proof of workers' comp and a bond or crime limit. Large facility owners may require higher limits than the seller carried.

Read your top contracts against the inherited policies, and remember that a certificate of insurance only summarizes coverage. In an asset purchase, contracts with anti-assignment clauses need consent to move to your company, and certificates the seller issued may name the wrong entity. If you use subcontracted crews, require their own coverage and certificates. See how to check customer contracts against your policies and whether your subcontractors carry required coverage.

What belongs on my first-month checklist?

If your largest facility contract asks for a bond or crime limit you are not sure you have, a Morrow review can line up the wording against it. For the broader picture, see insurance for cleaning and janitorial businesses.

Keep reading

• New Owner Review: Commercial Crime and Employee Theft
• New Owner Review: Workers' Compensation
• Payroll Estimates and Surprise Workers' Comp Audit Bills
• Do Surety and License Bonds Transfer When You Buy a Business?
• Employee Theft After You Buy a Business and Don't Know the Team Yet
• All guides for new business owners

Frequently asked questions

Is a janitorial bond the same as insurance?

Not exactly. A janitorial bond is usually a third-party fidelity bond that pays clients for proven theft by your employees, and some require a conviction or strict proof. A crime policy with coverage for clients' property can do a similar job with different terms. License and performance bonds are surety bonds, and the surety expects you to repay any claim.

Does general liability cover an employee stealing from a client?

Usually not. General liability covers accidental bodily injury and property damage, not theft by your own employees. That is the job of a janitorial bond or crime coverage for clients' property. Check the limits and conditions against what your contracts require.

Can I treat cleaners as 1099 contractors to lower workers' comp?

That carries real risk. At audit, the insurer can charge workers who were not properly covered to your policy, and misclassification can bring wage and tax claims. Whether someone is an employee depends on federal and state tests, so ask employment counsel before changing how you pay crews.

Does the seller's workers' comp experience follow me after the purchase?

Usually yes. Under NCCI rules and most state bureaus, the seller's payroll and claims history generally follows the business to the buyer, even in an asset purchase into a new company. NCCI and many state forms also require you to report the ownership change to your insurer within 90 days. Confirm the rule in your state. In Ohio, Washington, North Dakota and Wyoming, follow the state fund's own process.

Does insurance pay to rekey a building if my crew loses the keys?

Often not under standard general liability, because rekeying is usually not physical damage. Some policies written for cleaning companies add lost key coverage by endorsement, usually with a modest limit. Check your policy and the contracts that make you responsible for keys.

References

• IRMI: Need To Know: Major Changes to the ISO Commercial Crime Program
• Insurance Services Office: Commercial General Liability Coverage Form CG 00 01 12 07 (carrier-hosted copy)
• NCCI: Workers Compensation and Employers Liability Insurance Policy WC 00 00 00 C (carrier-hosted copy)
• NCCI: ABCs of Experience Rating
• OSHA: Hazard Communication
• OSHA: Bloodborne Pathogens and Needlestick Prevention
• U.S. Department of Labor: Misclassification of employees as independent contractors
• American Academy of Actuaries: Influential Features in the Workers' Compensation System: What You May Not Know (issue brief, October 2025)

This article is general information, not legal, tax or financial advice, and not a coverage determination. Coverage depends on the actual policy wording, carrier underwriting, your purchase agreement and your contracts. Ask your attorney and accountant about deal and legal questions.