Cleaning Service Bonds
Surety Bond Professionals is a family owned and operated bonding agency with over 30 years of experience. With access to a broad range of surety markets, our expert agents are ready to assist with all of your cleaning service bond needs.
Surety Bond Professionals is a family owned and operated bonding agency with over 30 years of experience. With access to a broad range of surety markets, our expert agents are ready to assist with all of your cleaning service bond needs.
What Are They?
Cleaning service bonds, sometimes called janitorial bonds, are a type of business services bond. They are designed to protect the clients of companies that send their employees into homes and work environments to clean. A cleaning service bond specifically pays damages to clients who have suffered a financial loss due to the unlawful conduct of a cleaning company’s employee(s) while on the client’s premises. Common offenses include the theft of the client’s property, such as jewelry or cash, and fraud perpetrated by gaining illegal access to the client’s checkbook, credit cards, or identification.
Without the protection of a cleaning service bond, the only way for the client to recover damages is to take legal action against the business owner. Such lawsuits can do a great deal of reputational damage and make it more difficult for the company to market its services in the future.
Who Needs Them?
Cleaning service bonds are purchased voluntarily; no state or local agency requires them as a condition for licensing. However, some larger clients, such as banks, office buildings, and department stores may require a cleaning service to purchase a bond before they will award a contract. Additionally, the ability to advertise that they are bonded gives cleaning services an advantage over their unbonded competitors. The amount of the bond is determined by the business owner at the time of purchase.
Speak with a Surety Bond Professionals agent today to discuss your bonding needs.
How Do They Work?
The surety bond agreement is legally binding on the owner of the cleaning service, known as the bond’s “principal,” and its guarantor, referred to as the surety. The terms of a cleaning service bond legally obligate the principal to pay all claims the surety determines to be valid.
It looks a little different in practice. Because the surety has guaranteed the payment of claims, the surety will pay a claim initially and then turn to the principal for reimbursement. This practice ensures that the claimant receives prompt payment and gives the principal a little time to repay the debt to the surety. Failure to repay the surety can result in legal action against the principal.
What Do They Cost?
The annual premium for a cleaning service bond varies depending on the bond amount and the premium rate set by the surety. The main underwriting concern is the willingness and ability of the principal to repay the surety for claims paid on the principal’s behalf.
The surety relies on the principal’s personal credit score to make that determination. A high credit score indicates that the risk to the surety is low, and the principal is rewarded with a low premium rate. On the other hand, a low personal credit score is cause for concern and warrants a higher premium rate. The premium on these bonds is typically one to two percent for good credit principals. A principal with lower credit may pay a higher premium rate than this.