Rancho Mesa's Alyssa Burley and Jeremy Hoolihan, Partner and Account Executive of the Janitorial Group, discuss the best practices for insuring janitorial companies.

Show Notes: ⁠⁠Subscribe to Rancho Mesa's Newsletter⁠⁠.

Director/Producer: ⁠⁠Alyssa Burley⁠⁠

Host: ⁠⁠Alyssa Burley⁠⁠

Guest: ⁠⁠Jeremy Hoolihan⁠⁠

Editor: Megan Lockhart

Music: "Home" by JHS Pedals, “News Room News” by Spence

© Copyright 2024. Rancho Mesa Insurance Services, Inc. All rights reserved.

TRANSCRIPT

Alyssa Burley: Welcome back, everyone. My guest is Jeremy Hoolihan, Partner with Rancho Mesa. He specializes in providing insurance services to the janitorial, maintenance and construction industries. Today, we’re going to talk about best practices for insuring janitorial companies.

Jeremy, welcome to the show.

Jeremy Hoolihan: Hi Alyssa, it’s great to be here at StudioOne™.

AB: Well, we’re happy to have you. Now, running a successful janitorial company in California can often be cut throat. With low profit margins, janitorial companies continue to face daily challenges like increased wages and material costs, as well as aggressive competition that continues to under bid contracts.

And, it’s natural for business owners to explore ways of cutting costs to help their bottom line.

So, is commercial insurance one of those areas?

JH: Alyssa, I would argue that that's absolutely not the case. In fact, business owners should be looking at additional coverages that are unique to janitorial operations to protect them long term, to continue to help them be a viable company.

AB: So which coverages should they be considering?

JH: Well some coverages that come to mind that oftentimes can be unique to janitorial is crime coverage, lost key coverage, some type of pollution liability; whether that's a true pollution policy or a limited pollution endorsement. Cyber liability is key, as well as employment practices liability.

AB: All right, so, let’s take a look at each of these.

Why would a janitorial business need crime coverage?

JH: Well, if you think about the fact that most janitors are working at night in an empty office space, oftentimes one to two janitors, there is that element of opportunity for employees to steal. And, really, when I look at commercial crime, I break it into two categories; one being first party and the second being third party.

Examples of first party crime are when an employee actually steals from their employer. So, some of those examples could be forgery or alteration, funds transfer fraud, credit card fraud, and computer fraud.

And, the third party crime example would be theft of clients’ property. So, like my example I started with, if an employee is in an office space and something is missing overnight, oftentimes the janitor is the one that's blamed, whether they actually stole the item or not. But, it's key to have that coverage in place in the event that there is a claim filed against the employer. It will protect them in the event that their employees steal from their clients.

AB: Okay, so that third-party crime coverage is a big deal for janitor and maintenance companies whose employees are working within their clients’ facilities often without direct supervision, like you mentioned. And since they're working in their clients' facilities, they need keys to get in different places.

Will you explain lost key coverage?

JH: Yeah, absolutely. So, if you’re operating a janitorial company and your employee misplaces or loses a master key for one of your clients' properties, the key question is; are you ready to replace all those keys and locks? Because in many instances those could be hundreds of sets of keys and the cost can be significant. Lost key coverage will help you not only replace the locks; depending on the number of locks to replace your business could be out tens of thousands of dollars. Lost key coverage is typically an endorsement that can be added to a general liability policy and limits and deductibles vary depending on the customer's request, really.

AB: Yeah, I don’t know if this falls under the lost key coverage, but I once worked in a building where all the locks had to be changed after an employee of the janitorial company was let go as a result of some questionable behavior towards employees who were in the building working late.

So, I can see how it can be expensive when all the locks have to be rekeyed or replaced throughout an entire building.

So, switching gears, will you explain why a janitorial company may need coverage for pollution?

JH: Absolutely, so as you can imagine, most janitors are using chemicals, cleaning products, power washers, and it's highly recommended that a company has, at the very least, a limited pollution liability endorsement. But, I also really, truly, recommend a full pollution liability policy.

You know, if there's an accidental job site pollution situation where a chemical spilled or if a janitor is using a power washer and not all the water is captured and there's a pollution claim filed against them, that's where the limited pollution liability endorsement as well as a pollution policy would come into place to help during those situations.

AB: Okay, that makes sense.

Let’s move on to cyber liability. Why would this be important for a janitorial company?

JH: Well, as with many companies, janitorial companies often store their clients and vendors’ information, and often process payments online with their customers. So it can be very enticing for hackers to get into their systems and hold them hostage, right? Which is why business owners should really consider carrying a cyber-policy to ensure the company for their data breaches, cyber-attacks, cyber extortion, business interruption, computer fraud, and really much more.

If you think about it, cyber-attacks can really debilitate a business and bring it to a screeching halt. Cyber liability coverages can assist with keeping a business afloat during these very trying times.

I've had clients that have systems that have been hacked and they're basically extorted for money. And whether you pay it or not, if you pay it, you may get your information back, but if you don't, you're certainly not. And I've had clients that have been left high and dry.

AB: Wow. Well, this seems like no business is exempt from cybercrime, really.

JH: Absolutely true.

AB: So, last, let’s talk about employment practices liability insurance, also known as EPLI. Why is this necessary?

JH: So, EPLI insures a business when a current or former employee sues the employer. And those types of claims can be wrongful termination, sexual harassment, retaliation, those employment-type related claims. But, an EPLI policy can also insure a business if a non-employee sues the owner.

So, examples of that would be for a janitor, for example, let's say one of your janitors is harassing another vendor that's on site. Well, that vendor's not to sue the employees, he’s going to sue the employer that he works for. So it's really critical, especially in the janitorial industry where there's typically a high number of employees and each employee being in exposure of that risk, that you have this coverage in place, because it's nearly impossible to be everywhere at one time.

AB: Yeah, those all seem like really important coverages to consider.

JH: Absolutely, and at the end of the day, Alyssa, insurance is simply risk transfer.

Businesses either elect to either transfer the risk to an insurance company or self-insure it. And I think the key is knowing what risk transfer options are out there and what they cost. And it starts with partnering, really, with an insurance broker that has expertise in your industry.

AB: Yeah. So, if listeners have questions about their insurance, what’s the best way to get in touch with you?

JH: Well, listeners can reach me at jhoolihan@ranchomesa.com or my direct line is (619) 937-0174.

AB: All right, well, Jeremy, thanks for joining me in StudioOne™.

JH: It was awesome to be here, thanks.