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Minnesota janitorial bonds are commonly referred to as a type of business services bond. This is because they provide financial protection for employers who might otherwise be held liable for paying damages to their customers resulting from a dishonest act such as theft or fraud committed by an employee. Business services bonds fall under the larger umbrella of fidelity bonds.
Fidelity bonds, including Minnesota janitorial bonds, function more like an insurance policy than like the typical surety bond in one important way. While most surety bonds are a three-way contract between an obligee (the party requiring the bond), a principal purchasing it, and a surety that underwrites and issues it, janitorial bonds involve only two parties—the principal and the surety.
There is no obligee mandating the purchase of a Minnesota janitorial bond. Purchasing a janitorial bond is entirely voluntary.
Business owners who send their employees to clean private homes and/or commercial establishments buy janitorial bonds for these important reasons:
The relatively low cost of a Minnesota janitorial bond is a worthwhile investment in the future of your cleaning business. Since purchasing a janitorial bond is voluntary, you can choose what losses will be covered and up to what dollar amount.
When a covered employee of a cleaning service that has purchased a Minnesota janitorial bond commits a dishonest act, such as stealing cash, securities, or fine jewelry from a customer’s home or business premises, the customer can file a claim against the principal’s bond. The customer can file a claim only if the employee has been convicted of a crime.
The surety will pay a valid claim up to the full coverage amount chosen by the principal when the bond was purchased. But here’s where the similarity between a Minnesota janitorial bond and an insurance policy ends.
An insurance policy typically has a deductible that reduces the amount that the insurance company pays on a claim. With a janitorial bond, the principal normally pays that deductible amount (usually $100 per employee found criminally responsible for the customer’s loss) directly to the customer who filed the complaint.
The biggest difference between a Minnesota janitorial bond and insurance lies in the fact that the principal is required under the terms of the surety bond agreement to repay the surety for the amount paid out on a customer claim.
Minnesota janitorial bonds are sold for an annual premium that depends on several factors such as the dollar amount of coverage, number of employees to be covered, and the size of the deductible.
Request a convenient online quote today, or call to speak with one of our experienced professionals about the Minnesota janitorial bond you may need.