Commercial cleaning and janitorial insurance in Indiana

Indiana's short list: register, skip the sales tax, collect certificates

Indiana is one of the lighter states for cleaning paperwork. The weight falls on comp certificates, school screening and what universities and cities write into their terms.

Forming the company

Form your LLC or corporation with the Indiana Secretary of State through INBiz, then register with the Department of Revenue for withholding once you hire. Indiana doesn't license commercial cleaning as a trade, and there's no statewide cleaning license.

Locally, Indianapolis's Department of Business and Neighborhood Services issues licenses by trade or activity, such as contractor and transient merchant licenses, so check whether any category fits your work. Other cities vary. Indiana's local income tax is set by county and withheld by the employer, based on the county each employee lived in on January 1 (for out-of-state staff, the county where they mainly worked). Ask your CPA how it applies to your crews.

No sales tax on the cleaning

The Indiana Department of Revenue says that, generally, transactions involving services aren't taxable retail transactions (Sales Tax Information Bulletin #26), and Bulletin #41's table of purchases lists janitorial services as not subject to sales tax. You don't need a registered retail merchant certificate for cleaning labor alone. You would if you sell goods. The supplies and equipment you buy to do the work are taxable purchases to you, the same way Bulletin #26 treats a laundry's detergents and cleaning fluids. Confirm the current rule with the Department of Revenue or your CPA.

Janitorial laws and school screening

We found no Indiana registration, training, wage or worker-retention law written for janitorial companies. The local exceptions are city contracts, like Bloomington's living wage.

Schools are where screening gets specific. Indiana requires schools to adopt a background check policy (IC 20-26-5-10) that covers contractor and subcontractor staff likely to have direct, ongoing contact with children. The expanded criminal history check, which includes a sex-offender registry search, is due before or within 30 days of the start. The expanded child protection index check, run through the Department of Child Services, is due within 60 days. Districts set the details, so read each district's policy before the first walk-through. Our school cleaning insurance page covers the rest of a school account.

How Indiana comp treats your crews and your subs

Every employer under Indiana's comp act must insure or qualify to self-insure, apart from the groups the act exempts. For a cleaning company, the bigger story is the chain of contracts.

Liability runs up the contract chain

The same statute reaches companies, public bodies and others that contract for more than $1,000 of work without getting the contractor's certificate. A building owner or property manager who hires an uninsured cleaning company can carry the same exposure for that company's workers, and that's why Indiana clients ask for your comp certificate before you start. You owe the same diligence to any crew you sub to.

The $20 exemption certificate for solo cleaners

A true independent contractor who chooses not to buy comp can apply through the Department of Revenue, which checks their status and files a certificate of exemption with the Board (IC 22-3-2-14.5). The fee totals $20 ($15 to the Board and $5 to the Department of Revenue). The certificate is valid for one year, so the contractor re-applies each year, and there's a wait: it takes effect at midnight seven business days after the Board's file stamp. Once you hold a copy of the stamped certificate:

• you can't require that contractor to carry comp
• your comp carrier must accept it the way it accepts a certificate of insurance
• it binds the contractor against comp claims on your company

Owners, rating and penalties

Sole proprietors, partners and LLC members who work in the business aren't covered unless they elect it, by written notice to both the Board and their carrier (the Board's Coverage Election Notice, State Form 36097). Corporate officers are covered unless they opt out the same way (IC 22-3-6-1). Indiana has its own rating bureau, the Indiana Compensation Rating Bureau, which publishes the yearly advisory rates by class code. If you don't send current proof of coverage by the 10th day after a Board request, IC 22-3-5-2.5 lets the Board assess $100 a day, counted from the request date; it must waive the penalty if your proof arrives within 20 days of receiving its violation notice. Forms are on the Indiana Worker's Compensation Board site.

What Indiana universities and agencies require of a cleaning vendor

Indiana University's minimum insurance requirements for vendors and non-construction contracts cover service vendors like a cleaning contractor, and require comp from any vendor working on IU property. They're a good model of a demanding Indiana client:

• general liability of $1M each occurrence, $1M products, $500,000 damage to premises and a $2M general aggregate
• auto liability of $1M combined single limit, written as "Any Auto" or all owned, hired and non-owned autos
• statutory comp with employer's liability of $1M each accident, $1M each employee and a $1M policy limit
• limits that may be met with a primary policy plus an umbrella or excess layer
• The Trustees of Indiana University as additional insured on GL, auto and umbrella (CG 20 10 10 01 and CG 20 37 or equivalent), with a waiver of subrogation on GL, auto and comp
• carriers rated A- or better by A.M. Best, no work or payment until IU approves the certificates, and higher limits possible for hazardous work

State agencies push screening instead. The Indiana Department of Administration's 2020 janitorial RFP 19-089, issued on behalf of all state agencies, made the contractor pay for background investigations on every employee and subcontractor, refresh them each year and keep them in each employee's file, with government-issued ID and check-in and out at every state facility.

IU's terms don't list a fidelity bond; when a client does want one, our janitorial bond guide explains it. For the full exhibit, read our page on contract insurance requirements.

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Indiana risks worth planning around

The uninsured subcontractor

Subletting a building to a crew without a Board certificate can make your company liable for that crew's injuries. In Everett Cash Mutual v. Taylor (2010), the Indiana Supreme Court described the statute as putting liability on a party that hires a contractor without checking for comp. If you sub out weekend floor work or overflow buildings, that's the claim to fear.

A slip where the visitor shares the blame

Under Indiana's Comparative Fault Act, a claimant is barred only when their fault is greater than the fault of everyone else whose fault caused the harm (IC 34-51-2-6); otherwise the award shrinks by their share (IC 34-51-2-5). A visitor who ignored a cone can still recover part of the loss.

Screening that never stops

The state's 2020 janitorial RFP required background checks on every worker, refreshed yearly. With cleaning turnover, that's a running cost, and a lapse leaves you exposed if something goes missing in a government building.

Indiana cities and what their buyers expect

What sets an Indiana cleaning company's premium

Indiana's rating bureau publishes advisory rates and loss costs by class each January 1, and your carrier applies its rate to your payroll by class, then your experience mod. Subcontracted crews matter here too: when a sub can't show its own comp certificate, a carrier may count that crew's pay as your payroll at audit, so collect certificates before the work, not after.

University and city clients set your liability limits, and IU reserves the right to ask for more on hazardous work. Your price depends on the payroll in each class code, your annual sales, the kinds of buildings you clean, how much specialty and chemical work you do, the vehicles your crews drive, your claims history and the limits your contracts require. See our cost guide for cleaning businesses.

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Commercial Cleaning Insurance Group is a brand of The Allen Thomas Group, licensed in Indiana (License #837378, NPN 7642818).

Indiana is next door to our Akron, Ohio office, and our team places coverage for cleaning companies in every corner of the state.