CHEM-DRY

The Chem-Dry franchise agreement requires general liability insurance on an occurrence form at $1,000,000 per occurrence. It adds a requirement most cleaning agreements leave out: the policy must include work-product coverage of at least $50,000 per occurrence, or it must carry no workmanship and no care-custody-control exclusion.

The named insured on your certificate is your own legal business entity — the LLC or corporation you operate through. Chem-Dry, Inc. is the franchisor. (The franchise disclosure document reviewed here did not spell out additional-insured naming, so confirm the current additional-insured and waiver requirements directly from your signed franchise agreement before you issue a certificate.)

That satisfies your franchisor. Here is where the requirement ends and your real exposure as a carpet and upholstery cleaner begins.

The franchisor entity is Chem-Dry, Inc., a BELFOR Franchise Group brand. The 2025 franchise agreement (Item 8) sets out the following:

General Liability at $1,000,000 per occurrence, on an occurrence form. The occurrence form covers claims based on when the harm happened, not when the claim is filed. Critically, the agreement requires the policy to include work-product coverage of at least $50,000 per occurrence, or to carry no workmanship and no care-custody-control exclusion. Work-product coverage and the removal of the care-custody-control exclusion are what let the policy pay when you damage an item you were cleaning — the single most likely claim in this business.

Automobile Liability — vehicle liability coverage is required as a condition of the franchise, though the agreement does not state a specific limit, leaving it to state law. That makes the real decision about auto limits yours.

Workers' Compensation at state-required limits, plus Employers Liability at $1,000,000 across all three limits. Workers' compensation pays medical bills and lost wages for an injured technician. Employers liability covers lawsuits outside that no-fault system.

All coverage must be written by an admitted carrier rated A- VII or better, with a certificate provided within 30 days of signing and annually before expiration.

The agreement does not require crime/employee-dishonesty coverage, EPLI, cyber, or an umbrella. Those gaps are addressed below — and the care-custody-control requirement, while unusually thoughtful, is set at a limit far below what the items you clean are often worth.

This is the defining claim for a Chem-Dry operation, and the agreement names it for a reason. Two standard general liability exclusions sit directly on top of your core work.

The first is the "your work" exclusion, which removes coverage for damage to the work you performed. If your cleaning discolors a carpet or leaves a permanent ring, the carpet is your work, and the standard policy excludes the cost to fix it.

The second is the care, custody, and control exclusion, which removes coverage for property in your control or that you are working on when it is damaged. The rug you rolled up and moved, the sofa you treated, the hardwood you cleaned — all of it is in your care during the job, and the standard policy excludes damage to it.

Together, those two exclusions can wipe out coverage for exactly the claims a carpet and upholstery cleaner is most likely to face. That is why Chem-Dry's agreement requires either work-product coverage or a policy with no workmanship and no care-custody-control exclusion. The catch is the limit: the agreement sets work-product coverage at just $50,000. A single antique Persian rug, a room of wool carpet, or a damaged hardwood or stone floor can exceed that on its own. The requirement is right; the number is low.

Chem-Dry's whole pitch is low moisture — the Hot Carbonating Extraction process uses far less water than steam cleaning. But less water is not no water, and over-wetting still happens: a saturated section, a slow-drying pad, moisture trapped against the subfloor. When it does, the damage often surfaces days or weeks later, after your crew is long gone.

The risk has two layers. The first is the water damage itself — buckled hardwood, a delaminated pad, a stained subfloor. The second is mold. Standard general liability policies exclude mold and fungus, and trapped moisture under a carpet is an ideal place for it to grow. So a homeowner who finds mold weeks after a cleaning can trace it to your visit, and the standard policy's mold exclusion is waiting.

Because the damage is latent, the occurrence form your agreement requires matters: a loss that traces to work done during the policy period is covered under that period, even when it is found later — provided your coverage never lapsed. But the mold exclusion is a separate problem the occurrence form does not solve. Confirm your policy includes resulting water-damage coverage and a mold endorsement, because low moisture lowers the odds of this claim without removing it.

Carpet cleaning is mostly an in-and-out job with the homeowner present, so the theft exposure is lower than a recurring maid service — but your technician is still inside the home, often moving furniture and working room to room while the client steps away. The exposure is real enough to address, and the way it is covered is widely misunderstood.

General liability will not pay for employee theft. Theft by your own technician is dishonesty, not an accident, and the standard policy excludes it. Many operators assume a "bond" fills the gap, but a janitorial or business-service bond is a fidelity bond that usually pays only after the employee is criminally convicted of the theft and then seeks reimbursement from your business. The most common claim — a credible accusation with no proof — can trigger nothing. The stronger instrument is a third-party crime policy, which pays without a conviction and does not claw the money back. Chem-Dry's agreement does not require either, so the decision is yours; Rikor's benchmark is a third-party crime policy at $250,000.

If you carry one, ask for the Loss Discovered form. A loss-sustained form covers a theft only if it both happened and was found during the same policy period; a loss-discovered form covers a theft found during the policy period no matter when it began. Even on lower-frequency carpet jobs, a missing item is often noticed days after the visit — a client realizes a watch left on a dresser is gone after the furniture went back. Loss discovered is the form that still responds when the loss surfaces after the job.

The honest answer is that your premium depends on details specific to your operation. What you can understand is how the number is built — and the part that catches franchisees at year-end.

Workers compensation is a major line for a cleaning operation, 

because the work is labor-based. Carriers price it with a formula: 

your payroll divided by 100, multiplied by your state's rate for the cleaning classification (NCCI code 9014), multiplied by your experience modification. The rate itself is set by your state's rating bureau, not the carrier — the insurer applies the state's number.

Both workers' compensation and general liability are auditable. An audit is the carrier's year-end review that compares what you estimated when the policy started against what actually happened, then adjusts the premium up or down. General liability for a cleaning operation is usually rated on payroll or gross receipts, so the number moves with your actual revenue and wages — and with any 1099 technicians who could not show their own coverage.

A simple example on the revenue basis. Say you estimate $150,000 in revenue when the policy starts and finish a strong year at $250,000. If your general liability is rated near $9 per $1,000 of revenue, the audit adds about $900 on that $100,000 difference. 

Workers compensation runs the same way on payroll. Both usually arrive as a single lump-sum bill a few months after the policy year closes.

A carpet and upholstery operation often runs leaner on payroll than a large maid service, so a complete program for an owner-operator with a small crew commonly lands in the range of $6,000 to $12,000 per year — rising with revenue, added technicians, and higher work-product limits for valuable items. The work-product/care-custody-control coverage and a real auto limit are what separate a compliant-on-paper policy from one that actually pays.

Most cleaning operators bring in overflow help at some point, and an undocumented 1099 technician becomes your payroll at the year-end audit. Rikor's subcontractor compliance monitoring tool tracks those certificates in real time so a lapse surfaces before the audit, not after. [See how subcontractor compliance works →](/subcontractor-compliance/) The practical move on audits is to estimate revenue and payroll close to reality, and if you grow fast mid-year, ask your carrier for a mid-term adjustment so the increase spreads across installments instead of arriving as a lump sum.

Chem-Dry's FDD gets the central thing right by requiring work-product / care-custody-control coverage. The work for experienced operators is to raise the limits the FDD set low or left blank, and to add the coverages it does not mention. The recommendations below are Rikor's baselines for a newer franchisee, calibrated to your revenue and the value of what you clean.

Work-product / care-custody-control above the $50,000 floor. This is the most important number in your program. The FDD requires the coverage but sets it at $50,000 — below the value of a single antique rug, a room of wool carpet, or a hardwood or stone floor. Carry the coverage with the exclusion removed and set the limit to the items you actually handle. For operators cleaning high-value rugs and floors, $100,000 or more is the realistic target.

Mold endorsement and resulting water-damage coverage. Low moisture lowers the odds of an over-wet claim but does not remove it, and the standard mold/fungus exclusion is waiting. Add a mold endorsement and confirm resulting water-damage coverage.

Contractors Pollution Liability for chemical and water exposure. The carbonating cleaner and the tile, stone, and granite chemistries you use can trigger the standard pollution exclusion if a release or reaction causes damage. For heavier or commercial work, CPL backs up that gap.

Third-party crime coverage at $250,000 on a Loss Discovered form. The FDD does not require it. Your technician is in the home, and a missing item is often noticed after the visit. Carry a crime policy — not a bond — at $250,000 on a Loss Discovered form.

EPLI — the FDD does not require it. Even a small crew produces employment exposure: wrongful termination, discrimination, wage claims. Rikor recommends standalone EPLI starting at $250,000, scaling as you add technicians.

Cyber at $250,000. Online booking and stored payment data create a breach exposure the FDD does not address. Rikor recommends $250,000 for a newer franchisee.

Real auto limits — $1,000,000, not the state minimum. The FDD requires vehicle liability but sets no limit. Your technicians drive to every job; carry $1,000,000 combined single limit with hired and non-owned coverage.

A confirmed $2,000,000 general aggregate. The reviewed FDD names a per-occurrence limit but no aggregate. Confirm a $2,000,000 aggregate so a year with multiple claims is not capped early.

Umbrella — driven by your exposure. The FDD does not require an umbrella, and an umbrella adds a layer of limit above your general liability, auto, and employers liability. For mostly residential carpet work the realistic worst case usually sits inside your primary limits, so the first dollars are better spent raising the work-product limit. An umbrella becomes appropriate as you add commercial accounts that require it on the certificate or take on larger facility and water-loss work. Size it to the commercial work you actually take on.