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July 25, 2023

The Top Insurance Coverages for Security Guard Companies

Security is a high-risk industry. To manage your company’s risks, you need an insurance package that includes multiple policy types chosen with your industry in mind. An insurance broker can help you review the insurance requirements for your company’s unique exposures. To give you a better idea of what you’re likely to need beforehand, though, we’ve compiled a list of the top insurance coverages for security guard companies.

Workers’ Compensation Insurance

Most employers must carry workers’ compensation insurance. A robust workers’ compensation program is especially important in a high-risk industry like security. A workers’ compensation program that includes risk management assistance and expert claims handling can help security companies keep workers’ compensation costs under control.

Property Insurance

Commercial property insurance provides coverage for your property – including your building and its contents – in the event of a covered loss. Covered losses typically include fires, theft, storm damage, and certain types of water damage. Policies typically exclude other types of losses (such as earthquakes and flood damage), but you may be able to purchase coverage for these losses as an endorsement or standalone policy.

Business interruption coverage is usually available in conjunction with property insurance. When a disaster strikes, companies typically experience business disruption on top of the property damage. Business interruption insurance provides coverage for lost income after a covered peril.

General Liability Insurance

Commercial general liability insurance is the cornerstone of any commercial insurance package, including for the security guard industry. According to the Insurance Information Institute, standard commercial general liability insurance provides coverage for bodily injury, property damage, and advertising injuries, such as claims involving libel, slander, and copyright infringement. It also typically includes medical payments coverage that can be triggered without legal action. 

Although commercial general liability insurance provides many important coverages, a standard policy may exclude some claims that could impact security firms. Look for coverage that includes false arrest, abuse and molestation, and premises liability coverage.

Auto Insurance

Since security work often involves vehicles, it’s important to have robust auto insurance. Most security firms know they need commercial auto insurance for any vehicles the company owns. This is typically necessary to satisfy state insurance requirements, although businesses may want to secure higher liability limits than required to protect against lawsuits.

You may also need coverage for the personal vehicles employees use in the course of work. For example, if a security guard uses a personal vehicle to patrol an area, pick up supplies, or do other work-related tasks, consider what could happen in the case of an accident. Since most personal auto insurance policies exclude commercial activity, a personal policy may not provide coverage. To make matters worse, if your business is named in a lawsuit, the personal policy will not provide you with coverage. For situations like this, hired and non-owned auto insurance provides valuable coverage on top of a personal auto insurance policy.

Umbrella Insurance

If your security firm is sued, how much will the lawsuit cost you? $500,000? $1 million? $10 million? More? It’s hard to say. Jury awards have been increasing – the trend is known as social inflation. According to the U.S. Chamber of Commerce’s Institute for Legal Reform, nuclear verdicts (jury verdicts worth at least $10 million) have grown in both frequency and size. Between 2010 and 2019, the average nuclear verdict increased from $19.3 million to $24.6 million – a 27.5% increase that outpaced the overall inflation rate for the same period.

In light of these increases, many businesses are protecting themselves by purchasing additional liability coverage. By buying umbrella insurance, you can increase your liability limits for multiple underlying policies at once.

Crime and Fidelity Insurance

Security guards are supposed to help prevent crime, but security guards themselves may commit crimes. Hopefully, you screen your employees and can trust them to behave honestly, but if an employee is accused of theft or another crime, the right insurance coverage could protect your company. Fidelity and crime insurance provides coverage for losses related to employee dishonesty and theft.

Management Liability Insurance

Running a company involves a lot of responsibilities. Mistakes – or even just perceived mistakes – could lead to lawsuits from employees, job applicants, investors, and others with a stake in the company. Management liability insurance products provide protection against these risks.

According to IRMI, management liability insurance consists of several types of policies, including directors and officers (D&O) liability insurance and employment practices liability insurance (EPLI). D&O insurance provides protection for directors and officers, who may be held personal liability, as well as for the company. EPLI provides coverage for employment-related actions (including hiring and firing) and covers claims of harassment and discrimination.

Insuring Your Security Firm

Do you need help securing the top insurance coverages for security guard companies? Heffernan’s security guard program is designed to meet the needs of businesses in this industry. Learn more.

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