Security companies have a unique insurance problem.

On paper, two companies may both describe themselves as “security guard companies,” but from an insurance standpoint, they can be completely different risks.

One company may provide unarmed guards at apartment buildings and warehouses. Another may handle nightclubs, schools, construction sites, executive protection, armed security or mobile patrol.

Those differences matter.

At Goldbridge Insurance Services, we work with security companies and one of the first things we look at is not simply how much payroll or revenue the company has. We want to understand exactly where the guards are working and what they are being asked to do.

The Type of Security Work Matters

Insurance carriers usually want a detailed breakdown of operations.

Some of the questions we regularly see include:

• Are the guards armed or unarmed?
• Do guards work at schools or college campuses?
• Are there nightclub, bar or entertainment accounts?
• Do guards provide executive or VIP protection?
• Are guards working at residential properties?
• Are employees driving between locations?
• Are company vehicles being used?
• Do guards detain or physically remove people?
• Are there special-event exposures?
• Are guards working alone?
• Are body cameras used?
• What training does the company provide?

A security company with 100 unarmed guards working at low-hazard commercial properties may be viewed very differently from a company with the same payroll providing armed security at nightlife venues.

That is why a generic application often does not tell the full story.

General Liability Is Only One Piece

Security companies typically think about general liability first, and for good reason.

A guard may be accused of excessive force, wrongful detention, failure to provide adequate security or causing injury to a third party.

But general liability is only one part of the insurance program.

Depending on the operation, a security company may also need to consider:

Workers’ Compensation

Security guards can be exposed to assaults, falls, strains, traffic accidents and other workplace injuries.

Workers’ compensation pricing can become especially difficult when a company develops frequent claims or a high experience modification factor.

Commercial Auto

If employees drive patrol vehicles, transport equipment or regularly travel between client locations, the automobile exposure needs to be addressed properly.

One of the biggest problems we see is when companies describe themselves as having “no driving exposure,” but guards are actually driving as part of their job.

That can create serious problems when a claim occurs.

Employment Practices Liability

Security companies often have large workforces with employees working different shifts and at different client locations.

That can create exposure to allegations involving discrimination, harassment, wrongful termination and other employment-related issues.

Umbrella or Excess Liability

Many larger clients require security contractors to carry higher liability limits.

An umbrella or excess policy can provide additional limits above the underlying policies and may be required by contract.

Contracts Can Create Insurance Problems

Security companies should also pay close attention to the contracts they sign with their clients.

It is common for a property owner, school, warehouse, event operator or other client to require specific insurance limits and endorsements.

Sometimes those requirements are straightforward.

Other times, the contract asks the security company to assume a significant amount of liability.

Before signing a major contract, it is worth making sure the insurance program can actually satisfy the requirements.

We have seen situations where a company wins a large new account only to discover afterward that its existing insurance carrier will not accept the exposure or cannot provide one of the required endorsements.

That is something you want to know before the guards are deployed.

Claims History Matters

Security companies with clean loss history usually have more options.

Once claims begin to develop, however, the market can change quickly.

A few serious incidents can affect:

• Workers’ compensation pricing
• General liability pricing
• Available carriers
• Deductible requirements
• Underwriting appetite
• Experience modification factors
• Renewal negotiations

That does not necessarily mean the company is uninsurable.

It means the story behind the claims becomes more important.

If a company had several losses but has since changed its training procedures, hired a safety manager, eliminated a problematic client or improved its hiring standards, the underwriter should know that.

Simply sending over loss runs without an explanation can leave the carrier to make its own assumptions.

Growth Should Trigger an Insurance Review

Security companies can grow quickly.

A company may go from 25 guards to 100 guards after winning one or two major contracts.

That growth can change the insurance exposure substantially.

Before taking on a large new client, management should review:

• Expected additional payroll
• Number of new guards
• Armed versus unarmed exposure
• Location type
• Driving requirements
• Contractual insurance limits
• Additional insured requirements
• Claims history
• Training procedures
• Use of subcontractors

Insurance should be part of the conversation before the contract starts—not after the certificate of insurance request lands in someone’s inbox.

The Bottom Line

Security companies are not all the same, and they should not be insured as if they are.

A properly structured insurance program starts with understanding the actual operation: where the guards work, what they do, whether they drive, whether they are armed and what contractual obligations the company has accepted.

At Goldbridge Insurance Services, we work with security companies to review their workers’ compensation, general liability, commercial auto, EPLI and excess insurance programs and help present their operations properly to the insurance market.

If your security company is growing, experiencing higher insurance costs or approaching renewal, it may be worth reviewing the program before simply accepting the next quote.