With new industries come new opportunities for security guard companies to expand their clientele. Medical Marijuana is an industry that seems to be booming, with more and more dispensaries opening up across the US. Businesses with high valued good have a need for these goods to be protected. Security guard companies are starting to pick up these contracts to protect said dispensaries, as well as transport goods between two places.

Insurance carriers realize this trend, and in turn select carriers have developed policies to cover this type of exposure. Your run of the mill general liability policy will not cover this exposure as it is considered high-risk due to the valued goods. But specializing in the security guard insurance industry we have multiple carrier contacts that can insure you for this type of exposure. If you aren’t sure about your policy and what types of contracts are covered, contact your insurance agent to ask.

In the security guard industry not only is it important to have the proper coverages and limits, but to also ensure your insurance carrier is financially sound. Luckily there is rating agency that allows people to see the stability of the carrier they choose. AM Best is a Nationally Recognized Statistical Rating Organization, designated by the US Securities and Exchange Commission. AM Best reviews the insurance carriers ability to meet its obligations to policy holders. The higher the rating a carrier has, the more financially stable it is. On the other hand, if a carriers rating is low, they might have trouble paying claims for their policyholders.

Here is a break-down of the AM Best ratings:

As depicted above, A++, and A+ (Superior) are the highest ratings a carrier can achieve, you should strive for a company that carries this rating. Anything that is a B or below is considered financially vulnerable.

When it comes to your insurance policy, make sure you choose a carrier that has the history and ratings to prove they are financially responsible to insure your business.    

Why Security Guard Company’s need This Coverage.

There are many situations that arise where a security guard company may be held liable for the actions of their employees while they are driving their personal vehicles. Your best protection again this exposure is Hired and Non-Owned (HNOA) automobile liability coverage. HNOA covers bodily injury and property damage caused by a vehicle you hire (included rented or borrowed vehicles) or caused by a non-owned vehicle (vehicles owned by others, including vehicles owned by your employees)

Whether  you realize it or not, as a security guard company, there are many occasions when this coverage is needed to properly protect your liabilities:

• Do you ever have a security guard use their personal vehicle during patrols?
• Do you ever have a security guard perform night-watch while in their personal vehicle?
• Do you ever have an employee use their vehicle to pick up lunch, go to post office or office supply store?
• Do you ever rent a vehicle while on a business trip?

HNOA coverage does not pay for the physical damage for the employee vehicle in the event of an accident. This is potentially covered under the employees personal auto policy. HNOA coverage is typically added to the current general liability policy if the guard company does not have a commercial auto policy in place. HNOA protects your company if it found legally liable for any physical damage or bodily injury caused by an auto hired or non-owned during the course of company business. The typical limit for HNOA is $1,000,000 in coverage.

Whether you are a new venture, or an existing and established Security Guard Company, it is important to be aware of the risk of contracts you obtain. Insurance carriers place contracts in two categories: Low Risk and High Risk. Some examples of low risk contracts are: retail, parking lots, office buildings, home associations, mid-high income housing. High risk contract examples are: schools, concerts, events, body guarding, bars/nightclubs/taverns, or any establishment that serves alcohol.

While there are multiple reasons why a contract may be considered high risk, typically it is because they tend to have more losses. We are more than able to obtain a quote for high-risk type contracts, but it the client should be aware of the minimum costs. Typically the minimum starting premium for high risk contracts is $15,000 - $25,000 annually (General Liability).

On the other hand, low risk contracts are just that, low risk. Insurance carriers see significantly lower losses, driving the minimum premium down. A good estimate of minimum starting premium for low risks contracts is $3,500 - $4,500 annually (General Liability).

If you are working a high risk contract, always be sure to speak with your broker to make sure you are properly covered for that type of job. If you aren’t sure whether your contract is high risk or low risk, feel free to contact us, or your current broker.

Not all security guard liability insurance policies are created equal. General liability policies vary from carrier to carrier and the differences can be difficult to detect. Below I have listed important coverage’s and endorsements that should be taken into consideration before determining the best liability policy for your security guard company.

Claims Made vs. Occurrence Deductible: A claims made deductible will require you to pay the deductible amount for each claim that is brought forward out of an occurrence. Often times there can be multiple claims from the one occurrence. If the deductible is $2,500 per claim, and there are 5 claims from one occurrence, the guard company would be required to pay $12,500 to the carrier. However, If the deductible was on an occurrence the security guard company would only be required to pay the one time deductible of $2,500. Is the General Liability Policy Auditable?  The carrier bases the security guard liability exposure off of annual guard hours billed or annual guard payroll. You will be asked to estimate the hours and/or payroll for the upcoming policy year. At the expiration of that policy the carrier will audit the actual hours and/or payroll to determine the exact amount of guard exposure. There are many security guard liability policies the only audit up. This means if you under-estimated the hours and/or payroll, the carrier will invoice you for the additional premium due. However, if you over-estimated, no premium will be returned. As a business owner, you need to make sure the security guard liability insurance program you choose is auditable in both directions. Does the Policy Exclude or Include Punitive or Exemplary Damages? Punitive/Exemplary damages are monetary compensation awarded to the injured party that goes beyond that which is necessary to compensate the individual for losses and that is intended to punish the wrongdoer. Make certain that the liability policy includes coverage for punitive or exemplary damages and that the coverage is provided at the full limit of the policy. Care, Custody and Control: Security guard companies can be found liable for the property they are guarding or that is in their care, custody and control. If the property is lost, stolen, damaged, etc the property owner can file a claim against the security guard companies seeking repair or replacement for the damages property. Some liability policies include the C,C & C endorsement, however, the limit on the endorsement is much less than the policy limit. The cost to replace or repair damaged property often exceeds the sub-limit provided by certain carriers. Mobile Equipment (Golf Carts): Does your security guard contracts require your guards to operate mobile equipment? If so, double check the general liability policy to insure that mobile equipment is endorsed onto the policy. If the coverage is not currently on the GL policy, you can add the mobile equipment endorsement to the liability policy for an additional premium. Lost Key Coverage:If you have contract that requires you to have the master key, you want to make sure you have this coverage in place. Lost Key Coverage will provide coverage in the event the master key is lost and the building has to be re-keyed. The cost to re-key a building can become excessive depending on the amount of locks to be replaced. Typically, Lost Key Coverage can be added to the liability policy at a sub-limit.

It is critical for security guard companies to determine whether an individual that provides service are an employee or an independent contractor. I receive daily inquiries from security guard companies telling me they hire independent contractors to perform contracts and are therefore not responsible for the work comp exposure. I advise that merely agreeing with someone on independent contractor status does not make it so, even if an independent contractor agreement is in place.

The criteria to determine independent contractor or employee varies by state but I have listed general characteristics to help determine classification:

• Behavioral Control: Does the company have the right to direct or control how the work is done through instructions, training and/or other means?
• Financial Control: Are the business aspects of the workers job controlled by the payer? These include things like how the worker is paid, are expenses reimbursed, who provides tools, supplies, etc.
• If you have the right to control or direct not only what is done, but also how it is to be done, then workers are most likely employees.
• If the worker performing the service has the right to hire and terminate others, then the worker is more likely to be independent contractor.

 Ramifications for misclassifying an employee as an independent contractor

There can be a number of costly legal consequences when treating an employee as an independent contractor. The employer can be required to:

• Reimburse employee for wages you should have paid them under the fair labor standards act, including overtime and minimum wage.
• Pay back taxes and penalties for federal and state income taxes, social security, Medicare and unemployment.
• Provide employee benefits, including health insurance, retirement, etc.
• Pay any misclassified employees workers compensation at audit.

A security guard’s duties change every single day, and it is important for their employer to be able to supply them with the insurance that they need in order to stay protected during any serious medical or legal ordeal.  While the private security sector continues to grow and remains a lucrative industry, each of these companies will need a comprehensive and affordable insurance plan in order to stay protected throughout the years.  The agents at BSGIns.com are ready to work closely alongside you and your company to safeguard your bottom line with a custom-built policy created around your own unique needs.

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