Running a security business in the U.S comes with great responsibility and serious risk. Whether you are a small-scale guard service or own a large-scale security firm, it is important that you have the right security company insurance and security guard insurance. Having these 2 insurances is not just a smart business decision but also a legal requirement that you cannot ignore.
In this blog, we will discuss in detail why having a security company and security guard insurance is important for your business.
Why Security Companies Need Specialized Insurance
Given that security companies operate in one of the highest-risk service industries, there are times when security guards are deployed in risky and unpredictable environments. In such situations guards are required to interact with the public, handle conflicts and at times even carry weapons. All of this involves following risk factors:
- Physical altercations
- Use of Force
- Property damage while on duty
- False arrest or wrongful detention claims
- Negligence in preventing incidents
It is because of the above-mentioned risk factors that traditional business insurance policies won’t be able to offer that financial protection to your company. Instead you will need special security company insurance that is designed to cover industry-specific exposures.
Legal & Contractual Requirements
In most parts of U.S, insurance is must for:
- Obtaining license for security company
- Securing contracts with clients from corporate & govt backgrounds
- Hiring and maintaining employees
Given that every client of yours will ask for security guard insurance proof, you will not be able to sign an agreement. Hence, the choice is yours, invest in security guard insurance or end up losing clients and face legal penalties.
Get in touch with Alkeme today and get a customized security company insurance that meets state licensing requirements and client expectations.
Types Of Insurance Required
If you wish to protect your business from potential financial and legal risks then you will need several different types of coverage. This is because each coverage caters to a specific risk area.
General Liability Insurance
General liability insurance forms the foundation of every security company insurance plan. Here’s a list of everything that it covers:
- Body injuries (for example: a visitor slips while your guards were patrolling)
- Accidental damage to client’s property
- Legal defense cost
In order to understand the application of this type of insurance better, let us consider an example. A guard accidently knocks over an expensive machine while inspecting the factory. In such a situation, your general liability insurance will cover all the damages and legal expenses. Typical coverage limits: $1 million per occurrence and $2 million aggregate.
Security Guard Liability Insurance
Also known as professional liability or Errors or Omissions (E&O), this insurance offers protection from claims related to performance failures. Here’s what it covers:
- Negligence
- Failure to prevent an incident
- Misconduct allegations
- Improper use of force
Here’s an example, to make things simple to understand. A guard somehow fails to respond to a security breach, resulting in theft. Following this, the client sues your company for negligence. This is where security guard liability insurance will help you cover all your claims.
Workers’ Compensation Insurance
Workers’ compensation insurance is mandatory for every company in the U.S if it has employees. Here’s what this type of insurance covers:
- Medical expenses for injured workers
- Lost wages
- Rehabilitation costs
To understand this better, let us consider an example. A guard is injured during a physical altercation. In such a situation, workers’ compensation insurance will cover the hospital bill and also the workers’ time off work. If a company will not have workers’ compensation insurance then it will be subjected to hefty fines, business shutdowns and lawsuits from employees as well.
Armed Security Insurance
This particular type of insurance is needed if your company guards carry firearms. Here’s what armed security insurance covers:
- Firearm-related incidents
- Accidental discharge
- Use-of-Force claims
If an armed guard discharges a weapon during a confrontation which leads to injury then in such a situation armed guard insurance will provide cover for legal and financial liabilities. There are times when several states in the U.S require higher liability limits for armed security companies, often starting at $1M-$5M.
Commercial Auto Insurance
This type of insurance is needed when your company uses vehicles for patrol or transport. Here’s what it covers:
- Vehicle damage
- Third-party injury
- Theft or vandalism
Whenever a patrol vehicle gets involved in an accident while responding to an alarm, commercial auto insurance will cover all the repairs and liability.
Given that there are so many different types of insurance available in the market, it is important that you make the right choice. Get in touch with Alkeme and protect your security company today.
Minimum Insurance Requirements By States
The insurance requirements are different for every state. However, most licensing boards mandate a minimum coverage limit. Here’s a look at that.
California (CA)
- Licensing Authority: Bureau of Security and Investigative Services (BSIS)
- General Liability: Minimum $1M per occurrence
- Workers’ compensation: Required for employees
Texas (TX)
- Licensing Authority: Texas Department of Public Safety (DPS)
- Liability Insurance: Typically $100,000-1M based on company size
- Armed guards require higher coverage
Florida (FL)
- Licensing Authority: Florida Department of Agriculture & Consumer Services
- General Liability: Minimum $300,00-$1M
- Workers’ compensation insurance is mandatory
Cost of Security Guard Insurance
The cost of security guard insurance majorly depends on the operations of your company. If you are a small, unarmed company, your average monthly cost can be between $150 and $400 per month. Meanwhile, for a mid-size firm, your monthly budget can be between $500 and $1,500 per month and for an armed security company, it will be more than $2,000 every month.
Key Cost Factors
- Armed vs unarmed guards
- Number of employees
- Type of contracts
- Claims history
- Coverage limits
Common Mistakes Security Companies Make
At times, even most-established and trusted insurance companies make mistakes which lead to major financial losses. Here’s are some of the most common mistakes made by security companies:
- Undercoverage
Sometimes, security guard companies end up picking minimum insurance coverage with an aim to save money. However, this decision often backfires when the insurance claims exceed the policy limit. Because of this, the company ends up paying for the lawsuits or damages.
- Missing Professional Liability Insurance
At times, companies forget their coverage due to negligence. In fact without E&O, your security company insurance will remain incomplete.
- Not Upgrading Policies As Businesses Grow
Everyone should know that as the business expands, the risk profile for the same also changes. This is why it is always better to upgrade your security company insurance so that you do not have to pay for financial and defense claims.
- Choosing The Cheapest Policy
This is one of the most common mistakes made by security guards in the U.S.
The biggest disadvantage of choosing a cheap insurance policy is that it does not include protection from critical risk factors.
Final Thoughts
Whether you are a small scale security company or a large-scale & well-established security company in the U.S, get in touch with us today to protect your business from financial & legal liabilities. We have a dedicated team of professionals who are highly experienced in this insurance sector. Get your quote from us today.
