When a business hires a security company, one of the standard questions is:
Thank you for reading this post, don't forget to subscribe!“Are you licensed and insured?”
The security company says yes, provides a Certificate of Insurance, and everyone moves forward.
But there is a much more important question:
Have you actually read the security company’s insurance policy and its exclusions?
Because having insurance and having insurance that will respond to a security-related lawsuit are two very different things.
In more than 40 years of owning and operating security companies, managing hundreds of client accounts, and working on security-related litigation and expert witness matters, I have seen firsthand how significant this issue can become.
Yet in all those years, I cannot recall a single prospective client asking me: “Send me your actual insurance policy. I want to review the coverage and exclusions.”
That is a mistake businesses cannot afford to make.
1. Assault & Battery Exclusions
This may be one of the most important exclusions in a security company’s liability policy.
Security work inherently involves human interaction. Officers may have to confront trespassers, remove individuals from private property, break up altercations, protect employees or customers, defend themselves, or detain someone until law enforcement arrives.
Those interactions can lead to allegations of assault, battery, excessive force, false arrest, or related misconduct—even when the security officer believes his or her actions were completely justified.
During my career, I have directly observed 18 security-officer-related lawsuits. All 18 involved allegations characterized as assault-and-battery-related claims.
Consider a simple scenario:
A security officer approaches a suspicious person and tells him to leave the property. A verbal confrontation occurs. The individual attacks the officer. The officer defends himself, takes the person to the ground, places him in handcuffs, and detains him for law enforcement.
The officer may have acted appropriately. The client may believe the security officer did exactly what he was hired to do. But the individual can still file a lawsuit alleging assault, battery, excessive force, wrongful detention, or other related claims.
If the security company’s insurance policy contains an applicable assault-and-battery exclusion, the insurer may deny coverage for claims arising from that incident.
You hired a security company specifically to protect your business from dangerous situations. Yet the company’s insurance may exclude coverage arising from the very type of physical confrontation that security officers are hired to handle.
A Certificate of Insurance alone will not necessarily tell you the whole story.
Read the policy. Read the endorsements. Read the exclusions.
2. Limits of Liability — $300,000 May Not Be Enough
Businesses should also examine the security company’s liability limits.
Meeting the minimum insurance requirement imposed by a licensing or governing agency does not necessarily mean the security company carries enough insurance to adequately protect its clients.
A $300,000 liability limit can disappear quickly once a serious lawsuit begins.
Consider the potential costs associated with:
- Serious bodily injury
- Wrongful-death allegations
- Negligent security claims
- Attorney fees and litigation expenses
- Multiple claimants
- Significant settlements or judgments
In today’s litigation environment, $300,000 may provide very little protection following a catastrophic security incident.
In my experience, a much stronger starting point for a professional security company is $1 million per occurrence with a $2 million aggregate.
Depending on the client’s risk profile, location, industry, number of officers, armed versus unarmed services, and potential severity of loss, even higher limits or umbrella/excess liability coverage may be appropriate.
Do not confuse “meeting the minimum requirement” with being adequately insured.
3. Are You an Additional Insured?
This is another question every client should ask:
“Will my company be named as an Additional Insured on the security company’s policy?”
When a security incident results in a lawsuit, plaintiffs frequently do not sue only the security officer or security company.
They may also sue the property owner, business operator, management company, landlord, or other organizations connected to the property.
The allegation may be that the business negligently hired, retained, supervised, or relied upon the security provider—or otherwise shares responsibility for what occurred.
Being properly named as an Additional Insured, subject to the actual policy terms and endorsement, may provide important protection to the client for covered claims arising from the security company’s operations.
Do not simply assume you are covered because your security contractor has insurance.
Ask for the Additional Insured endorsement and verify what protection it actually provides.
4. Industry and Operational Exclusions
The fourth area businesses need to examine carefully is the policy’s exclusions.
Security companies can work in higher-risk or specialized environments, including:
- Cannabis facilities and dispensaries
- Nightclubs and entertainment venues
- Special events
- Construction sites
- Residential communities
- Retail establishments
- Transportation and product movement
- Armed-security assignments
- Other specialized or federally restricted industries
A security company may have a liability policy and still have an exclusion that removes coverage for the exact type of facility or operation where its officers are working.
Cannabis businesses are a particularly important example because marijuana remains federally restricted even though many states permit and regulate cannabis operations.
If you operate a specialized or higher-risk business, do not simply ask whether the security company has insurance.
Ask: “Does your insurance specifically cover security operations at my type of business?” Then verify it.
The Cheapest Security Insurance Policy May Become the Most Expensive
There is a reason some insurance policies cost substantially less than others.
Coverage matters.
Some security company owners may not fully understand their own policies. They obtain the insurance necessary to satisfy licensing or contractual requirements, receive their Certificate of Insurance, and assume they are protected.
Others may understand the exclusions but accept the risk because broader coverage costs substantially more.
Either situation can create enormous exposure for the client.
And unfortunately, you usually discover the problem at the worst possible time: After the incident has occurred.
The lawsuit has already been filed. Attorneys are involved. The security company submits the claim. Then the insurance carrier points to an exclusion and says: “This claim is not covered.”
At that point, changing security companies, increasing coverage, or requesting an Additional Insured endorsement will not fix the problem. The incident has already happened.
Before Hiring a Security Company, Ask for More Than a Certificate
Before signing a security contract, businesses should consider having their insurance broker, risk manager, or qualified legal counsel review the security company’s actual insurance documents.
At a minimum, examine:
- Assault & Battery Coverage — Is it covered, limited, sublimited, or excluded?
- Liability Limits — Are the per-occurrence and aggregate limits sufficient for your exposure?
- Additional Insured Status — Will your business actually be added, and what does the endorsement cover?
- Exclusions — Are there exclusions affecting your industry, location, armed services, use of force, cannabis operations, or other activities the security officers will perform?
Also review the security contract’s indemnification, hold-harmless, defense, and insurance provisions to make sure the contract and insurance coverage work together.
One Final Question
The next time a security company tells you: “Don’t worry. We’re fully insured.”
Don’t stop there.
Ask them: “Fully insured for what?”
Then read the policy.
Because the time to find out whether your security company’s insurance will protect you is before the incident—not after the lawsuit.
Michael Healea
CEO, Sec1 Security Group, LLC
Security Professional | Security Consultant | Expert Witness
40+ Years of Security Industry Experience
Real Security for the Real World.