General liability insurance for security companies

No client signs without a certificate of general liability insurance in hand. The claims behind that certificate are not hypothetical: a guard restrains the wrong person, a patrol truck backs into a gate. One of those, uninsured, ends a company.

What does general liability actually cover?

GL responds to claims brought by third parties. Not your employees. Injuries to your own guards go to workers' compensation, which is a separate policy with a separate carrier and a separate audit.

Bodily injury to a third party

Someone who does not work for you gets hurt in connection with your operation:

• A visitor trips over a barrier your guard set in a doorway
• A bystander is hurt during an altercation between your officer and a trespasser
• A tenant slips on a spill your guard was supposed to cone off
• A patron alleges excessive force during a removal at an event

The job involves putting hands on people. Defense costs on a use-of-force suit start accruing the day the complaint is filed, long before anyone decides whether your officer was right.

Property damage

• A patrol vehicle backs into a client's gate arm or a resident's car
• A guard damages a door or lock while forcing entry on an alarm response
• A flashlight or radio goes through a display case
• Water gets in because a fire door was propped open during a storm

Personal and advertising injury

The category most new operators skim past, and the one that generates the claims:

• False arrest or detention. Your guard detains someone who turns out to be a customer, a tenant, or the building owner's son.
• Malicious prosecution. A statement your officer wrote leads to charges that do not hold up.
• Invasion of privacy. Camera placement, bag searches, or surveillance that crossed a line nobody documented.
• Defamation. A guard accuses someone of theft in front of witnesses and is wrong.

How much coverage do you need?

How do per-occurrence and aggregate limits work?

Two numbers, two jobs. Per occurrence caps what the insurer pays on one incident. Aggregate caps what it pays across the entire policy year.

Run the arithmetic on a $1M/$2M policy. One $800K claim is paid in full and leaves $1.2M of aggregate. A second $800K claim is paid in full and leaves $400K. A third $800K claim in the same policy year gets $400K, and you write the check for the rest. Claims cluster. One bad site produces three of them, not one.

What limits do your state and your clients require?

The state sets the floor. California requires a private patrol operator to hold a general liability policy with minimum coverage of $1,000,000 for each occurrence at licensure and at every renewal. Texas sets its statutory minimum far lower: Occupations Code Sec. 1702.124 requires $100,000 per occurrence for bodily injury and property damage, $50,000 per occurrence for personal injury, and $200,000 aggregate. Check your own regulator before you quote a number, because these move.

Your clients set the real number. The asks below are what operators run into most often, not a published standard, and the contract in front of you is the only limit that actually binds you:

• Retail, restaurants, single-tenant offices: $1M/$2M, no argument either way.
• Property management and multifamily: $2M/$4M is a common ask, often satisfied with $1M/$2M primary plus an umbrella.
• Corporate campuses: $2M to $5M, usually layered rather than written primary.
• Healthcare: the same range, with assault and battery coverage named explicitly in the contract.
• Government solicitations: the RFP states the limit and the endorsements. Read that page before you bid. You cannot negotiate it after award.

If you can carry $2M/$4M, carry it. One contract you cannot bid because your certificate reads $1M usually costs more than a year of the difference. Ask your broker to quote both limits so you see the actual delta.

What drives your premium?

Security GL is rated on revenue. The carrier applies a rate per $1,000 of gross receipts, often split by service class. That rate is the number to ask for. A rate lets you compare two quotes. A total premium tells you nothing until you know what exposure it was applied to.

Six things move it:

• Revenue and how it splits. Armed, event and nightlife hours are rated harder than a lobby post or a construction watch. Report the split honestly. A year-end audit that reclassifies your hours is how a cheap quote turns expensive.
• Armed versus unarmed. Armed work is a different rate class, not a surcharge, and a fair number of carriers will not write it at any price.
• Loss runs. Claims history is the biggest single swing factor. Carriers want five years. Two open use-of-force files can move you out of the admitted market entirely.
• Years in business. Under three years there is no history to credit you for, and you pay for that absence.
• Venue. Jury awards, plaintiff bar activity and labor law differ enough that the same book of business prices differently in California than in Iowa.
• Client mix. Bars, stadiums and hospitals sit at the top of the rate table. Corporate lobbies and gated communities sit at the bottom.

Which exclusions will bite you?

• Assault and battery. The big one. Base forms commonly exclude it outright or bury it under a sub-limit far below what a use-of-force suit costs to defend, and use-of-force is the claim this industry actually generates. Get the endorsement, with its own limit printed on the declarations page. If a broker cannot tell you the A&B limit on a quote, that quote is not comparable to the others.
• Professional liability. GL does not respond to "your security plan was inadequate." When a client's employee is attacked and the client blames your post orders, that is an errors and omissions claim. It needs a separate E&O policy.
• Employee injuries. GL covers third parties. Your guard's torn rotator cuff is workers' comp. Different policy, different carrier, different audit.
• Auto. A patrol vehicle in a collision is a commercial auto claim, and hired and non-owned auto covers the officer using his own car. Both belong in your fleet program, not your GL.
• Firearms. Many forms exclude any claim arising from the discharge or use of a firearm. If you run armed posts, confirm in writing that the exclusion has been endorsed off.
• Cyber. Guard schedules, client site plans, access credentials and employee Social Security numbers all sit on your systems. A breach of any of them is not a GL loss.

How do you get quotes worth comparing?

Do not hand this to the agent who wrote your homeowner's policy. Security is a narrow niche, a shrinking number of carriers write it, and a generalist will come back with a single quote from whichever market answered the phone.

Four questions separate a security broker from a generalist:

1. How many security accounts do you place a year, and at what size?
2. Which carriers will you approach for my armed and unarmed split?
3. What is the A&B limit on each quote, and does defense erode it or sit outside it?
4. Which of these markets are admitted, and which are surplus lines?

Get three. Compare the rate per $1,000 of revenue, the A&B limit, whether defense costs eat into the limit, and the exclusions list, in that order. A cheaper premium carrying a $50,000 assault and battery sub-limit is not cheaper.

What do you need ready for the application?

• Business license and state security license, plus the surety bond your state requires alongside the insurance
• Revenue broken out by service type: unarmed standing post, unarmed patrol, armed, event, executive protection
• Headcount by classification, including any 1099 contractors, which underwriters will ask about and rarely like
• Client and site types
• Your written training program, which is one of the few things you control that underwriters will credit
• Five years of loss runs from your current carrier
• A sample contract showing your indemnification and insurance language

What will clients ask for on the certificate?

Every new client wants a Certificate of Insurance before the first shift, and most want endorsements attached to it:

• Additional insured. Names the client on your policy so they are defended when your guard causes a claim on their property. Effectively universal.
• Waiver of subrogation. Stops your insurer from turning around and suing the client to recover what it paid.
• Primary and non-contributory. Your policy pays first, before the client's own coverage is touched.
• Notice of cancellation. Clients ask for 30 days. Note that the certificate itself grants nothing, and most carriers strike third-party notice obligations, so if the client genuinely needs notice it has to be an endorsement on the policy, not a line typed into the certificate box.

Certificate fees vary by carrier. Some include a block in the premium, some bill per issuance. Ask before you bind: with thirty clients on annual renewals plus one for every event, a per-certificate charge stops being a rounding error.