An office sustained extensive fire damage even though the hired security firm's employee was on duty at the time of the fire. The insurance company paid for the fire loss and then subrogated against the security firm for the employee's failure.

The security company challenged the subrogation action because its contract with the owner of the office contained a waiver of subrogation.

This classic case asked the court to decide when an insurance company must be notified of such a waiver.

Click here to review the resolution of this 1988 court case.

Who has the right to waive subrogation? The Insurance Services Office (ISO) Building and Personal Property Coverage Form is very clear on this subject. The insured's subrogation waiver stands if it was in writing and in place prior to the loss.

What about waivers that are not in writing or that take place after the loss? This coverage form also responds to this question.

Click here to review the PF&M discussion on Transfer of the Rights of Recovery.

Security firms protect themselves to some extent by using contracts but even with them, their exposures can be difficult to insure. Some firms are simply observers whose employees are trained to call the police when a problem arises. Others arm their employees and expect active intervention if an incident arises.

Security companies may be a niche worth pursuing. The premiums can be substantial, depending on the activities, but those activities must be evaluated and coverages examined carefully to identify gaps in coverage.

Click here to review a narrative on Security Companies Operations to see if this is a classification for you to pursue.

There are a limited number of markets that specialize in security companies. They understand the needs of these operations and have developed specialty products for their professional liability exposures.

Click here to read a recent Rough Notes Magazine article where experts in covering security firms provide their insight.

As stated above, a limited number of insurance companies write coverage for security operations. If your companies do not provide the coverage needed at an affordable price, consult The Insurance Marketplace, a publication of The Rough Notes Company, Inc. for a list of brokers, MGAs, and Program Administrators that are interested and that operate within your state.

Click here for a list of such markets in the state of Indiana.