SIC CODE: 7381 Detective, Guard and Armored Car Services
7382 Security Systems Services

NAICS CODE: 561612 Security Guards and Patrol Services
561621 Security Systems Services (except Locksmiths)

Suggested ISO General Liability Code: 98751, 91130

Suggested Workers Compensation Code: 7720

Description of operations: Security operations evaluate clients’ needs for fire and burglary protection, develop a security plan, and implement it as agreed to by the client. The security provided may include random drive-by security patrols, guards stationed at clients’ premises, or alarms and security systems, including monitoring from a central station and responding to calls.

Property exposures are generally limited to those of an office, although there may be some vehicle storage. If an alarm or monitoring service is provided, there will be wiring and monitoring equipment. Fire sources include faulty wiring, wear, and overheating of equipment.

Crime exposure is from employee dishonesty, including theft of customers’ property as guards often have open access to customers’ premises. Hazards increase in the absence of procedures and monitoring of the insured’s workers who may have such access. Background checks of all employees must include verification of criminal records, education and employment background.

Inland marine exposures are from accounts receivable, computers, mobile equipment, and valuable papers and records. Mobile equipment includes radios, base station, walkie-talkies and other items carried by guards or in their vehicles. Surveillance equipment is highly sophisticated, sensitive and a target for theft. All equipment must be secured and locked when not in use. Hazards may increase in the absence of procedures to ensure proper accounting of all equipment. Power failure and power surges are potentially severe hazards, especially if alarm or monitoring services are offered. Client reports and contracts represent the inspector’s primary valuable papers and records exposures, and must be protected since these will include contracts and review of security needs of customers.

Premises liability exposures are limited at the office location due to lack of public access. Off-premises exposure is extensive. Depending on services offered, potential for causing either bodily injury or property damage may be considerable. Guards must be careful not to infringe on the lawful rights of others. Personal injury in the form of libel, slander, trespass, and invasion of privacy is a serious concern, and may often fall under the professional liability coverage.

Professional liability exposure is due to the protection provided to clients for safety and security to their property and person. If a fire or burglary loss should occur, the security agency could be held liable for failing in its professional duty to the client. Personal injury hazards include assertions of invasion of privacy, wrongful detention, or unreasonable use of force.
Because more emphasis is being placed on security, the commitments and promises of the security operation are important to review and evaluate. If the security service carries firearms, all federal, state and local statutes must be followed. Training, supervision and monitoring are crucial to the operations. It is also important to have a clear contract with each client, explaining services and offering advice. These agreements must be signed and it should be noted where services were recommended and not taken.

Automobile exposures can be extensive if mobile patrols are offered. Age, training, experience, and records of the drivers, as well as age, condition, and maintenance of the vehicles, are all important items to consider. MVRs must be acceptable prior to hire and MVRs should be run on a regular basis. Vehicle maintenance records must be kept in a central location. If company vehicles are supplied for use, there should be clear procedures in place regarding personal use by employees and their family members.

Workers compensation exposure is high. Guards work alone in dark areas that may be targeted by burglars. Check-in procedures, instruction, and training on how to handle trespassers and emergency situations are all important to review. If guards use vehicles, they must have training in proper evasive maneuvers. Any firearm use must be permitted only after there is extensive training and periodic recertification. Without firm procedures regarding firearm ownership, handling, and storage, hazards may increase dramatically.

Minimum recommended coverage:

Business Personal Property, Employee Dishonesty, Accounts Receivable, Computers, Mobile Equipment Floater, Valuable Papers and Records, General Liability, Employee Benefits Liability, Professional Liability, Umbrella Liability, Hired and Nonownership Auto Liability, Workers Compensation

Other coverages to consider:

Building, Business Income with Extra Expense, Equipment Breakdown, Computer Fraud, Forgery, Employment-related Practices Liability, Business Auto Liability and Physical Damage