Unpredictability reigns supreme, so how do businesses secure their future against unseen threats and inevitable risks? General liability presents a problem for security companies since the nature of their work makes them a higher-than-average insurance risk.
Security personnel deal with people and property, which can lead to situations involving physical confrontations, negligence accusations, or claims of excessive force. These scenarios can result in expensive lawsuits, which can concern insurers about providing coverage. Plus, the different levels of training and experience of security personnel can also influence an insurer’s risk assessment.
High-risk categories
The specific verticals also affect insurance availability and cost. High-risk verticals involving armed security, executive protection, or event security for large-scale gatherings present challenges. Examples include government contracts, residential, concerts, retail stores, convenience stores, bars, and shelters. Broad post orders, in general, are one of the areas that give insurers pause.
Insurers may be hesitant to underwrite policies for these areas due to the increased potential for incidents and liabilities. This reluctance can lead to limited coverage options and higher premiums. In contrast, places like car dealerships, museums, farms, and office buildings present little risk.
Current trends
Current trends show that while some new carriers are entering the market, others are retracting or eroding coverage forms. Basically, excess capacity is more scarce and more expensive. Auto rates are more difficult to insure and are increasing. Meanwhile, workers’ compensation, management liability, and cybersecurity are staying stable or even decreasing.
More trends include:
Rising premiums due to increased risk—Due to natural disasters, terrorism, and other physical threats, insurance premiums for physical security are experiencing upward adjustments. This is a reflection of the increased perceived risk within the industry.
Integration of advanced technology in coverage – Insurers increasingly offer policies that cover losses related to advanced security technologies like surveillance systems, access control systems, and other IoT devices. This reflects the growing reliance on technology for physical security.
Tailored policies for high-risk sectors – High-risk sectors see more tailored insurance products. These customized policies address the risks associated with different physical environments and activities.
Predictive analytics for risk assessment – Using predictive analytics and big data allows insurers to offer more precise risk assessments.
Increased demand for business interruption coverage—Businesses are increasingly looking for insurance that covers interruptions and financial impact caused by physical security incidents, such as closure due to an active shooter incident or natural disasters.
Focus on loss prevention—These services help businesses reduce risks before they lead to claims, possibly resulting in lower premiums over time.
Regulation and compliance-driven products – Insurers offer coverage for incidents that may arise due to regulatory compliance failures.
Reinsurance markets adapting to security risks -The reinsurance market is adapting by developing new products that cater to the complexity of physical security risks. This helps primary insurers spread their risk more effectively.
The five types of insurance
Having the right insurance coverage is crucial when protecting security companies from multifaceted risks. Here, we’ll dive into the five essential types of insurance that can safeguard these businesses and ensure their operational continuity.
The five types of insurance for security companies include:
- General liability insurance
General liability insurance is one of the most general insurance policies a security company can hold. It covers medical expenses if someone gets hurt, property damage, administrative costs, and court costs. It must also cover professional liability, assault and battery, and firearm insurance.
- Workers’ compensation
Workers’ compensation insurance gives financial protection in work-related injuries or illnesses. Given the nature of security work, the risk of injury is relatively high. Workers’ compensation covers medical expenses, lost wages, and rehabilitation costs for injured employees, regardless of fault.
3. Property insurance
Property insurance protects physical assets from damage or loss, including fire, theft, and vandalism. This includes equipment like surveillance systems, communication devices, and vehicles for security companies. With the right insurance, the company can recover financially and continue operations if these assets are damaged or destroyed.
4. Auto insurance
This insurance covers the financial risks associated with operating vehicles. Coverage typically includes liability for bodily injury and property damage to third parties and comprehensive and collision coverage for the company’s own vehicles. Since patrol security guards frequently operate while in vehicles, this is important.
5. Crime coverage
Crime coverage protects against theft and damage, plus protects the business if someone commits a crime while working for the business. For instance, you’re covered whether your security guard is robbed on duty – or if he’s the one doing the robbing.
Strategies to reduce risk
With all these challenges, how can you reduce your risk and costs?
With a risk management strategy, you’ll have proof to show insurers that you’re a responsible operator. Consider these steps:
Invest in training: A well-trained security force is your first line of defense. Train for equipment handling, de-escalation tactics, emergency response, and legal compliance. This reduces the likelihood of accidents, plus the risk of liability claims.
Create safety protocols: Develop documented safety procedures, from simple vehicle maintenance to complex situations like dangerous situations. Review and update protocols to stay current.
Prioritize prevention over reaction: Try to prevent losses before they happen! This includes installing security systems, inspecting equipment, and promoting safe driving practices. By addressing potential concerns, offices can reduce the chance of accidents.
Use a reporting and analysis system: Establish a process for reporting and analyzing incidents and near misses. This way, businesses can identify recurring issues, identify areas for improvement, and take corrective actions to prevent future incidents.
Communicate: Ensure employees feel comfortable reporting safety concerns and hazards so organizations can address issues before they become major problems.
With these risk management strategies, security companies can reduce insurance costs and improve operations. Demonstrating a proactive approach to risk management saves money and improves a business’s long-term success.
Security firms need to realistically assess where they stand with liability, high-risk verticals, and insurance trends. By concentrating on the right management strategies, security businesses can reduce the risk of their potential losses. Plus, using the latest technology will help with protection. Blending insurance coverage and risk management will help security businesses establish financial and operational stability.
