INSURANCE CARRIERS AND SECURITY GUARD CONTRACTS: KEY CONSIDERATIONS
Shaun Kelly & John Koskinen, Assured Partners , CALSAGA Preferred Broker
Introducing John Koskinen
Hello everyone,
I’m John Koskinen, and I’m excited to introduce myself to the security and insurance world. I’m partnering with Shaun Kelly to deepen our security insurance team. I wanted to take a moment to thank CALSAGA and all the attendees for a fantastic conference. There were so many great topics discussed, including legal issues, social media, and, of course, our favorite—insurance.
The industry has a bright future with plenty of opportunities for growth, and we are eager to support as many of you as we can. Following up on Shaun’s insurance speech from Thursday, I wanted to share some additional information regarding service and contract agreements with clients.
Thank you for your time and support.
Insurance Carriers and Security Guard Contracts: Key Considerations
A strong, well-negotiated security guard contract is crucial in the security industry to protect your business from unwarranted liability. When a new customer inquires about your services, it’s an opportunity to protect the client and protect you. Drafting a solid contract with your legal counsel and insurance team ensures your business is protected from unnecessary risks and outlines your responsibilities.
Protecting Your Business:
The contract’s main objective should be to prevent the client from adding terms into your contract that assign responsibility from them to your security company. If the drafting is not done carefully, the company could find itself in hot water in case a claim arises.
Terms to Understand:
To safeguard your business, here are some terms to understand.
Indemnification, or Hold Harmless Clauses: These clauses have the potential to shift the Client’s liability to your business, holding you liable for all claims, including potential claims brought about by the client’s carelessness.
Additional Insured: You are providing your client with the same terms, conditions, and rights as you, when you add them as an additional insured under your insurance policy.
Primary and Non-contributory: Primary and non-contributory is a term commonly used in contract insurance requirements to stipulate the order in which multiple policies triggered by the same loss are to respond. Security guard companies typically do not want their liability insurance to be primary and non-contributory. Instead, they prefer other parties’ policies to pay first. If primary and non-contributory language favours your client, your insurance policy will pay in full before the clients policy will pay anything towards a claim/loss. Try to limit this wherever possible.
Waiver of Subrogation: Restricts your ability to recover losses by preventing your insurance company from recovering costs from a third party or client that may have caused a loss.
Understanding Client Contracts:
Large clients often use legal and technical language in contract drafting, which may not be clear-cut for business owners. It’s crucial to review these agreements and raise concerns about clauses that don’t adequately address your interests, as these may transfer risk back to you.
What do Insurance carriers look for?
Insurance companies look for contracts that favour the insured, unambiguous and do not unnecessarily shift risk to your company. They search for contracts that fairly delineate obligations and liabilities, guaranteeing that your business is not subjected to undue hardship.
Even though adding a client as an additional insured may seem commonplace, doing so can put your limits at risk and raise your liability exposure.
Three Key Takeaways
- Review Indemnification and Hold Harmless Clauses in contract with legal counsel.
- If at all costs, avoid adding client as an additional insured, including a waiver of subrogation and primary & non-contributory wording.
- Have your own service agreement prepared/ready for clients to sign. This way you can create a contract that is in your favour when it comes to risk, insurance, and liability.
If you have any questions regarding your security agreements and insurance, please feel free to call or email us. We’re here to help you navigate the complexities of security guard contracts and liabilities.
Contact Shaun Kelly (661) 616-4712 or John Koskinen (805) 585-6724
Shaun Kelly joined Tolman & Wiker Insurance Services in 2005. He specializes in all lines of property and casualty insurance for industries including contract security firms, agriculture, construction, oil and gas. Shaun received a BS in Business Administration with a major in Finance from California State University in Fresno, California. He is an active member of several industry associations, including the Association CALSAGA, the Kern County Builders Exchange and the Independent Insurance Agents of Kern County. Shaun can be reached at 661-616-4700 or skelly@tolmanandwiker.com.
Born and raised in Duluth, Minnesota, John Koskinen began his entrepreneurial journey at the age of 12 by mowing lawns. He has three years of experience in the insurance industry, specializing in claims, sales, and advisory services. John earned his Bachelor’s degree from UCSB in Santa Barbara.
Passionate about the security industry, he enjoys supporting first responders and helping other entrepreneurs thrive. To deepen his involvement, he obtained his BSIS guard card.
John lives with his wife in Ventura, CA. In his free time, he enjoys cooking, surfing, skiing, hiking, and helping others.