Insurance Legal Description Text


Shaun Kelly, Tolman & Wiker, Preferred Broker

Hope everyone is doing well and getting back to normal or close to it.

Based on some conversations I have had lately on terrorism coverage, I thought it would be good to provide a refresher.

If or when another terrorist attack occurs, the allegations will inevitably include lack of security. So, should you add terrorism coverage to your General Liability policy?

 It is important to understand that prior to 9/11, terrorism was included in commercial insurance policies. After 9/11 and the resulting financial losses to insurance carriers, terrorism exclusions started to appear on most insurance policies. These exclusions were applied to eliminate all future terrorism losses. The reasoning behind the exclusions are that the claims are unpredictable and catastrophic, thus making it impossible for insurance carriers to underwrite the risk. The potential losses to the actual target of the terrorism act and the surrounding businesses, including human life, can be devastating. Here are some financial figures from the 9/11 attack:

  •  Total loss approximately $100 Billion
  • Total insured loss $47 Billion (Breakdown by line of coverage)
    • 11% World Trade Center 1 & 2
    • 33% Business Interruption
    • 19% Property other than the WTC
    • 12% Liability
    • 11% Aviation liability
    • 14% Other including life insurance

 With the lack of terrorism coverage available from insurance carriers, the US Congress established the Terrorism Risk Insurance Act (TRIA). TRIA was created by the federal government to assist insurance carriers in offering terrorism coverage to businesses by providing a financial backstop to minimize the economic hardship the insurance carriers may experience with another attack. As defined in TRIA, in order for loss to be triggered, the terrorism act must be “Certified”. An act can only be “Certified” if the Secretary of the Treasury, the Secretary of State and the Attorney General of the United States determine the terrorism act meets the following:

 Act of Terrorism

  • Is a violent act or an act that is dangerous to human life, property or infrastructure.
  • The act occurs is in the United States, or outside the United States in the case of an US air carrier, vessel and/or missions as described in the Act.
  • The act was committed by an individual or individuals, as part of an effort to coerce the US civilian population or to influence the policy or affect the conduct of the United States government by coercion.

Limitation to the Certification

  • The act is committed as part of the course of war declared by Congress
  • Property and casualty losses do not exceed $5 Million

 The mass shooting in Las Vegas on October 1, 2017 has yet to be determined a “certified” act of terrorism. The anticipated financial settlement to the victims is estimated at over $800 Million. Insured losses paid by insurance carriers are upwards of $750 Million. Those being held responsible are the security provider for the venue and the owner of the Mandalay Bay Hotel.Interesting to note in this case is the “Safety Act”. The Safety Act was established by the Department of Homeland Security to limit the liability of providers of anti-terrorism technology. Under the act, “technology” is meant to include products and service providers. Security falls under the list of service providers. This is the first time that the Safety Act is being considered and tested in a legal proceeding. The security firm involved in the mass shooting is certified by the DHS under the Safety Act. For information and details on the Safety Act, click the link:

 There are many violent events and uncertainties today (Mass shootings, riots, softening of the borders…COVID?) that border on the line of being an act of terrorism. Terrorism insurance may not be for everyone, however here are some criteria to assist you in determining your terrorism exposure and cost:

  • Location of your clients
    • Large metropolitan cities or areas
    • Historical landmarks
    • Government buildings
    • Tourist destinations and surrounding areas
    • Stadiums and large venues
    • Other…
  • Types of clients
    • Schools, universities, colleges…
    • Oil refineries, utility and water companies…
    • Nightclubs, casinos…
    • Airports
    • Shopping centers and movie theaters
    • Hospitals and healthcare facilities
    • Hotels
    • Other…
  • Cost
    • Normally 5-10% of premium for General Liability (Separate premiums for other lines of coverage, terrorism is included in workers compensation)  

 In conclusion, we should evaluate the potential risk in all areas of our businesses. Implementing a strong risk management program to minimize the probability of loss is extremely important. Some risks you can avoid, accept, minimize or transfer. Terrorism is one of the most unpredictable and catastrophic losses that can affect your business. In evaluating the terrorism risk, in most cases I would rather have the insurance coverage and be able to sleep better at night.

 Please do not hesitate to contact me if you have any questions.

 Thank you.

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



Tory Brownyard, Brownyard Group

This time last year, I wrote about how security insurance was entering a hard market, in which underwriting guidelines become stricter and insurance premiums rise. At the time, I never suspected that a tragic, once-in-a-lifetime pandemic would outweigh or complicate all industry trends and predictions. However, many of those very trends have reinforced the importance of tried-and-true risk management practices, particularly contracts.

Over the past year, the security industry, like all industries, has had to react and respond to the coronavirus pandemic. Security officers were tasked with responsibilities typically reserved for police officers or medical personnel (i.e., crowd control, COVID-19 screenings). As a result, private security is in demand.

When business is expanding, it can be tempting to skim through contracts or quickly sign one provided by the client. Often the contingencies against which contracts are meant to protect seem abstract or distant. However, from a risk management perspective, they can do the very practical work of clarifying roles, transferring risk and mitigating liabilities. 

Security firms and their clients can define post orders for guards in contracts, which is particularly important as guards are asked to take on new roles due to the pandemic or social unrest. For example, the contract can clearly state that the guard is responsible to protect the client’s property and the client, but not shared parking lots or third parties. Many claims against guard firms stem from violent acts on a client’s premise, and security firms can be held liable for alleged negligence or inadequate protection even if the incident involves people or property the firm did not anticipate protecting. In the absence of specific post orders, a security firm may have assumed the duty to protect any people or against any incidents on the premises. 

In short, contracts may help limit liability by clearly stating who and what guards are responsible for protecting. Language about the scope of work can also protect the security firm; rather than saying that guards will eliminate risks, contracts can say that they will reduce certain risks. Though it is not legally binding, marketing and advertising language may also create an expectation in clients. Some firms promise their services provide “total protection from harm,” which may lead clients to expect that guards can prevent all violent incidents, vandalism, theft, etc.

Indemnification clauses play a significant role is determining liability when an incident occurs. An indemnification clause “holds harmless” one contract party (i.e., the client) in specific types of incidents that result from negligence or errors by the other contract party (i.e., the security officer). This shifts financial responsibility for a claim from the client to the security firm and their insurer.

In contracts, indemnification can be broad or limited. Limited indemnification can protect a security firm against assuming all liability for incidents that may be partially or wholly due to the client’s negligence; it holds the security firm responsible for incidents that are, put simply, the fault of guards. Broad indemnification language would hold the security firm solely responsible for any incident covered by insurance, whether or not the client was also negligent. In extreme circumstances where a security firm is held responsible for an incident due solely to a client’s negligence, the firm’s insurance may deny the claim.

Clients’ contracts may also include a “waiver of subrogation.” This language means one party (the security firm) has agreed to waive its rights of recovery against the other party (the client) for the second party’s negligence. This prevents your insurance company from recovering losses from the other party in the event of a claim. This can increase insurance costs, as some insurers require additional coverage for contracts that include a waiver of subrogation.

From a risk management perspective, a contract best-case scenario has a few characteristics.  Contracts in which clients agree to limited indemnification can help protect the financial interests of a security firm, as can contracts without a waiver of subrogation. In addition, the contract should include language specifying the scope of the security firm’s responsibilities and language that excludes third-party beneficiaries. Finally, the contract can state that the client is responsible for securing their own general liability and property coverage; the contract with the guard firm is not a replacement for insurance.

Negotiating contract language can be particularly challenging with large clients who often have their lawyers provide contracts that fully indemnify the client against any incidents related to guards’ duties. However, my stance is that it is worth asking for revisions. At the least, security firms can seek to be held harmless (indemnified) against damages from incidents resulting from the client’s negligence. 

Some security firms choose to sign contracts with broad language because they want to win a big contract that can help their business expand. For others, assuming the risk may not be worth it. No matter what, I often recommend security firms work with a lawyer to create a standard contract with language and terms that adequately protect them.

Risk management is exactly that — management, not elimination, of risk. Over the past decade, the security industry has experienced a slew of large settlements against security firms. It is not just the risk of a claim, but the size of potential claims, that we should be taking into consideration. A phenomenon known as “social inflation” has been driving up the cost of claims as juries award larger and larger settlements. We cannot control these broad social and legal trends, but we can manage business-level risks.

The security industry stepped up to protect people and businesses during the pandemic and political unrest of 2020. That quick response is a testament to the strength of the industry, but it can create situations where security firms become responsible for risks they did not foresee. That’s why contracts and insurance are there — to protect you so you can focus on your mission.

Tory Brownyard, CPCU, is President of Brownyard Group (, an insurance program administrator with specialty programs for select industry groups. In addition to his responsibilities as President, he currently spearheads the Brownguard security guard insurance program. Tory is a highly regarded subject matter expert in the field of Security Insurance and has contributed to industry publications such as Security Magazine and has been featured regularly in leading insurance publications. He can be contacted at


Shaun Kelly, Tolman & Wiker, CALSAGA Preferred Broker

As you may recall, Governor Newsom signed an executive order on May 6, 2020  creating a temporary, rebuttable presumption that COVID-19 is work-related (industrial) for employees who meet the specific conditions below:


  • This Executive Order provides that COVID-19 cases for some employees will be presumed to be work-related (industrial) if certain conditions are met. This makes it easier for qualified employees to obtain workers’ compensation benefits because it shifts the burden onto the employer to prove that injury was not Fundamentally, if an employee worked on/after March 19, 2020 at the work location and direction of the employer and tested positive or was diagnosed by a medical doctor, the presumption will apply.


  • If the claim form (DWC-1) was filed on/after May 6, 2020, the employer has 30 days to investigate in order to try to challenge the presumption and deny the claim. Otherwise, the claim is presumed compensable. With that said, this presumption is temporary as well as rebuttable.  It only applies as long as the State of Emergency due to COVID-19 exists.  Right now, it is set to end 60 days from May 6, 2020 (about July 4, 2020).


  • Claims (DWC-1) filed after May 6, 2020 which show date(s) of employee’s COVID-19 diagnosis between March 19, 2020 and July 4, 2020 have a REDUCED investigation period of just 30 days, instead of the usual 90 days. The 30 days starts with the employee’s filing of the claim form (DWC-1). If a claim form for COVID-19 was filed before May 6, 2020, those claims are likely subject to the 90-day investigation period.

It is important to know that this presumption will cover claims of a COVID-19 diagnosis for employees working through July 4, 2020. Thereafter, the State Legislature and/or the Governor would have to pass a bill and/or extend the Executive Order to continue this rebuttable presumption after that date. 


It is past the July 5, 2020, what now?

Although the presumption expired on July 5, 2020, California Legislature is currently addressing three bills that could potentially extend the order. SB1159 aims to backdate the bill to cover claims filed after July 5 for an employee.  We will continue to monitor legislative updates. In the interim, new COVID-19 claims will again be addressed under previous workers’ compensation rules.

  • There is no automatic presumption for COVID-19 claims
  • We go back to a 90-day investigation period
  • Workers’ Compensation benefits will be provided according the Pre – Executive Order rules and regulations

Please note that all COVID-19 related claims are still exempt from the experience modification.  We will keep you posted on any updates.

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


Josh Ring, El Dorado Insurance Agency, Inc.

The current economic situation has given rise to an increased number of security companies entertaining contracts that they would normally look to avoid.  The continued lack of new work, reduced hours at current job sites and slow-paying customers are forcing security company owners to explore additional sources of revenue in order to keep their companies afloat.  While I’m certainly not going to suggest that any firm allows themselves to go “belly up”, there are factors that need to be weighed when taking on additional (and potentially riskier) contracts.

First and foremost, make certain to verify that your insurance policy does not specifically exclude coverage for the type of work being entertained.  Most insurance policies for security companies have exclusions that deny the company coverage in occasions where certain work is being performed.  For instance, the most prevalent exclusion on policies is for “Bars, Nightclubs, Taverns & Similar Establishments”.  It is my experience that most company owners are aware of this exclusion and will look to avoid these contracts if the exclusion is found on their policy.  However, there may be additional exclusions that you should be aware of before entering into a work agreement.  If you are unsure, my advice in this situation is to speak with your insurance professional with regards to the coverage on your policy.  They will be well versed in the exclusions and should be able to advise if the contract you are entertaining would be covered in the event of a claim.

The second, and less obvious factor that should be considered is your overall client portfolio.  With respects to an insurance carrier, certain operations performed by a security contractor are considered riskier than others.  These operations may not be explicitly excluded by your policy but could have a negative impact on your underwriting at the time of renewal.  This negative impact could come in the form of increased premiums or non-renewal on the part of the carrier.  Additionally, and equally as important could be the deterioration of your loss ratio.  With riskier operations certainly comes the increased exposure to claims.  As we all know, when claims start to occur an insurance carrier will take a very hard look at the policyholder at the time of renewal to determine their profitability and pricing strategy for the coming year.  Again, I stress that engaging your insurance broker in this situation is extremely important and beneficial in both the short & long term.  Your broker will be able to offer insight as to what contracts might be best to avoid if possible so that your company maintains a “clean” profile as viewed by an insurance carrier.


At the end of the day, neither your insurance broker nor your carrier is on the frontlines working to keep their security company in business.  It is up to each individual company owner to decide what risks they are willing to take and accept the potential consequences of those choices.  However, by enlisting the expertise of your insurance professional, you will be able to make the most informed decision possible.

Josh Ring, CIC is the President of El Dorado Insurance Agency, Inc., a family-owned business specializing in custom insurance programs for the Security Industry since 1968.  Josh oversees the agency and its customers, along with coordinating the development of new insurance products and programs.  Josh graduated from The University of Texas McCombs School of Business with academic honors. He also holds a Certified Insurance Counselor (CIC) designation.  Josh lives in Katy, Texas with his wife and two children.  In his spare time, Josh loves to run, travel, and spend time with his family.


Tory Brownyard, Brownyard Group

Over the last decade the security industry has enjoyed what we in the insurance business call a “soft market.” That means underwriting guidelines loosen, making it easy to obtain coverage, and premiums decrease for many accounts. In fact, some security firms have been seeing lower insurance rates today than they had 15 years ago.

However, a rash of large legal settlements is resulting in the hardening of the security insurance market. That is, insurers are losing their appetite for some risk. This means they are instituting stricter underwriting guidelines for security firms, increasing rates and (perhaps) limiting coverage offered, especially to those with a history of severe or frequent claims. Firms with a troubled risk profile are likely to see substantial rate increases.

Large Settlements

Among the large legal settlements involving security professionals in the last 10 years are several in California. In a case dating from 2006 involving a teenager who was disabled following a shooting in a Fontana public housing complex, the security firm patrolling the area was held partially liable for a $55 million settlement. The settlement was made in 2013 — meaning the case was in costly litigation for years.

In 2010, an immigrant house painter was brutally beaten by a security guard in a Los Angeles bar and left with brain damage. Three years later, the security firm was held directly liable for negligent hiring and training of an untrained, unlicensed guard, and a jury awarded the victim $58 million for pain, suffering and medical expenses.

While these cases are infrequent and do not follow a distinct pattern in terms of setting or victims, they are having wide-ranging consequences for the security industry and the role of security officers, as well as for the security insurance market. Security firms are being implicated more often in very costly suits. While frequency of claims for security firms is generally not an issue, the increase in the severity of the claims being brought against firms is a cause of concern for insurers. Plus, the increased severity that we’ve witnessed over the last decade not only affects the security firms involved in claims, but the industry as a whole.

The increase in frequency of active shooter incidents is also having an impact on the risk profile of security firms. Since 1982, California has had the highest number of active shooter incidents of any state, including the most in 2018. Security officers, which are often the first line of defense in these incidents, can be the target of claims that allege they failed to prevent the tragedy.

Improving Risk Profiles

While individual security firms may have little control over these industry-wide trends, they can improve their own risk profile and limit their liability in the event of an incident, thus helping them minimize rate increases and preventing denial of coverage by a trusted insurance partner.

As I discussed in an article in The Californian last year, there are specific steps security firms can take to reduce their exposure:

  • Limit liability with carefully worded contracts. Some security services contracts may transfer a great deal of liability to a security firm, and that can be a problem when there is a claim. Instead, look for language that will limit liability to the security firm’s own negligence and not assume liability for a client’s negligence.
  • Make sure contracts clearly state the duties and responsibilities of the security officers. This can help limit liability when sorting out the details after an incident.
  • Make hiring and training a priority. Ensure security officers have an appropriate background for their posts. For example, insurers want officers with law enforcement experience at armed posts. In addition, make sure officers are trained for the specific settings in which they work. Underwriters like to see this type of situational training.
  • Consider the different risks of different industries. When evaluating potential risk, underwriters look carefully at whether the industry is high-risk. These are posts that have a great deal of exposure to the public, large crowds or criminal activity, as well as active shooter risk.

These are just some of the issues to consider when discussing your insurance policy with your insurance broker. With changes in today’s insurance market, security firms will be well served by proactive risk management and loss control — efforts that may help secure insurance and limit premium increases.


Tory Brownyard, CPCU, is president of Brownyard Group (, an insurance program administrator with specialty programs for select industry groups. In addition to his responsibilities as President, he currently spearheads the Brownguard security guard insurance program. Tory is a highly-regarded subject matter expert in the field of Security insurance and has contributed to industry publications such as Security Magazine and has been featured regularly in leading insurance publications. He can be contacted at


Shaun Kelly, Tolman & Wiker, CALSAGA Preferred Broker

Personally, I want to say, “Thank you”, to the CALSAGA Team for putting on another wonderful conference! It is always great to see everyone and meet the new Members and guests. The Security Industry is continuing to change and CALSAGA does an excellent job keeping the Members updated on those changes that affect our businesses.

Did you know that workplace violence is the second leading cause of workplace fatalities?  With incidents increasing within the last three years, it has sadly become a sign of the times. Do you and your clients know that Active Shooter and Violent Act Insurance Coverage is available to assist in mitigating potential revenue loss and liability?

As the threat of violence emerges, business owners are reviewing their general liability insurance policies and finding that bodily injury or property damage caused by an active shooter may or may not be covered.

Standard coverage may not apply to the crisis management as a result of the event. Personal attacks against customers or other third parties may not be covered by general liability insurance. Additionally, if law enforcement determines your business should remain closed after an incident, your policy may not cover loss of business income.

This policy includes coverage for Business Interruption, Third Party Bodily Injury Liability, Property Damage and Incident Response Expenses.  While most people feel that GL covers some of this exposure, be aware of the following:

  • Intent Current General Liability (GL) applications do not ask questions regarding this exposure and therefore are not underwriting for it.  The original intent of GL does not include coverage for this type of exposure.
  • Foreseeability GL can exclude/deny coverage for events the Insured reasonably could have foreseen.  This can include losses where employees have a history of violent behavior and no action was taken to prevent an event, or security measures that could have been taken that were not, etc.
  • Crisis Response GL will only respond if there is a lawsuit filed and NOT offer proactive crisis management services.  The Workplace Violent Act policy offers Incident Response Expenses (IREs) that include crisis response and extra expense as well as assistance and guidance during a crisis event to help mitigate and/or prevent demands and lawsuits after the crisis.
  • TerrorismWhile GL policies offer TRIA to be purchased, there is still no coverage for uncertified violent act or terror events.

Policy definitions and coverage triggers:

Incident means Workplace Violent Act Event, Workplace Violent Act Threat Event, Workplace Violent Act Against

Offsite Employee Event or Stalking Event. Multiple Incidents involving the same Violent Actor(s) will be considered one Incident. In order for Workplace Violent Threat Event(s) or Stalking Event(s) to be considered for coverage, they must be reported to the appropriate government authorities as soon as practicable.

Workplace Violent Act Event means the use of a Deadly Weapon to cause Bodily Injury at a Covered Location.

Deadly Weapon means any firearm, vehicle or other device, instrument, material, or substance that, from the manner in which it is used or is intended to be used, is calculated to or likely to produce death or physical injury.

Active Shooter and Violent Act Insurance coverage may be something that you or your clients may be interested in reviewing. Specifically, if they are a school, religious establishment, airport, hospital, shopping center……anywhere. Click here to view information on the coverage. An application is included, if you would like to obtain a quote.

Please let us know if you have any questions or if we can be of assistance.

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

Continue reading the 2019 Q4 edition of The Californian


Nick Langer, Turner Surety & Insurance Brokerage, Inc.

While workers compensation rates continue to decrease, one thing remains the same; final audits at the end of your policy term can be arduous. Fortunately, they do not have to be. Navigating and fully understanding the workers compensation system in California is difficult and most businesses do not have the time or resources to invest in having an in-house expert. With tight margins and ever-increasing competition, Private Patrol Operators simply cannot afford to be misinformed.

The first step in preparing for your final audit starts with having a better understanding of the law, your obligations as a California employer and rules set forth by the Workers Compensation Insurance Rating Bureau (WCIRB). Included below are 5 facts about workers compensation that every California employer should know.

Workers Compensation – The Facts:

  • Under California Labor Code Section 3700, all employers with one or more employee must provide workers’ compensation benefits to their employees.
  • California Corporate Officers & Managing Members of an LLC can be excluded if they own at least ten percent (10%) of the issued and outstanding stock.
  • Worker’s Compensation premiums are based upon “annual remuneration” of all employees. Annual remuneration is not exclusive to payroll. Annual remuneration includes:

Gross wages                     Salaries                                  Commissions

All bonuses                                  Most profit sharing   Vacation pay

Holiday & sick pay                     Automobile allowances                   

Overtime (“straight time” portion only)

  • The Workers Compensation Insurance Rating Bureau develops and maintains the Standard Classification System. (Class Codes)
  • The workers’ compensation experience rating system is a merit rating system intended to provide employers a direct financial incentive to reduce work-related accidents. The California Workers’ Compensation Rating Insurance Bureau (WCIRB) calculates an Experience Modification Rate (EMR) for every qualifying employer.
    • High EMR’s (over a 1.00) will increase your workers’ compensation premiums
    • Low EMR’s (below a 1.00) will decrease your worker’s compensation premiums


Preparing For Your Final Audit

Workers’ Compensation policies are written with premiums based upon your company’s payroll (remuneration) estimate at the beginning of each policy period. At the end of the policy period, your insurer will audit your payroll records to obtain your actual payroll numbers. This procedure is required for 2 reasons:

  1. To compare your actual payroll with your estimated payroll. Your premium is then adjusted accordingly.
  2. To submit your actual payroll data along with your actual losses during the policy term to the WCIRB. This allows the rating bureau to then calculate your experience modification rate (EMR).

Your insurer has the right to audit payroll records at any time. Failure to comply with an insurance company’s audit can lead to the cancellation or non-renewal of your policy, and insurers can use all legal means at their disposal to collect outstanding premiums.  In addition, the WCIRB can promulgate (calculate) your experience modification rate using reported loss data and excluding unaudited payroll, resulting in an increased experience modification rate. It is important to be aware that the deliberate under-reporting of payroll or misclassification of payroll is considered insurance fraud and can be prosecuted to the fullest extent of the law.

Here is the type of information you may be asked to provide:

  • Accounting ledger.
  • Tax forms – Specifically, Form 941 and 944, Employers Federal Tax Return, and State Payroll Tax records (EDD – DE9/DE9).
  • Records of cash disbursements.
  • Payments for services provided by independent contractors. The auditor needs to verify that these workers are not your employees.
  • Payments for services provided by subcontractors.
  • Certificates of insurance for each subcontractor you hired
  • W-2 and 1099 forms.
  • Job description for each worker. Make sure the description accurately describes the workers’ duties.
  • Description of your business operations.
  • Payroll records by classification and access to your payroll system, employee time cards and all electronic time keeping systems for the term of the policy. The auditor needs to verify all sources of remuneration provided to each worker (salary, bonuses, etc.).
  • Certificates of insurance for every OCIP or CCIP you were enrolled in during your policy term.

Understanding what is expected of you will help to expedite the process and minimize confusion at the time of your final audit. Coordinating with your Insurance Broker and CPA prior to your final audit can help to eliminate costly mistakes.

Nick Langer is a Senior Risk Advisor at TSIB with more than 15 years of property & casualty broker experience. He specializes in the Construction, Energy and Security Industries. Nick enjoys the challenge of finding solutions to his client’s unique needs and is committed to learning the intricacies of each client’s business operations.

Prior to joining TSIB Nick had his own insurance agency that specialized in both personal and commercial lines of insurance. After 7 successful years of growing his property and casualty agency he joined Tolman & Wiker Insurance Services, LLC.

Nick regularly presents at trade associations on risk management topics including: Workers’ Compensation, Claims Management, Risk Management, Contractual Risk Transfer and Employment Practices Liability.

Nick is committed to improving the lives and success of his clients for the benefit of the community through his various roles and leadership positions. He has served as the Insurance Advisor to the Board of Directors of The California Association of Licensed Security Agencies, Guards and Associates (CALSAGA). He is President of The Bakersfield Young Professionals in Energy (YPE), a member of the Associated Builders & Contractors (ABC), and the former Government Affairs Committee Chair for the Central California chapter. Nick is a member of the Associated General Contractors (AGC) and the American Society of Safety Engineers (ASSE).

Nick has Bachelor of Science in Business Economics from University of California, Santa Barbara. Nick and his wife have three children and three rescue dogs. In his spare time, Nick is an avid fisherman and enjoys golfing, hiking and fitness training.


Kwantek Team


In the Security Industry, it’s common to hire employees that would qualify for Work Opportunity Tax Credits (WOTC). If your company has significant annual hiring volume, using these credits can help deduct tens of thousands of dollars from taxable income.

WOTC is a Federal Tax Credit available to most employers who hire and retain veterans and individuals from other groups with barriers to employment. Employers are eligible to reduce their federal income tax liability by an average of $1,000 per employee, with a credit potential up to $9,600 for some employees.

Who is Eligible for WOTC?

WOTC is available for employers that hire veterans and individuals from other groups with barriers to employment. This includes:

  • Veterans – unemployed and other qualified
  • Temporary Assistance for Needy Families (TANF) Recipients
  • SNAP (food stamps) Recipients
  • Ex-Felons
  • Supplemental Security Income Recipients

This represents a massive opportunity for contract security companies to reduce their taxable income by thousands – and even hundreds of thousands of dollars. Let’s take a look at an example of a Kwantek client:

  • 665 New Hires were WOTC Eligible
  • 309 Received WOTC Certifications
  • $904.22 average Tax Credit earned per certified employee
  • $279,404.09 real Tax Credit to Employer

If you’re hiring veterans, ex-felons, or low-income employees, you could stand to deduct thousands of dollars each year from your taxes!

Click here to download a full report detailing everything you need to know about WOTC.


Tory Brownyard, Brownyard Group

Whether we’re insuring a family mini-van or an oil company operating in a hostile environment, insurance underwriters carefully evaluate the risks and exposures facing a particular person or company. In commercial underwriting, we consider a company’s loss experience, risk management practices and other factors in determining whether or not we can accept the risk and what kind of coverage it requires.

For the security industry, there are several questions we ask ourselves about a company and its application. Here, I review some of these questions and try to shine a light on insurance coverage for security firms based on my experience as an insurance underwriter for security risks.

What industries does the firm work with?

Many security firms specialize in serving one industry or environment, whether that’s government contracts, retail stores or large events. An application for insurance will often ask detailed questions on this topic.

This helps underwriters determine if a firm is a “low-profile” or “high-profile” risk. A high-profile security risk assigns officers to posts that have a great deal of exposure to the public, large crowds or criminal activity. Unfortunately, there is another factor we must take into consideration when looking at industries served by a firm: active shooter risk. Some environments have been susceptible to active shooter incidents, such as hospitals and churches.

Low-profile risks, like those serving industrial warehouses, government contracts and office buildings, tend to go through the underwriting process quickly. Other factors determine how the account may be priced.

Is the work armed or unarmed?

The debate over staffing armed guards in schools has been playing out in the media over the past several years. As you well know, the question of providing armed guards to a particular post requires a complicated answer. That is why this is an important question to many underwriters. In my work, I consider whether or not a particular environment could necessitate an armed officer. For example, some government contracts may require and warrant staffing armed security officers.

We will also consider the person behind the firearm. From an underwriting perspective, an ideal armed security officer has been properly screened, carries the appropriate licenses and has extensive firearms training. For that reason, we often consider former or off-duty law enforcement professionals to be qualified armed security professionals. They are more likely to have extensive training and experience handling firearms.

Who does the firm hire and how are they trained?

Rules about hiring and training security officers vary from state to state. Of course, an insurance underwriter will expect firms applying for coverage to follow state rules and regulations. We also expect firms to subject potential hires to the usual criminal background check and to ensure they are permitted to carry a firearm, if applicable. However, we may also consider whether or not the company tends to hire officers with a background appropriate for their posts. As mentioned above, from an underwriting perspective, people with law enforcement experience seem like the safest bet for armed posts.

We also take pay scale into account. Are most of the guards earning around minimum wage? Are they towards the top of the industry pay scale? The answers to these questions can tell underwriters a story about the experience level of the firm’s workforce. Though some officers will be entry-level, we would like to see these early-career employees balanced with experienced, trained professionals.

Underwriters may also ask about and consider the type of training provided to security officers. We will consider if it prepares them for the settings in which they work. An officer posted to a hospital emergency room may be served by training that can help them deescalate fights in that sort of environment. In general, underwriters like to see situational training to hone skills needed for different environments.

Lately, we have also been reviewing active shooter trainings. A well-planned active shooter training program and response protocol can help a security company minimize liability in the event of an active shooter claim.

What is the “loss experience” of the risk?

When we talk about a firm’s “loss experience,” we are talking about the number of claims a security firm has incurred in recent years and the nature of those claims. Overall, the security industry has an infrequent but severe loss experience; that is, security firms are not often involved in incidents or litigation that cause an insurance claim, but when they are, those claims involve large settlements or expenses.

Every firm will have a large claim from time to time, but low-profile firms have low claims frequency. A firm with three or more losses a year may have a problem with its screening and training practices. This is particularly true if those losses result from actions like a security officer assaulting someone. When such patterns emerge, an insurer is more likely to decline to write an account.

What do their contracts look like?

Insurance underwriters are not lawyers, so we cannot provide advice on the finer details of contract law. However, contracts transfer a great deal of liability, so we do often discuss the implications of certain types of contract language with our insureds and potential clients. Some security services contracts will transfer all liability to the security firm—which puts the firm in a difficult position. We prefer language that will limit the insured’s liability to their own negligence and not assume liability for their client’s negligence. It is also important that the contract clearly states the duties and responsibilities of the security officers.

Underwriting guidelines differ from insurer to insurer, as every insurer has a slightly different risk appetite. In general, admitted insurers have less risk appetite, while insurers on the non-admitted market—whose customers are not subject to the protection of state regulations—are able to accept riskier accounts.

If you have further questions about how your insurance policy is underwritten and priced, your insurance broker is a great resource.

Tory Brownyard, CPCU, is president of Brownyard Group (, an insurance program administrator with specialty programs for select industry groups. In addition to his responsibilities as President, he currently spearheads the Brownguard security guard insurance program. Tory is a highly-regarded subject matter expert in the field of Security insurance and has contributed to industry publications such as Security Magazine and has been featured regularly in leading insurance publications. He can be contacted



Shaun Kelly, Tolman & Wiker, CALSAGA Preferred Broker

It’s that time of the year….not post tax season… Heat Illness Prevention season!

With the change in seasons comes the warmer weather and it is imperative (And required by Cal/OSHA) that all employers train their supervisors and employees on heat illness prevention. The safety of your employees is the responsibility of the employer and if an unfortunate event does occur, Cal/OSHA may  be investigating the event. If so, they will be asking if you have your Heat Illness Prevention Program in place. The investigation will include verification that you have provided training to your supervisors and employees.

A Cal/OSHA study identified the key role that employers play in preventing worker fatalities due to heat illness. The findings highlighted the value of training supervisors so that they can make the fullest use of their power to control safety on the job.

California Code of Regulations, Title 8, Section 3395 Heat Illness Prevention requires all employers to have a Heat Illness Prevention Program which includes the following:

Provide fresh/potable drinking water

Employers must provide employees with fresh, pure, and suitably cool water, free of charge. Enough water must be provided for each employee to drink at least one quart, or four 8-ounce glasses, per hour and the water must be located as close as practicable to the work area. Employers are also required to encourage employees to drink water frequently

Provide access to shade

When temperatures exceed 80 degrees, employees must be provided shade at all times in an area that is ventilated, cooled, or open to air and that is as close as practicable to the work area. There must be sufficient space provided in the shade to accommodate all employees taking rest. When temperatures do not exceed 80 degrees, employees must be provided timely access to shade upon request. Employees should be allowed and encouraged to take preventative cool-down rest as needed, for at least 5 minutes per rest needed.

Have high heat procedures in place

High heat procedures are required of agricultural employers when temperatures exceed 95 degrees. The procedures must provide for the maintenance of effective communication with supervisors at all times, observance of employees for symptoms of heat illness, procedures for calling for emergency medical services, reminders for employees to drink water, pre-shift meetings to review heat procedures and the encouragement of employees to drink plenty of water and take preventative cool-down rest as needed.

Agricultural employers must additionally ensure employees take, at a minimum, one 10-minute preventative cool-down rest period every two hours in periods of high heat.

Allow for acclimatization

New employees or those newly assigned to a high heat area must be closely observed for the first 14 days of their assignment. All employees must be observed for signs of heat illness during heat waves. A “heat wave” is any day where the temperature predicted is at least 80 degrees and 10 degrees higher than the average high daily temperature the preceding 5 days.

Train all employees regarding heat illness prevention

Employees must be trained regarding the risk factors of heat illness and the employers’ procedures and obligations for complying with the Cal/OSHA requirements for heat illness prevention. Supervisors must additionally be trained regarding their obligations under the heat illness prevention plan and how to monitor weather reports and how to respond to heat warnings.

Have emergency response procedures

Employers must have sufficient emergency response procedures to ensure employees exhibiting signs of heat illness are monitored and emergency medical services are called if necessary.

Have a Heat Illness Prevention Plan

Employers must have a written heat illness prevention plan that includes, at a minimum, the procedures for access to shade and water, high heat procedures, emergency response procedures, and acclimatization methods and procedures.

For your reference, linked is a sample of a Heat Illness Prevention Plan.

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