As a security guard company in California, winning contracts is key to growth. But before you submit a bid—especially for specialized or high-risk jobs—it’s crucial to understand how each contract could impact your insurance coverage. Overlooking these details could put your entire operation at risk, including your BSIS license, financial stability, and future insurability.
1. Not All Contracts Are Equal in the Eyes of Insurance
Many business owners assume that once they have a general liability (GL) or workers’ compensation policy, they’re covered for all security operations. That’s not the case. Insurance policies often have exclusions or limitations based on the type of work, location, and risk involved.
Example: Crowd Control at a Concert or Festival
Let’s say you’re bidding on a crowd control security contract for a large music event. This kind of operation may involve:
- Dense crowds
- Alcohol consumption
- Potential physical altercations
- Emergency response protocols
Your standard general liability or workers’ comp policy may not cover crowd control or event security without specific endorsements. Some policies exclude coverage for work involving public gatherings, entertainment venues, or firearm use.
What to do:
Before bidding, inform your insurance agent about the scope of work:
“We’re bidding on a temporary crowd control assignment at a weekend music festival with an expected attendance of 15,000. Will our current insurance cover this?”
If your policy doesn’t already include that exposure, your carrier may:
- Deny coverage for incidents
- Charge additional premiums
- Require safety plans or additional training
- Decline to renew your policy later
2. Additional Insured and Contractual Requirements
Many contracts—especially from large clients or municipalities—require you to add them as Additional Insured on your GL policy. Some even request Primary and Non-Contributory wording or specific waivers of subrogation.
These endorsements often cost extra and must be approved by your carrier. If you’re unaware until after winning the bid, you may end up eating the cost or defaulting on contract terms.
3. Contract Scope and Territory Matter
Insurance policies are rated and priced based on:
- Number of guards
- Hours worked
- Types of duties performed (armed, unarmed, patrol, stationary)
- Geography (on-site vs mobile patrol, indoors vs public streets)
If you typically secure retail parking lots in Los Angeles, and suddenly bid on a VIP executive protection job in San Diego, you need to alert your carrier. These changes could alter your risk profile and may void coverage if not disclosed.
4. Workers’ Compensation Concerns
Each security guard you place on a job must be covered by your workers’ compensation policy. If you’re hiring temporary guards or subcontractors to meet a big contract, be aware that:
- Subcontractors may require separate certificates of insurance
- Temporary workers must be reported accurately to your insurer
- Misclassifications or underreporting payroll could lead to hefty audits or penalties
5. What If You Skip These Steps?
Failure to notify your carrier or adjust your insurance properly could lead to:
- Denied claims (even if you’re sued)
- Contract termination by the client
- Legal liability for damages or injuries
- Fines or suspension of your BSIS PPO license for being uninsured
Key Takeaways for Security Companies Bidding in California:
✅ Review the scope of every contract before bidding
✅ Talk to your insurance agent or broker early
✅ Update your policy with accurate job types and exposure
✅ Ensure you can meet all certificate and endorsement requirements
✅ Maintain good communication with your insurer—don’t surprise them
Final Thoughts
Winning the contract is only half the battle. Being properly insured for the job protects your company, your guards, and your long-term reputation. In California’s heavily regulated security industry, one uninsured claim can undo years of hard work.
Pro Tip: Before bidding on any new job, especially in sectors like events, schools, hospitals, or government buildings—run it by your insurance agent first. A 10-minute call could save you thousands. Contact our experienced agent to learn more about how the right insurance can give you peace of mind at (855) 888-8008.
