"Failure to Perform" – Security Companies Taking a Huge Risk Without This Coverage

Over the past twenty years, the investigation and security services field has seen considerable expansion due to a rapid rise in business and technology.

A number of jobs that used to be handled by police forces are now performed by private firms. A large share of security activities in North America now falls to non-governmental agencies. In major metropolitan cities, business improvement associations are hiring private security firms to patrol the downtown streets. Private consulting firms regularly conduct investigations of suspect financial operations and in urban areas, private companies are hired to protect large industrial complexes. As businesses reassess their security plans and new are technologies being introduced at lightning speed, the private security sector has become a multibillion dollar industry and is only getting bigger.

Yet are these companies that are in the business of protecting their clients, protected themselves? A very crucial coverage called “Failure to Perform” is lacking in many insurance policies that are specific for this sector.

Let’s look at a simple example of a security company hired to protect a retail outlet. For those who followed the Jerry Seinfeld show, one episode had George supply a security guard with a chair so he did not have to stand all day. Ultimately this proved costly as the guard fell asleep during a robbery. It may have been all laughs on the show but in reality a situation like this would cost the Security company their contract in addition to a potential lawsuit for the failure of service resulting in thousands of dollars that was taken during the crime. If this claim was presented to the insurance company, the claim would be denied leaving the security company on hook for the entire loss.

An example of “failure to perform” coverage is listed below from an insurer that specializes in this area of coverage.

We will pay those losses resulting from the failure of THE NAMED INSURED’S PRODUCTS or THE NAMED INSURED’S WORK performed by or on behalf of the Insured to meet the level of performance, quality, fitness, or durability warranted or represented by the Insured and including loss of use of tangible property of others provided that such accident or occurrence happens or commences during the policy period, subject to the limits of liability, exclusions, conditions and other terms contained herein.

The first sentence is the key as it clearly indicates the policy will cover losses from the failure of the insured’s WORK. The example above would have been covered if the insurance policy had this special clause embedded in the policy wording. Other examples that would fall into the category of Failure to perform are

  1. A sprinkler contractor accidentally discharging the system while performing maintenance
  2. A security camera installer cutting a major electrical artery
  3. A locksmith cutting a Master key for a specific industry that has strict protocols

Many standard insurance policies that are issued to the Protection Services industry are lacking this coverage. It is imperative that brokers and business owners seek out this coverage in the policy. A few minutes can save thousands of dollars. If it is not offered, ask the insurer if the coverage can be added on as an endorsement, otherwise seek out a policy that can offer this protection. There are insurance companies that specialize in this class of business and can offer this coverage at premiums comparable to or less than regular CGL policies.

Tips to Finding the Top Security Companies to Protect Your Home or Office

Choosing a security company can be a daunting experience. You want to choose a high quality company with years of knowledge and security to ensure your assets are protected in the event that someone tries to break in. At the same time, you don’t want to break the bank, but it is important to take the following recommendations into consideration to ensure you choose the best security companies to meet your particular requirements.

The first step to finding a security company is to shop around. You want to find a selection of companies offering security services in your local area. This provides you with the ability to review each company, learn as much as you can about them and then compare them against each other to find the perfect match to meet your particular home or office needs.

The next step is to get written quotes. When it comes to a security company you may have a list of things you want taken care of. This may be everything from the supply and installation of alarm systems to providing you with a security guard. You may even want to include armed response. Whatever you are looking for, get it in writing to ensure that you have the quote in black and white, making it easier when you sit down to compare the companies.

Ensure the quotes you receive provides you with a price, the services and products included and anything else you requested. This may be the duration of the contract along with any fees for early cancellation. Having quotes is a great way to find out more about what you can have to protect your home.

With the quotes in front of you, you can now start comparing the companies by going through the written quotes and identifying those that offer you more for your money. Be wary of companies that charge too much or seem to quote way below the others, the quotes should be similar in price. Going through these together can help you eliminate some from the list. You may feel one is a little too high for your budget, but the others fall into line.

Once you narrow down your search, do your research. Go online and search through the independent review sites and online forums, learning as much as you can about each of the security companies you have received quotes from. You will be amazed, but this particular process can help you narrow down your search considerably.

Check with the company that they screen and check all their employees that work for them. It’s easier to pick up the phone and speak to a real person on the other end of the line, rather than relying on the internet alone. You want all the security personnel to be vetted and checked, putting your own mind at ease that you have made the right decision.

Once you are completely satisfied with your choice then ask for a contract. Read the contract with a fine tooth comb. Go through every line and ensure you are happy with the contents and that you understand the contract before putting pen to paper.

If the security company you have chosen is supplying any of the products, then you will want to ensure that they provide you with a good warranty, protecting you against defects and installation.

In addition to this, ensure the company is licensed. The main priority is to ensure that they have the right licenses in place to supply and install the products for you keeping your property safe and secure at all times.