When it comes to effective insurance coverage, Security Services is a bit of a niche industry. According to Colleen Bliss, underwriter with South Western Insurance Group Limited, “The key to Security Services is knowledgeable underwriters who understand the product and what insureds do – because that is not always the case for the majority of brokers who come to us.”
With end-users in both the commercial and residential markets, businesses involved in Security Services typically include:
- Security Guards,
- Private Investigators,
- Alarm and CCTV Installers,
- Alarm and CCTV Monitoring Stations,
- Sprinkler Installers, and
- Providers of Fire Extinguishers and CO2 Systems
While a certain level of industry coverage for incidents like lost keys is standard, there is a more specialized element known as Failure-to-Perform.
“Failure to Perform” is what happens when a provided service or system fails to perform as it was originally intended. It can involve anything from human error, to a burglar alarm or window sensor malfunction. It can also, as Bliss explains, “pull us into a claim, years from now, for work that was done today.”
Brokers coming to South Western Insurance Group Limited should expect to be asked whether their security-based client does any consulting. If so, Bliss describes why it is important to distinguish between those who consult on a stand-alone basis, and those who provide consulting as part of their overall service.
“In the first instance, if an alarm system fails to perform, that may not fall under the insured’s coverage with us because the installation was performed by an outside contractor. In cases where the insured is acting strictly as a consultant, they need to have Errors and Omissions (E&O) coverage in place – in addition to Failure-to-Perform – because they do not perform any of the tangible, hands-on work themselves.”
Whether consultant or installer, the best way to ensure adequate defence in the event of a claim is to encourage your client to do their due diligence.
“Handshake deals are a thing of the past,” Bliss affirms. “We cannot suggest strenuously enough how important it is for clients to have precise work contracts in place. Schematics and other documented paperwork is essential in the event that a claim gets initiated. So if your client suggests putting an alarm somewhere – and that recommendation is declined – there needs to be something in writing to that effect.”
South Western Group Insurance Limited has been underwriting Security Services since 1998, and was one of the very first companies to do so. Underwriters attend conventions and symposiums to keep themselves informed on what is happening and changing in the industry.
“We take steps to educate ourselves on what our clients do, and what they need,” says Bliss, who has been involved with Security Services since 2013. As a result, the company is able to educate their brokers on the actual services insureds provide.
“We help them to understand that it is about far more than drilling a hole in the wall, feeding some wire through, and setting up a sensor or two. And that allows them to go back to their clients and look at things from the perspective of what could potentially go wrong.”