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Many variables come into play when choosing your security solution. Apart from cost, factors such as the location of the firm, references, or minimal contracting period can all influence your decision. If you want your HOA to have the most insurance options, it is best to contract with a Security/Patrol Company that has been in business for over 5 years and one that does not use armed guards with arrest authority. First, we must address what it means to be armed. Most Insurance companies consider the following items as armed: firearms, mace, tasers, nightsticks, handcuffs and guard dogs. If the Security/Patrol Company that your HOA contracts with is armed with any of the aforementioned tools, the HOA will have fewer options when it comes time to shop for General Liability Insurance. Most Insurance Companies for HOAs will not entertain an association that uses armed guards. If you have fewer options, you will likely not get the most competitive premium.
So, what do you do if your HOA is adamant about contracting with a Security/Patrol firm using “Armed” Guards?
You can still qualify for General Liability Insurance with an Insurance Company that is admitted (licensed to conduct Insurance in the State of CA), but there are some important steps you need to take before signing a contract. Besides having your legal counsel review the contract, it is imperative that the contract have proper hold harmless wording that is favorable to the HOA. First and foremost, the HOA should be held harmless for the actions of security personnel. Furthermore, there should be an insurance requirement section in the contract that spells out the type of Insurance the Security Company needs to maintain. Check with your legal counsel, but we recommend the following in the contract:
- The contract with the Armed Security Company must stipulate that the Security Company agrees to indemnity, defend and hold the Association harmless from any and all claims and lawsuits, including the payment of all damages, expenses, cost and attorneys’ fees, whether these claims are based upon active or passive negligence, or strict or product liability on the part of the Company, its agents, servants or employees.
- In addition to requiring proof of Worker’s Compensation Insurance, the Insurance section of the contract needs to stipulate that the Contractor (Security Company) shall carry Comprehensive General Liability Insurance coverage for bodily injury liability and property damage liability with a limit of at least $5,000,000 each occurrence/ $5,000,000 aggregate. The HOA shall be named as additional insured under Comprehensive General Liability Insurance policy and the insurance afforded shall apply as primary insurance. That any other insurance carried by the HOA, its officers, directors, employees, and members will be excess only and will be non-contributory with Security Company’s insurance.
“Legal Disclaimer. Views expressed here do not constitute legal advice. The information contained herein is for general guidance of matter only and not for the purpose of providing legal advice. Discussion of insurance policy language is descriptive only. Every policy has different policy language. Coverage afforded under any insurance policy issued is subject to individual policy terms and conditions. Please refer to your policy for the actual language.”