The owner of a security company in Plantation gets a call from the manager of a gated townhome community his guards have protected for three years. Two residents came back from vacation to find jewelry and cash missing, and the gate and camera records show the only person who entered either unit was one of his overnight officers, who had been given the master key to check on a water leak. The guard has stopped answering his phone. The community wants to know who is going to pay the residents back.
The owner assumes his insurance will handle it. His general liability policy, his workers’ compensation and his assault and battery coverage are all in place. None of them was written to pay for theft by his own employee. That is the job of a fidelity bond or crime insurance, and for a business built on handing strangers the keys to other people’s property, it is one of the more important and least discussed coverages a security company can carry.
Why Security Companies Carry This Exposure
Few businesses give employees the kind of access a security guard has. Guards hold master keys, gate and alarm codes, camera system logins and building access cards. They work nights and weekends, often alone, in apartment communities, office buildings, warehouses, car dealerships and retail centers full of other people’s property. That access is the service the client is paying for.
It is also the reason a single dishonest employee can cause a large loss. A guard who steals from a resident’s unit, helps an outside crew get past a gate, shares alarm codes or quietly removes merchandise from a warehouse is doing exactly what the client hired the company to prevent. When that happens, the client will look to the security company to make it right, and many security contracts say so in writing.
Fidelity Bonds and Crime Insurance
The two terms are often used interchangeably, but they are not quite the same. A fidelity bond, in the sense most security clients mean, protects against losses caused by the dishonest acts of employees: theft, embezzlement and fraud. Some bonds are written to protect the security company’s own money and property, and others, often called third-party or client coverage, protect the property of the clients the company serves. That distinction matters. A bond that only covers the company’s own bank account will not help the residents in the Plantation community.
Crime insurance is the broader policy. A commercial crime policy can include employee theft, theft of client property, forgery, computer fraud, funds transfer fraud and theft of money and securities by outsiders. For a security company, the most important parts are usually employee theft and the client property extension, but funds transfer and social engineering coverage have become important too, because security companies handle payroll for large crews and are frequent targets of fake vendor and payment-change emails.
Our page on security guard insurance shows where this coverage fits in a complete security program.
Why Liability Insurance Doesn’t Respond
General liability insurance pays when the business is legally responsible for bodily injury or property damage to others caused by an accident. Theft is not an accident, and most liability policies exclude intentional acts and the dishonest acts of employees. Even when a client sues the company for negligent hiring or supervision after a theft, the underlying loss is the stolen property, and the liability policy may treat that as outside its coverage. The result is a real gap. A company can have well-built liability, workers’ compensation and assault and battery coverage and still have no protection at all for an employee’s dishonesty.
When Contracts Require Bonding
Many commercial clients, financial institutions, high-end residential communities and some government contracts require a security company to show proof of a fidelity bond or crime coverage, often with a specific limit and sometimes naming the client as a loss payee. These requirements usually sit in the insurance section of the contract alongside the general liability and workers’ compensation requirements, and they are easy to miss. A company that discovers the requirement after winning the contract may have to scramble to place coverage before the start date. Our article on what HOAs should verify before hiring a security company shows how associations look at this from the other side.
Conditions That Affect a Claim
Crime policies have conditions that matter after a loss. Many require that the employee be identified, or that the loss be clearly attributable to an employee’s dishonest act, rather than an unexplained disappearance. Most require prompt notice once the company discovers a loss and a sworn proof of loss within a set period. Coverage for a particular employee typically ends once the company learns of prior dishonesty by that person, which is why companies that keep a guard on staff after a known theft can lose coverage for that guard’s later acts. Coverage for subcontracted guards and temporary staff varies widely and should be confirmed in writing.
Hiring and Controls Still Matter
Good hiring practices reduce the chance of a loss, and Florida’s licensing system already requires background checks for licensed guards. Insurers will still ask about the company’s own controls: whether keys and codes are logged and changed when a guard leaves, whether guards are rotated on sensitive posts, whether access to client systems is limited to what each post needs and whether incidents are documented and reported promptly. Strong controls help with underwriting, and they help after a loss by showing the company acted reasonably.
Choosing a Limit
The right limit depends on what the company’s guards can reach. A company protecting a small office park has a different exposure from one guarding a jewelry district, a bank operations center or a warehouse full of electronics. Looking at the most valuable client site and the most access any single guard has is a good starting point. Contract requirements set the floor, but they are not always enough.
Worth Confirming With Your Agent
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Whether you have employee theft coverage, client property coverage or both
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Whether your limit matches the most valuable site your guards can access
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Whether any client contract requires bonding, a specific limit or loss payee wording
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Whether funds transfer fraud and social engineering losses are included
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How the policy treats subcontracted and temporary guards
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What notice and proof of loss deadlines apply after a theft
This article is general information and is not legal advice.
Talk to Prestige Insurance Group
Prestige Insurance Group places fidelity bonds and crime coverage for Florida security companies alongside the liability, workers’ compensation and assault and battery coverage the business depends on. If a client contract is asking for bonding, or you aren’t sure whether your program would respond to a theft by one of your guards, we can review what you have and close the gap.
Call the office nearest you. Se habla español.
Orlando: 407-993-2331
Miami: 305-969-8776
Stuart: 772-247-3788
Prestige Insurance Group, License L057894
