How Much Is Workers' Comp for a Security Guard Business?

If you own a security guard business, one of the first questions you'll probably ask is, "How much is workers' comp going to cost me?" Whether you're hiring your first guard, expanding your team, or bidding on a new contract, workers' compensation insurance is often a necessary business expense that can't be ignored.

The truth is that workers' comp for a security guard business doesn't have a one-size-fits-all price. Costs vary based on several factors, including your payroll, the type of security work you perform, your claims history, and the state where your business operates.

Understanding how insurers calculate premiums can help you budget more accurately and find opportunities to reduce your costs.

How Much Is Workers' Comp for a Security Guard Business?

Workers' compensation insurance for a security guard business is typically calculated based on your total payroll, your workers' compensation class code, your claims history, and your state's insurance rules. Premiums are generally priced per $100 of payroll, but rates vary widely by state and business risk.

Businesses with lower-risk operations, strong safety programs, and few claims may pay less than businesses with higher-risk security work or frequent workplace injuries. The best way to determine your actual cost is to request quotes from a licensed workers' compensation agent familiar with your state's requirements.

Why Security Companies Need Workers' Compensation Insurance

Security guards often work in environments where accidents and injuries can happen unexpectedly. Even guards assigned to lower-risk locations may experience slips, falls, lifting injuries, vehicle accidents, or confrontations while performing their duties.

Workers' compensation insurance generally helps cover:

• Medical treatment for work-related injuries

• Partial replacement of lost wages while an employee recovers

• Rehabilitation expenses when needed

• Certain employer liability protections, depending on the policy and state

In most states, employers with employees are required to carry workers' compensation insurance, although the rules differ significantly from state to state. Texas, for example, treats workers' compensation differently than most other states. Because regulations change, always verify current requirements with your state's workers' compensation board or speak with a licensed insurance agent.

Explore more in our blog: Security Guard Workers' Comp Insurance: A Complete Guide

What Factors Affect Workers' Comp Costs?

Several factors influence how much your policy may cost.

Payroll

Payroll is usually the largest pricing factor.

Workers' compensation premiums are commonly calculated per $100 of payroll. As your company hires more guards and payroll increases, your premium generally increases as well.

However, higher payroll doesn't automatically mean a higher rate. The rate applied to that payroll depends on several other factors.

Security Guard Class Codes

Every workers' compensation policy uses class codes, which are industry classifications assigned to different types of work. These codes help insurers estimate the level of workplace risk.

For example, a company providing unarmed retail security may have different classifications than one providing armed guards, executive protection, or mobile patrol services.

Using the correct class code is important because misclassification can result in incorrect premiums and complications during a policy audit.

Armed vs. Unarmed Security Work

Not every security business performs the same type of work.

Insurers generally evaluate factors such as:

• Armed versus unarmed guards

• Stationary guards versus mobile patrols

• Retail security

• Construction site security

• Event security

• Loss prevention services

• Executive protection

Higher-risk assignments may result in higher insurance costs because they present greater chances of workplace injuries.

Your Experience Mod (EMR)

Your experience modification rate, commonly called your experience mod or EMR, is a number that compares your company's workers' compensation claims history to similar businesses.

An EMR below 1.00 generally indicates fewer or less severe claims than average.

An EMR above 1.00 indicates more claims than similar businesses, which may increase your premium.

Businesses with a strong safety record often benefit from a lower EMR over time.

Claims History

Insurance companies also review your previous workers' compensation claims.

Frequent injuries, severe claims, or repeated safety issues may increase future premiums. On the other hand, companies with consistent safety practices and fewer claims may receive more favorable pricing.

Keeping accurate injury records, training employees, and addressing workplace hazards can make a meaningful difference over time.

State Requirements

Workers' compensation rules vary by state.

Each state sets its own regulations regarding:

• Coverage requirements

• Benefit levels

• Rating systems

• Payroll reporting

• Assigned risk programs

You can review general workers' compensation information through the U.S. Department of Labor, while state-specific requirements are typically available through your state's workers' compensation agency.

Employee Classification Matters

One common mistake security businesses make involves worker classification.

Some companies use a mix of:

• Full-time employees

• Part-time employees

• Seasonal workers

• 1099 independent contractors

Simply issuing a worker a Form 1099 does not automatically make them an independent contractor.

States apply different legal tests when determining worker classification. If someone should legally be treated as an employee, payroll may need to be included in your workers' compensation premium calculations.

Misclassification can lead to additional premiums during an audit and may expose your business to penalties, depending on state law.

A licensed insurance professional can help determine how your workforce should be classified based on your state's rules.

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Understanding Premium Audits

Most workers' compensation policies include a premium audit at the end of the policy period.

An audit compares your estimated payroll with your actual payroll during the policy year.

If your payroll was higher than estimated, you may owe additional premium.

If your payroll was lower, you may receive a premium adjustment or refund, depending on your policy.

Keeping accurate payroll records throughout the year makes audits much easier.

The Occupational Safety and Health Administration (OSHA) also offers workplace safety resources that can help businesses reduce injuries and improve overall safety performance.

What Is Pay-As-You-Go Workers' Compensation?

Many security companies choose pay-as-you-go workers' compensation.

Instead of estimating annual payroll upfront, this option generally calculates premiums using your actual payroll throughout the year, often through your payroll provider.

Potential benefits include:

• Better cash flow

• Smaller payment adjustments during audits

• More accurate premium calculations

• Easier budgeting as payroll changes

Availability depends on your insurance provider, payroll system, and state.

Do Security Companies Need Ghost Policies?

A ghost policy is a workers' compensation policy that typically provides little or no payroll coverage. It is often purchased by business owners who have no employees but need proof of insurance to satisfy certain contract requirements.

Some sole proprietors or owner-only security businesses may consider a ghost policy if allowed in their state.

However, ghost policies are not available everywhere, and eligibility depends on state rules and business structure.

If you hire employees later, your policy usually needs to be updated.

Ways to Lower Workers' Comp Costs

Although you can't control every pricing factor, there are several ways to help manage your insurance costs.

Invest in Safety Training

Regular safety meetings, de-escalation training, and proper equipment use may reduce workplace injuries over time.

Maintain Accurate Payroll Records

Accurate payroll reporting helps prevent unexpected audit bills.

Classify Employees Correctly

Proper classification reduces the risk of audit adjustments and compliance issues.

Report Claims Promptly

Quick reporting often helps claims move more efficiently and may reduce overall claim costs.

Return Employees to Work When Appropriate

Many employers use modified or light-duty assignments when medically appropriate to help injured employees return safely.

Work With an Experienced Agent

Security companies often have unique risks compared to many other businesses.

An experienced workers' compensation agent can help ensure your business is properly classified, explain state-specific rules, and identify available cost-saving opportunities.

Common Mistakes That Increase Workers' Comp Costs

Business owners sometimes unknowingly increase their insurance expenses.

Common mistakes include:

• Underestimating payroll

• Misclassifying employees

• Failing to update payroll after hiring

• Ignoring workplace safety

• Delaying injury reporting

• Not preparing for annual audits

• Assuming 1099 workers are automatically excluded

Avoiding these issues can help your policy remain accurate and reduce surprises later.

Choosing the Right Workers' Comp Policy

Price matters, but it shouldn't be the only consideration.

A good workers' compensation policy should fit the way your security company operates today while remaining flexible as your business grows.

When comparing policies, consider:

• Experience working with security businesses

• Claims reporting process

• Audit support

• Payroll reporting options

• Pay-as-you-go availability

• Ongoing customer service

A licensed insurance agent can explain your options and help you compare policies based on your business rather than simply choosing the lowest premium.

Frequently Asked Questions

Is workers' compensation required for security companies?

In many states, employers with employees are required to carry workers' compensation insurance. Requirements vary by state, so verify current rules with your state's workers' compensation board or a licensed agent.

What determines my workers' comp premium?

Premiums are typically based on payroll, class codes, claims history, your experience mod (EMR), the type of security work performed, and state-specific rating rules.

Are armed security guards more expensive to insure?

They may be. Armed security work is often viewed as presenting greater workplace risk than some unarmed security services, but pricing depends on several factors.

Can independent contractors be excluded from workers' compensation?

Not always. States have different legal standards for determining whether a worker is truly an independent contractor. Simply issuing a Form 1099 does not automatically exclude someone from coverage.

Can I lower my workers' compensation costs?

Possibly. Strong safety programs, accurate payroll reporting, proper employee classification, and maintaining a favorable claims history may help reduce costs over time.

Get a Free Workers' Comp Quote

Every security guard business is different, and so is every workers' compensation policy. The right coverage depends on your payroll, services, workforce, and state requirements.

GET A SECURITY INSURANCE QUOTE

If you're ready to compare your options, Total Work Comp can help you request a free workers' compensation quote. Our licensed agents work with businesses across the United States to explain coverage, answer questions, and help you find a policy that fits your company's needs.