Workers' Comp for Security Companies: Armed and Unarmed Coverage
- Jul 1
- 6 min read
Running a security company means protecting other people, but you also have to protect your own business. Whether you're bidding on a new contract, hiring additional guards, or trying to keep insurance costs under control, workers' compensation insurance is often one of the biggest concerns.
Workers' comp for security companies helps cover medical expenses and lost wages when an employee is injured on the job. It can also help your business meet state requirements and satisfy clients who require proof of insurance before awarding contracts.
Do Security Companies Need Workers' Compensation Insurance?
In most states, security companies with employees are required to carry workers' compensation insurance, although the exact rules vary by state and can change over time. Texas, for example, handles workers' compensation differently than most states. Always confirm current requirements with your state's workers' compensation board or a licensed insurance agent.
Workers' compensation generally covers employees who are injured or become ill because of their job. For security companies, that could include injuries from:
Physical confrontations
Slips, trips, and falls
Vehicle accidents while on patrol
Heat stress during outdoor assignments
Repetitive motion injuries from long shifts
Exposure to hazardous environments
If an employee suffers a covered work-related injury, workers' compensation may pay for medical treatment, rehabilitation, and a portion of lost wages, depending on the policy and state laws.
Explore more in our blog: Security Guard Workers' Comp Insurance: A Complete Guide
Armed vs. Unarmed Security Coverage
One of the most common questions security business owners ask is whether armed and unarmed guards need different workers' compensation coverage.
The answer is generally yes.
Both armed and unarmed security companies typically need workers' compensation insurance, but the level of risk is often different.
Armed Security Companies
Armed guards usually perform higher-risk duties that may include:
Cash transport
Executive protection
High-value asset protection
Armed patrol services
Bank or government security
Because these jobs involve greater exposure to violent incidents and weapons, insurers often consider them higher risk. That higher risk may affect classification and premium calculations.
Unarmed Security Companies
Unarmed guards often work in:
Office buildings
Apartment communities
Schools
Hospitals
Retail stores
Construction sites
While unarmed work may present fewer risks than armed security, employees can still experience injuries from assaults, falls, lifting, weather conditions, or vehicle accidents.
Each business is evaluated based on the actual work employees perform, not simply whether the company advertises armed or unarmed services.
How Workers' Comp Premiums Are Calculated
Workers' compensation premiums are usually based on several factors working together.
These commonly include:
Your total payroll
Your employees' job duties
Your workers' compensation class codes
Your claims history
Your business location
State-specific rules
Workers' compensation is generally priced per $100 of payroll, although rates vary widely by state, job classification, claims history, and insurance company.
Understanding Class Codes
Every employee is assigned a class code, which is a standardized classification describing the type of work they perform. These codes help insurers estimate workplace risk.
For security companies, employees performing different duties may require different classifications. For example:
Armed security personnel
Unarmed guards
Office staff
Dispatch employees
Supervisors who perform different job duties
Using the correct class codes is important because incorrect classifications can lead to premium adjustments during an audit.
You can learn more about how classification systems work from the National Council on Compensation Insurance (NCCI), which develops workers' compensation classifications and resources used in many states:https://www.ncci.com
What Is an Experience Mod (EMR)?
Your experience modification rate, commonly called an experience mod or EMR, is a number that compares your company's claims history to similar businesses.
A lower EMR generally means your business has experienced fewer or less severe claims than expected.
A higher EMR may indicate more frequent or costly claims.
Because insurers often use EMRs when calculating premiums, maintaining a strong safety program and reducing workplace injuries may help control long-term insurance costs.
Payroll Matters More Than Revenue
Many new business owners assume workers' compensation is based on company revenue.
It usually isn't.
Instead, premiums are generally calculated using payroll because payroll reflects how much employee work is being performed.
If your company grows and hires additional guards, your payroll increases, which may increase your workers' compensation premium.
Keeping accurate payroll records throughout the year makes audits much easier.
Pay-As-You-Go Workers' Comp
Some security companies choose pay-as-you-go workers' compensation.
Instead of estimating annual payroll and paying a large upfront premium, pay-as-you-go programs calculate premium using actual payroll from each payroll cycle.
Benefits may include:
Improved cash flow
Reduced surprises during audits
More accurate premium calculations
Easier budgeting for growing companies
Not every business or policy qualifies, so discuss available options with a licensed workers' compensation agent.
Workers' Compensation Audits
Nearly every workers' compensation policy includes an annual audit.
An audit is a review of your payroll records and employee classifications to verify that the premium charged matches your actual business operations during the policy period.
During an audit, you may be asked for:
Payroll reports
Tax records
Employee job descriptions
Certificates of insurance for qualifying subcontractors
Financial records
Preparing organized records throughout the year can help make the audit process much smoother.
The Occupational Safety and Health Administration (OSHA) also provides workplace safety guidance that may help reduce injuries and strengthen your safety program:https://www.osha.gov
Employees vs. 1099 Independent Contractors
Some security companies use independent contractors instead of traditional employees.
However, simply issuing a 1099 tax form does not automatically make someone an independent contractor for workers' compensation purposes.
Employee classification rules vary by state and depend on factors such as:
Who controls the work
Who provides equipment
How the worker is paid
The overall working relationship
If workers are incorrectly classified as independent contractors, a workers' compensation audit may result in additional premium or other compliance issues.
Because state rules differ significantly, speak with a licensed insurance professional if you're unsure how your workers should be classified.
What Is a Ghost Policy?
A ghost policy is a workers' compensation policy that generally provides proof of insurance without covering employees because the business has none.
Ghost policies are sometimes used by sole proprietors or single-owner businesses that need a certificate of insurance to meet contract requirements.
However:
Availability varies by state.
Not every insurer offers them.
They usually do not provide employee injury coverage.
If you plan to hire employees later, you'll typically need to update your policy.
Ways Security Companies May Lower Workers' Comp Costs
Every business wants affordable insurance, but reducing costs starts with reducing risk.
Some strategies that may help include:
Hiring qualified employees
Performing background checks where appropriate
Providing regular safety training
Maintaining written safety procedures
Reporting claims promptly
Returning injured employees to modified duty when appropriate and permitted
Keeping accurate payroll records
Reviewing employee classifications regularly
Working with a licensed workers' compensation specialist
No strategy guarantees lower premiums, but proactive risk management often helps create a safer workplace.
What Clients Often Require
Many commercial clients require security companies to provide a certificate of insurance (COI) before work begins.
A certificate of insurance is a document showing that your workers' compensation policy is active.
General contractors, property managers, hospitals, schools, and government agencies frequently request certificates before signing contracts.
Having the correct coverage in place can help avoid project delays.
Choosing the Right Workers' Comp Policy
Every security company operates differently.
When comparing policies, consider:
Whether you provide armed or unarmed services
Number of employees
Patrol versus stationary assignments
Multiple business locations
State requirements
Payroll reporting options
Claims support
Audit process
An experienced licensed agent can help review your operations and identify coverage options appropriate for your business and state.
Frequently Asked Questions
Is workers' compensation required for security companies?
In most states, security companies with employees are required to carry workers' compensation insurance. Requirements vary by state and may change, so always verify current rules with your state's workers' compensation board or a licensed insurance agent.
Does armed security cost more to insure than unarmed security?
It may. Because armed security work generally involves greater risk, premiums can differ depending on employee duties, payroll, class codes, claims history, and state regulations.
Are security company owners covered by workers' compensation?
That depends on state law, business structure, and your policy. Some owners may be eligible to include or exclude themselves from coverage where permitted.
What happens during a workers' compensation audit?
The insurer reviews payroll records, employee classifications, and business operations to verify the correct premium for the policy period.
Can 1099 security guards be excluded from workers' compensation?
Not automatically. Worker classification rules vary by state, and incorrectly classifying employees as independent contractors may create insurance and compliance issues.
Protect Your Security Company with the Right Coverage
Whether you operate an armed security firm, an unarmed guard service, or a growing patrol company, having the right workers' compensation policy helps protect both your employees and your business.
The licensed specialists at Total Work Comp work with security companies across the United States to help them understand state requirements, compare coverage options, and find workers' compensation solutions that fit their operations. Request a free workers' compensation quote today and get expert guidance tailored to your business.
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