This article will examine security company insurance needs, evaluate potential
insurance available to the industry and make various recommendations.
       The insurance industry has most certainly changed as a direct result of
the 9/11 terrorist attacks.  An industry that had for whatever reason become
overbloated, lax and perhaps careless in its underwriting and claims procedures
woke up to stunning loses and the realization that business was no longer going
to be "as usual."  How does this affect you in the security business?
       Like all businesses, alarm and other security companies need various
types of insurance.  This ranges from business premises liability insurance,
automobile insurance, life and disability insurance, workers compensation,
performance bonds and general liability insurance with errors and omissions.
       Though not necessarily unique in their need for errors and omission
insurance, the security industry has a particular need for this form of
insurance.  Unlike most businesses and others who want or need to protect
themselves from liability events, the security industry faces wide open and
unlimited exposure, the scope of which is rarely contemplated, considered or
compensable when security companies quote rates for their services and
contractually commit to provide security services.  The rates for services are
based on the service to be provided, not the potential loss that could accrue
if there is a breach of security and loss followed.  Obviously a breach of
security or failure of an alarm could result in tremendous loss of property and
life.  For this reason it is absolutely necessary for alarm companies and
security companies to have errors and omissions insurance.
       The alarm industry has seen the market for errors and omissions
insurance go from fairly available and affordable to almost not available and
costly; from stringent underwriting requirements to flexible to the point of
almost no requirements; from competent loss and claims handling to incompetent
costly and time consuming mismanagement of claims and defense of cases.  Where
the alarm insurance industry is headed now is speculative, but you need to
recognize the issue and plan for this important insurance coverage.
       One of the more reliable insurance products available for errors and
omissions insurance is offered by Izzo Insurance Services Inc out of Illinois,
an insurance broker who as specialized in the alarm and security industry since
1979.  The Izzo program is called the "Gold Shield Advantage" and currently
writes policies for North American Specialty Insurance Company [an admitted
carrier in most states] or North American Capacity Insurance Company [a surplus
line carrier].  The manager for this program is Matt Disparte and he can be
reached at 800-800-1704.  Also Karen Izzo is a wealth of information regarding
alarm company insurance issues, and she can be reached at the same number.
       The Gold Shield Advantage insurance appears to have several advantages
over the competition.  The premiums are low to competitive and you can get a NO
DEDUCTIBLE.  The aggregate limit is also high for the industry, 5 million.  The
policy does not have a Punitive Damages exclusion, and many claims against you
throw in punitive damages, just to be extra annoying.  There are a lot of other
benefits and I suggest that you contact Izzo directly for the advantages and to
plan your next years errors and omissions policy.  You can also have your local
broker contact them since Izzo will work with and through your personal broker,
or Izzo will become your personal broker.
       I addition to the alarm program Izzo also has a Security Guard and
Investigative Agencies program.  The Izzo web site is www.izzoinsurance.com and
I suggest you visit it and contact them.