5 Terms In A Security Guard Contract That You Should Know

Save your time and effort when you sit and try to make your security guard contract. Read this blog first and get the knowledge you need to make one before you make a mistake.

Key Takeaways:

• A security guard services contract isn’t just about rates and hours, it decides who carries risk when incidents happen.
• Five crucial terms to know: Indemnity, Additional Insured, Waiver of Subrogation, OCP Liability, and Terms of Agreement.
• Understanding these terms helps both clients and guard companies negotiate fairer security company contracts.
• Clear contracts don’t just prevent disputes; they help you get more security contracts by showing professionalism.
• Always align insurance terms with your actual services and consult legal/insurance experts.

If you run a security company (or you’re hiring one) your security guard services contract does more than set hours and rates. It quietly decides who carries risk when something goes wrong. The five terms below show up again and again in security company contracts, RFPs, and vendor onboarding packets. Understanding them helps you negotiate fairer deals, avoid surprise liabilities, and ultimately win (and keep) better security contracts.

I’ll explain these in plain English and give you simple negotiating tips. This is general information, not legal advice, run final language past your attorney or broker.

Security Guard Contract Term 1: Indemnity, Indemnification, or Hold Harmless

What it is (simple): An indemnity or “hold harmless” clause says one party will financially protect the other if certain claims happen. In security, clients often try to make the guard company take responsibility for injuries or property damage connected to the work, even when the client’s own actions contributed. Think of it as the “who pays if there’s a claim?” clause. Authoritative insurance sources define a hold harmless as a contract provision making one party respond to certain legal liabilities of the other, and explain that “indemnify,” “defend,” and “hold harmless” each have distinct roles in the clause.

Why it matters: Broad indemnities can push you to cover the client’s negligence, not just your own work. Many security firms sign this without realizing they’ve taken on outsized risk. Industry resources for guard companies caution that these clauses, while common, can “put you on the hook” for damages not really your responsibility.

What to ask for (practical):

• Limit to your fault. Ask that indemnity be limited to losses “to the extent caused by” your company’s negligence, not the client’s independent negligence. This “comparative fault” phrasing is widely discussed in insurance/contract guidance.
• Separate “defend” and “indemnify.” If the clause requires you to defend immediately, you may be paying legal fees before fault is sorted. Try “defend to the extent caused by your negligence.” (Contract lawyers note these terms are not synonyms and change who pays and when.)

Red flags to watch:

• “Indemnify for any and all claims” (no fault limit).
• Indemnity that survives even if the client is 100% negligent.

Example: A guard fails to lock a side door; theft occurs. If your indemnity is limited to your negligence, you’ll respond to that portion of the loss. If it’s broad, you might pay even if the client’s alarm system is offline.

Security Guard Contract Term 2: Additional Insured

What it is: When a client is named additional insured on your general liability policy, your insurance can defend and pay claims on the client’s behalf (subject to the endorsement’s terms) when the claim is tied to your operations. This is usually done via standard ISO endorsements (often referred to historically as CG 20 10 for ongoing work and CG 20 37 for completed operations), with scope and wording that have evolved over time.

Why it matters: Clients like additional insured status because it gives them a direct path to your insurer for claims connected to your services. For you, it can be an acceptable concession if the endorsement is carefully limited to liability arising out of your work, not the client’s sole negligence. Both insurance and security-industry sources stress aligning the AI scope with your indemnity limits.

What to ask for:

• Use standard ISO forms. Ask for industry-standard additional insured endorsements that limit coverage to liability “caused, in whole or in part, by” your acts or omissions. (This phrasing appears in modern ISO AI endorsements.)
• Match the indemnity. If your indemnity is comparative fault, the AI coverage should mirror that, not extend to the client’s independent negligence.
• Completed operations clarity. If your duties include installation or projects, confirm whether the client is seeking completed operations AI (commonly via CG 20 37).

Red flags to watch:

• Non-ISO, manuscripted AI language that’s overly broad.
• “Primary & noncontributory” demands without limits, combined with broad indemnity.

30-second example: A visitor trips over cables your team placed for a temporary checkpoint. With the client as additional insured for liability arising out of your operations, your policy may defend the client for that claim, within the endorsement’s terms.

Security Guard Contract Term 3: Waiver of Subrogation

What it is (simple): Your insurer normally has the right to subrogate, to seek reimbursement from a responsible third party after paying a claim. A waiver of subrogation endorsement (on general liability, commonly ISO CG 24 04) tells your insurer not to pursue that recovery against a person or organization you’ve agreed to protect by contract.

Why it matters: Clients ask for this so they don’t get sued by your insurer after a loss. It’s common in vendor agreements, including security guard contracts, but it slightly reduces your insurer’s recovery rights, which can influence premiums or claim strategy. Industry commentary notes these waivers are frequently required on CGL policies and widely used in risk-transfer programs.

Smart nuance: If the client is already an additional insured on your policy for a covered claim, your insurer typically cannot subrogate against its own insured, so a separate waiver may be unnecessary in some cases. Public-sector risk manuals and contract guides point this out.

What to ask for (practical):

• Blanket, when required by contract. Many carriers offer blanket waivers triggered only when a contract requires them, often at little or no extra cost in today’s market.
• Tie it to AI status. If the client is an additional insured, confirm whether the waiver is still necessary for the lines of coverage involved.

Red flags to watch:

• Waivers are demanded on lines where they don’t apply or add no benefit.
• Waivers without a corresponding contract requirement (which can confuse claims handling).

30-second example: Your GL policy pays for a slip-and-fall at the client site. Without a waiver, your insurer might try to recover from the client if evidence shows the client’s negligence. With a waiver, your insurer agrees not to pursue the client you’ve contracted with (subject to the endorsement).

Security Guard Contract Term 4: Owners and Contractors Protective Liability

What it is (simple): OCP (Owners and Contractors Protective) liability is a separate policy (not just an endorsement) typically bought by the project owner or GC to protect their liability for BI/PD caused, at least in part, by the contractor’s work. It’s job-specific and meant to cover the owner/GC for certain claims arising from the contractor’s operations.

Why it matters for security: While OCP is common in construction, you’ll occasionally see it in complex event security, large venues, or project-based guard work where the owner wants stand-alone protection instead of (or in addition to) being an additional insured on your CGL. Experts emphasize that OCP is not a substitute for your CGL and is often used as an alternative or complement to additional insured status, with narrower coverage.

What to ask for (practical):

• Clarify who buys it. OCP is usually purchased by the owner/GC for their benefit; it’s not a policy the guard company buys to cover itself.
• Align with AI strategy. If the client insists on OCP instead of AI status, discuss with your broker which route better fits the risk and cost. Industry commentary outlines differences and tradeoffs. ([IRMI][16])

Red flags to watch:

• Treating OCP as if it covers your company’s direct liability (it doesn’t).
• Assuming OCP removes the need for your own CGL and contractual protections.

30-second example: A stadium hires your company to staff a major event. The stadium buys an OCP policy to protect itself from claims tied to its operations at that specific event. Your company still needs its own GL and proper contract terms.

Security Guard Contract Term 5: Terms of Agreement

This is the “everything else” bucket, and it’s where deals are won or lost. Strong security company contracts balance service clarity with fair risk allocation. Use this checklist to tighten yours:

Scope of services & limits

• Posts, patrol frequency, and reporting (DARs, incident reports).
• Equipment responsibility (radios, body cams).
• Exclusions (cash handling, safes).

Response & supervision

• Escalation paths (supervisor → ops manager → client contact).
• Response time standards.

Training, licensing & vetting

• Compliance with local licensing and mandatory training.

Insurance & risk transfer

• Indemnity (limited to negligence).
• Additional insured (ISO standard forms).
• Waiver of subrogation (only if required).
• OCP liability (when the owner requires).

Payment terms

• Net terms, late fees, price adjustments, and minimum hours.

Term & termination

• Initial term, renewal, and notice rules.

Limits & caps

• Liability caps are aligned with insurance.

Docs & evidence

• Who owns reports and video, retention length?

Venue & dispute resolution

• Governing law, arbitration/mediation options.

Why this helps you win contracts: Clear, balanced terms speed up legal reviews and onboarding. Industry resources emphasize that indemnity, AI, waivers, and OCP must work together for risk transfer to make sense.

How These Terms Affect “How to Get Security Contracts”

When clients compare bids, the cheapest hourly rate doesn’t always win, risk posture matters.

1. Show you understand risk. Note your standard terms: limited indemnity, ISO AI, blanket waivers only when required, OCP coordination.
2. Offer options. Give clients a “Standard Risk Transfer” price vs. a “Client Risk Expansion” price.
3. Back it with evidence. Provide sample incident reports or training records.
4. Keep it readable. Plain language and checklists win in both contracts and Google rankings.

Final Word

Great security guard services contracts balance fair risk with clear service expectations. If you only remember one thing, make it this: these clauses work as a system. Align indemnity, additional insured status, waivers, and OCP with the work you’ll actually perform, and price accordingly.

That approach protects your margins, reassures clients, and makes your company easier to hire, exactly what you need when figuring out how to get security contracts in competitive markets.

Not legal advice; consult your attorney and insurance broker for language and endorsements appropriate to your state and operations.