A guard company is rated as one business, not job by job. Your workers' comp premium follows payroll in the class the insurer assigns under your state's rating bureau rules, then an experience mod (a multiplier based on your claims history) adjusts it, and that mod usually carries over from the seller. No single class code fits every state, and the insurer decides which one applies to you. This guide is for a buyer who has to get the policy, the payroll estimate and the ownership change report right in the first months.
The short answer
- Class codes vary by state and by rating bureau, and the insurer assigns the code. Massachusetts, for example, uses one class for private security and makes no distinction between armed and unarmed guards.
- The business is classified, not each job. In Massachusetts drivers sit inside the class wording, other states differ, and clerical staff qualify for the office exception only if they meet the state's separate-and-distinct tests.
- The premium is an estimate. An audit up to three years after the policy ends can bill you for payroll the estimate missed, and in a stock deal that includes pre-closing payroll. Overtime records and owner coverage are guard-company audit points.
- The seller's experience mod usually follows the business, in both stock and asset deals where you take over operations. Report the change to the insurer within 90 days.
- Treating guards as independent contractors is a classification risk, not a way to avoid workers' comp.
How do guard duties map to workers' comp classes?
A class code describes the business, and the rating bureau's wording decides which jobs fall inside it. For guard companies the wording is state-specific. Massachusetts places private security in class 7720 and says it covers all employees of private security services except clerical office employees who qualify for the office exception, with no distinction between armed and unarmed work. Other states use other codes and titles, and some run their own classification systems rather than following the National Council on Compensation Insurance (NCCI). This guide does not name a code for your state.
| Role | What they do | The question to settle |
|---|---|---|
| Unarmed post guard | Staffs a door, desk, gate or patrol on foot, often on rotating or night shifts | Governing class for the company in your state, and payroll by state |
| Armed guard | Same posts with a firearm under a state license or commission | Whether your state's class wording or the carrier distinguishes armed work |
| Mobile patrol officer | Drives between sites, often in a marked car | Whether drivers sit inside the guard class or are classed separately. Massachusetts's class wording includes drivers, and other states differ |
| Supervisor or site lead | Inspects posts, handles escalations | Field supervision may follow the field class, so confirm with the insurer and the bureau's wording |
| Dispatcher, trainer or recruiter | Takes calls, assigns posts, runs classes, files guard paperwork | Whether the work meets the office exception or stays in the governing class |
| Office and accounting staff | Billing, payroll, administration | May qualify for the clerical office exception if duties and location meet the tests |
If an auditor finds the work is not described by the class on the policy, the insurer can assign the proper class by endorsement, which can change the audited premium. See workers' comp class code corrections.
What injuries should you expect at guard posts?
Bureau of Labor Statistics (BLS) data for security guards across all private employers in 2023 and 2024 show these shares of days-away-from-work cases.
| Event | Share of cases |
|---|---|
| Falls, slips and trips | 34 percent |
| Violent acts | 26 percent |
| Overexertion | 14 percent |
| Contact injuries | 13 percent |
| Transportation incidents | 7 percent |
| Other events, including harmful substances | about 6 percent |
The median case involved 9 days away, and about 29 percent involved 31 or more. Guards' total days-away rate is about the same as all workers, but violent acts run about eight times higher (21.7 against 2.6 per 10,000 full-time workers). In 2024 the BLS recorded 64 fatal work injuries for security guards, 44 of them from violent acts. These are occupation figures that include in-house guards in other industries, so they describe the work, not your company. For the price effect, see what drives insurance cost for a security guard company, and for keeping claims short, return-to-work programs and workers' comp claim costs.
What happens to the seller's experience mod?
A hypothetical example. You buy a guard company a year after an unarmed guard at a hospital entrance was struck by a combative visitor and was out for four months with a back and shoulder injury. The claim is closed, but it sits in the experience data for several years, so it is part of the mod you bought. It is a workers' comp claim, not a general liability claim, because general liability excludes the insured's own employees.
Under NCCI rules, a change in ownership includes buying the stock, buying the assets and taking over the operations, a merger, or forming a successor entity. The past experience usually transfers, even into a new LLC, and dropping it takes a near-complete change of owners, operations and hazards. The policy requires you to report the change within 90 days. A recalculated mod can apply back to the date of the change and can go up or down, and the rating organization, not the insurer or broker, decides. Independent bureau states, including California, New York, New Jersey, Pennsylvania and North Carolina, can have their own ownership forms, reporting routes or timing, so ask your insurer which applies. For a guard company, check whether the assault claims from the last few years are still open at reserved amounts. Read how to check your experience mod for errors once the new mod arrives.
How do payroll estimates and audits work for guards?
A guard company's estimate goes stale faster than most, because payroll swings with every post won or lost. The insurer can audit during the policy and for up to three years afterward, and the general rules are in payroll estimates and surprise workers' comp audit bills. Four guard-specific points:
- Overtime. Guards on long or overnight posts often earn overtime. In the NCCI manual as published for North Carolina, the extra (premium) portion of overtime is left out of premium payroll only if your records show overtime separately by employee, and other states differ. Ask your insurer and keep overtime separate.
- Several states. If customers' sites sit in more than one state, payroll is reported by the state where guards work, so a new post across a state line changes the estimate.
- Office, dispatch and field staff. Clerical employees can be rated in the office exception only if they meet the state's separate-and-distinct tests, and in the NCCI manual as published for North Carolina, pay in a standard exception class cannot be divided with another class. A person who works both a dispatch desk and posts usually goes entirely in the guard class. Splitting one employee's pay between two ordinary classes needs records of actual time and pay in each, and without them all of it can go in the highest-rated class. Ask your insurer how each role is treated.
- Subcontracted guards. Pay to other persons engaged in work that could make the insurer liable can be added at audit, so subcontracted guards without their own coverage can add their payroll to yours.
In a stock purchase the audit balance belongs to the acquired company, so a post-closing audit can bill your company for pre-closing payroll. In an asset purchase it is normally the seller's, and the purchase agreement decides who bears the cost. Pay-as-you-go billing charges premium from each payroll cycle, but the policy can still be audited and the arrangement is tied to a specific policy and payroll account, so ask the carrier what happens at closing. A guard company that lost or won a large post during the policy year can see the estimate and the audit diverge. See pay-as-you-go workers' comp.
What about you and your partners if you work posts or patrol?
Whether an owner or officer who works in the business is counted in payroll, or can be included or excluded from coverage, depends on the state and the type of entity. Ask the insurer in writing how the new owners will be treated, and tell your lender and investors the answer. An owner who is hurt at a post or in a patrol car may have no workers' comp protection if excluded. This matters most if you plan to cover posts yourself in the first months, or if a partner will drive patrol.
Can guards be treated as independent contractors?
Treating guards as independent contractors is a classification risk, not an opportunity. New York defines a security guard company as one that employs at least one security guard, and Florida requires an agency to report each licensee's hire or termination within 15 calendar days. States test independent contractor status differently, and some presume employment. If a regulator or auditor disagrees, the exposure can include unpaid premium, back wages and taxes. See 1099 contractors and the workers' comp audit bill, and ask an employment lawyer about your state.
Does the state change how you buy workers' comp?
| Situation | What changes |
|---|---|
| Most states | Private insurers sell the policy, and the rating bureau sets the class and the mod rules |
| Texas | Most private employers may choose not to carry workers' comp. Ask whether the seller carried it, whether any customer contract or lender condition requires it, and talk to an employment lawyer about what the choice means for injured guards. Texas guard licensing separately requires general liability evidence |
| North Dakota, Ohio, Washington, Wyoming | Workers' comp comes only from the state fund, and employer's liability usually needs a separate stop-gap cover |
| Independent bureau states | Eleven states use their own bureaus, with forms, classification systems and timing that can differ, though Indiana, Massachusetts and North Carolina still use NCCI's experience rating plan |
| Guards on a professional employer organization (PEO) policy | The PEO's coverage does not extend to a new buyer's entity automatically, so confirm what covers the guards at closing |
If the seller used a PEO, find out whose policy covered the guards and what will be in force at closing. See PEO vs your own workers' comp policy after an acquisition and new owner review: workers' compensation. The library page on workers' compensation insurance has the basics.
What do you send the insurer in the first 90 days?
- Confirm the policy is in the entity that employs the guards, in every state where you have posts, or arrange new cover effective at closing.
- Ask the insurer in writing which class code applies in each state, and how drivers and office staff are treated.
- Report the ownership change within 90 days, with the transaction date and the entities involved.
- Rebuild the payroll estimate by state, role and overtime, using current posts and wage rates.
- Ask for loss runs and the current mod worksheet, and check them for claims that do not belong to you.
- Decide how you will keep payroll records by role and for overtime, so a dispatcher or supervisor who also works posts is classed correctly.
- Ask in writing how owners and officers who work in the business are treated.
A first-month insurance list for a security guard company lines this up with the other policies. A Morrow review can compare the class, payroll and mod on the inherited policy with the business you bought, though any new terms depend on carrier underwriting.
Keep reading
- What Drives Insurance Cost for a Security Guard Company?
- Just Bought a Security Guard Company? What Insurance Do You Need?
- New Owner Review: Workers' Compensation
- Payroll Estimates and Surprise Workers' Comp Audit Bills
- How to Check Your Experience Mod for Errors After an Acquisition
- All guides for new business owners
Frequently asked questions
What is the workers' comp class code for a security guard company?
It depends on the state and the rating bureau, and the insurer assigns it. Massachusetts uses class 7720 for private security. Other states use different codes and titles. Ask the insurer to confirm the code in writing for each state where you have guards.
Do armed and unarmed guards have different class codes?
Not necessarily. Massachusetts says its class makes no distinction between armed and unarmed work. Other states may differ, and carriers may price armed work separately on liability. Ask your insurer how it treats them.
Does a new LLC start with a clean experience mod?
Usually not. Under NCCI rules, buying the assets and taking over the operations is an ownership change, and the seller's experience generally transfers to the buyer. Report the change to the insurer within 90 days.
Can I pay guards as independent contractors to avoid workers' comp?
It is a classification risk. Licensing laws in states such as New York and Florida treat guards as employees of the licensed company, and states test contractor status differently. Ask an employment lawyer, and expect an auditor to look closely.
How far back can a workers' comp audit go?
The policy lets the insurer audit during the policy period and for up to three years after it ends. In a stock purchase, a later audit can bill the acquired company for payroll from before closing.
References
- Workers' Compensation Rating and Inspection Bureau of Massachusetts: classification lookup, class 7720
- NCCI: Experience Rating Plan Manual Item E-1411 (changes in ownership), as filed in Texas
- NCCI: ABCs of Experience Rating
- American Academy of Actuaries: Influential Features in the Workers' Compensation System (October 2025)
- Texas Department of Insurance: Employers, workers' compensation
- U.S. Bureau of Labor Statistics: Table R12, days away from work by occupation and event, 2023 to 2024
- U.S. Bureau of Labor Statistics: Table R100, annualized injury rates by occupation and event, 2023 to 2024
- U.S. Bureau of Labor Statistics: Fatal occupational injuries by occupation and event, 2024 (Table A-5)
- New York General Business Law section 89-f (Security Guard Act definitions)
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This article is general information, not legal, tax or financial advice, and not a coverage determination. Coverage depends on the actual policy wording, carrier underwriting, your purchase agreement and your contracts. Ask your attorney and accountant about deal and legal questions.