Why EPLI with Third-Party Coverage Is Critical for Security Companies

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Employment Practices Liability Insurance (EPLI) for security companies may cover both employee claims (wrongful termination, discrimination, harassment) and third-party claims (false arrest, unlawful detention, civil rights violations) when structured with third-party coverage. Because security guards exercise authority over the public, this coverage is often critical for private security firms in the United States.

Security companies operate in a different risk category than most industries.

Unlike office-based businesses, private security firms authorize employees to control access, enforce rules, detain individuals, and manage confrontations. That authority creates two parallel legal exposures: internal employment claims and public-facing civil rights allegations.

Employment Practices Liability Insurance (EPLI) is designed to address employment-related claims. But for security companies, the key detail is whether the policy includes third-party coverage.

Without it, a major exposure may remain uninsured.

The Two Sides of EPLI for Security Firms

1. First-Party EPLI (Employee Claims)

Security companies frequently experience:

• High turnover

• Rapid hiring cycles

• Decentralized field supervision

• Multi-location operations

These conditions increase vulnerability to claims such as wrongful termination, retaliation, discrimination, hostile work environment, and failure to promote.

The U.S. Equal Employment Opportunity Commission (EEOC) continues to report tens of thousands of workplace discrimination charges annually, reinforcing how common employment litigation has become across industries.

https://www.eeoc.gov/statistics/enforcement-and-litigation-statistics

Even defensible employment decisions can generate significant legal defense costs.

2. Third-Party EPLI (Public Claims)

This is where security companies face elevated risk.

Third-party EPLI addresses claims brought by non-employees alleging wrongful acts connected to a guard’s authority. These may include:

• False arrest

• False imprisonment

• Improper detention

• Civil rights violations

• Discriminatory enforcement

False imprisonment and civil rights claims are grounded in long-standing legal standards concerning unlawful restraint and constitutional protections.

https://www.law.cornell.edu/wex/false_imprisonment

https://www.law.cornell.edu/wex/civil_rights

A brief retail detention, inconsistent enforcement at a residential property, or perceived bias during access control can quickly evolve into litigation.

Many General Liability policies exclude employment-related discrimination. Professional Liability coverage may not respond to employment-practice-based discrimination allegations.

https://www.irmi.com/term/insurance-definitions/employment-practices-liability-insurance

For security companies, that gap can be significant.

Why This Exposure Is Increasing

Public scrutiny of private security operations has intensified. Social media amplification, civil rights awareness, and aggressive plaintiff litigation strategies have increased both frequency and severity of claims.

Security litigation often centers on:

• Whether probable cause existed

• Duration of detention

• Consistency of enforcement

• Documentation quality

• Supervisor oversight

Even routine enforcement actions can be reframed as constitutional violations.

Bottom Line

For security companies in the United States, EPLI is no longer limited to internal HR protection. When structured with third-party coverage, Employment Practices Liability Insurance may help protect against both employee-driven litigation and public-facing authority claims.

For firms that deploy guards in retail, healthcare, municipal, multi-family, or event environments, this coverage is often a foundational component of risk management.

Frequently Asked Questions

What does EPLI cover for security companies?

EPLI may cover claims alleging wrongful termination, discrimination, harassment, retaliation, and other employment-related misconduct. When structured with third-party coverage, it may also cover claims brought by members of the public alleging false arrest or civil rights violations.

What is third-party EPLI coverage?

Third-party EPLI extends coverage to claims brought by non-employees alleging discrimination, harassment, or civil rights violations connected to employment practices.

Why are security companies high risk for EPLI claims?

Security guards exercise authority over individuals, including detention and access control. That authority increases the likelihood of discrimination or civil rights allegations.

Is EPLI required for security companies?

EPLI is not typically mandated by law but may be contractually required by property managers, municipalities, or large commercial clients.

How expensive are EPLI defense costs?

Employment-related litigation defense costs often reach six figures, even before settlements are considered.