Licensed and bonded has become so common a term it doesn’t seem like it’s really that important anymore. Advertisements for everything from cleaning services to lawn services use the phrase like a slogan. In the security industry, licensed and bonded is highly significant.
Bonding is essentially a business liability insurance that lets clients know if anything goes wrong, the security company has assured money is available to reimbursement claimants for their mistakes. It helps to legitimize the security company. However, bonding is not mandatory by every state, but licenses and insurance are required. For example, California and Florida only require business liability insurance. Bonding is optional.
The process of licensing includes background checks and fingerprinting, measures to protect the client and the general public. In the book, “Career Opportunities in the Travel Industry” author Judy Colbert writes that “At least 33 states require security guards to be licensed. Some states share reciprocity agreements in which persons licensed in one state can practice or carry firearms in a partner state. Otherwise, the security company has to get a license to operate in that state.
Business liability insurance is the insurance security companies use to deal with minor matters. In California, insurance is required for security companies that are “A Private Patrol Operator who employs armed security guards must have $1 million in insurance -- $500,000 for one loss due to bodily injury or death, and $500,000 for one loss due to injury or destruction of property."