BILL ANALYSIS Ó
AB 2220
Page 1
ASSEMBLY THIRD READING
AB 2220 (Daly)
As Amended April 10, 2014
Majority vote
BUSINESS & PROFESSIONS 14-0 APPROPRIATIONS 16-0
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|Ayes:|Bonilla, Jones, |Ayes:|Gatto, Bigelow, |
| |Bocanegra, Campos, | |Bocanegra, Bradford, Ian |
| |Dickinson, Eggman, | |Calderon, Campos, Eggman, |
| |Gordon, Hagman, Holden, | |Gomez, Holden, Jones, |
| |Maienschein, Mullin, | |Linder, Pan, Quirk, |
| |Skinner, Ting, Wilk | |Ridley-Thomas, Wagner, |
| | | |Weber |
|-----+--------------------------+-----+--------------------------|
| | | | |
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SUMMARY : Requires all private patrol operators (PPOs) to carry
a minimum of $1 million in insurance coverage for any one loss
due to bodily injury or death, and $1 million for any one loss
due to injury or destruction of property, and to have on file
with the Bureau of Security and Investigative Services (BSIS) a
certificate of workers' compensation coverage, and exempts a
duly appointed peace officer from requalification requirements
in order to renew a firearms qualification card. Specifically,
this bill :
1)Requires BSIS within the Department of Consumer Affairs (DCA)
to require, as a condition precedent to the issuance,
reinstatement, reactivation, renewal, or continued maintenance
of a PPO license, that the applicant or licensee file or have
on file with BSIS the following:
a) An insurance policy, as specified; and
b) A certificate of workers' compensation coverage for its
employees issued by an admitted insurer.
2)Requires all PPOs to maintain an insurance policy that
provides minimum limits of insurance of $1 million for bodily
injury or death, and $1 million for destruction of property,
whether or not the licensee employs an armed security guard.
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3)Exempts a duly appointed peace officer, as defined, who is
employed by a PPO from firearms requalification requirements
and from having to pass a specified written examination in
order to renew a firearms qualification card.
FISCAL EFFECT : According to the Assembly Appropriations
Committee:
1)Ongoing costs to [BSIS] in the range of $65,000 for one
position to review, verify, and monitor insurance policies and
workers' compensation coverage for PPOs.
2)Minor and absorbable costs to [BSIS] associated with a
potential increase in enforcement workload for PPOs found to
be uninsured or without workers' compensation coverage.
COMMENTS :
1)Purpose of this bill. This bill would require all PPOs, even
those that do not use armed security guards, to maintain an
insurance policy that provides minimum limits of insurance of
$1 million for bodily injury and death and also $1 million for
destruction of property. This is intended to both increase
and standardize insurance requirements among PPOs so that
clients and the public are adequately protected regardless of
which PPO they hire. This bill is sponsored by the California
Association of Licensed Security Agencies, Guards and
Associates.
2)Author's statement. According to the author, "Current law
does not require a security guard company to have any
insurance coverage if they do not have armed guards and
requires only $500,000 for guard companies that have armed
guards. The security industry believes these levels to be
inadequate to protect customers and the public? [As] private
security guard companies expand their presence at critical
infrastructure sites, it is appropriate to assess and
modernize their requirements."
3)Liability insurance. Only PPOs that employ armed security
guards are required to carry an insurance policy that, at a
minimum, provides $500,000 in coverage for bodily injury or
death and $500,000 for property damage. According to BSIS,
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there are over 3,000 PPO licensees, and over 280,000
registered security guards in California, and 43,000 of those
registered security guards are authorized to carry firearms or
weapons.
Liability insurance for private security services may cover
claims based on professional liability, premises liability,
assault and battery, personal injury, use of firearms, and
fire damage. According to one insurance broker, annual
premiums for $1 million insurance coverage policies start at
around $2,500 per year. However, costs may increase based on
other factors, such as the nature of the work, the type of
property that is being protected, and whether the guard is
armed. Insurance for armed guards is more costly than for
unarmed guards because of the risk of deadly force brought to
the job site.
Even though only PPOs that use armed guards are required by law
to maintain insurance coverage, many clients require their
security companies to maintain $1 million liability insurance
policies, or more, depending on the work site and the nature
of their work.
According to the sponsors, some clients may require a PPO to
maintain a minimum insurance policy that also names the client
as an additional insured on the policy, but after the insurer
issues proof of coverage, the policy may be cancelled, for
example, because of nonpayment by the PPO. In such cases, the
client may never find out that the policy was cancelled and
that they are uncovered. There may also be instances when
PPOs underbid on private security contracts because they do
not maintain or intend to maintain an adequate amount of
coverage, which may harm the client and disadvantage properly
insured competitors. Individuals who end up being harmed in
the course of business may also be faced with limited recourse
if a PPO is not insured, or even no recourse if the PPO has no
assets or went out of business.
The sponsors assert this bill would address those issues by
requiring a minimum level of insurance of all PPOs and making
that insurance policy a condition of licensure, in order to
better protect the public and the client.
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Analysis Prepared by : Eunie Linden / B., P. & C.P. / (916)
319-3301
FN: 0003446