BILL ANALYSIS Ó
AB 2220
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 2220 (Daly)
As Amended August 21, 2014
Majority vote
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|ASSEMBLY: |75-0 |(May 19, 2014) |SENATE: |31-0 |(August 25, |
| | | | | |2014) |
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Original Committee Reference: B., P. & C.P.
SUMMARY : Requires all private patrol operators (PPOs) to carry
a minimum of $1 million in insurance coverage for any one loss
or occurrence due to bodily injury, including death, or property
damage, or both; exempts a duly appointed peace officer from
requalification requirements in order to renew a firearms
qualification card; and, beginning July 1, 2016, authorizes PPOs
to be the registered owner of a firearm and authorizes the PPO
to assign the firearm to a security guard, as specified.
Specifically, this bill :
1)Exempts a duly appointed peace officer, as defined, who is
authorized to carry a firearm in the course of his or her
duties and who has successfully completed requalification
training and 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.
2)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 a commercial general liability policy, as
specified.
3)Requires all PPOs to maintain a commercial general liability
policy of insurance that provides minimum limits of insurance
of $1 million for any one loss or occurrence due to bodily
injury, including death, or property damage, or both, whether
or not the licensee employs an armed security guard.
4)If a PPO fails to maintain sufficient insurance or provide
proof of that insurance upon request by BSIS, automatically
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suspends the PPO's license until the licensee provides proof
of compliance with the insurance requirement.
5)Requires BSIS, prior to the automatic suspension, to notify
the licensee, in writing, that it has 30 days to provide proof
of the required insurance policy or the license will be
automatically suspended.
6)Requires a certificate of liability insurance issued by an
agent or employee of the insurer to be submitted
electronically to BSIS, or in a manner authorized by BSIS, for
an insurance policy secured by a licensee to satisfy these
provisions.
7)Requires an insurer issuing a certificate of liability
insurance to report the following information to BSIS:
a) The name of the insured.
b) The licensee's license number.
c) The policy number.
d) The dates that coverage is scheduled to commence and
end.
e) The cancellation date, if applicable.
8)Beginning July 1, 2016, authorizes PPOs to be the registered
owner of a firearm if the PPO is registered with the
Department of Justice (DOJ), and authorizes a firearm to be
assigned by a PPO to a security guard only when his or her
employment requires him or her to be armed, as specified.
9)Provides that an assignment of a firearm pursuant to these
provisions is not a loan, sale, or transfer of a firearm.
10)Requires DOJ to do all of the following:
a) Modify its Dealers' Record of Sale (DROS) form to allow
a PPO to be listed as the purchaser and registered owner of
a firearm.
b) Require a PPO to designate a firearm custodian, who must
possess a valid firearm qualification permit issued by
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BSIS, for the firearm owned by the PPO who shall be
responsible for the firearm and serve as the point of
contact for DOJ.
c) Prescribe a Certificate of Assignment (COA) to be used
to identify the employee of the PPO who has been assigned a
PPO-owned firearm and to identify an employee of the PPO
who will use his or her own firearm in the course of his or
her duties.
d) Immediately notify BSIS and the PPO if a security guard
becomes listed on the Prohibited Arms Persons File, and
requires BSIS to take appropriate action regarding the
security guard.
e) Charge a fee, to be deposited in the DROS Special
Account, not to exceed the reasonable costs for filing and
processing a COA and for the costs incurred in the
implementation and administration of these provisions.
11)Requires a PPO to do all of the following:
a) Upon assigning a firearm, complete the COA and file it
with DOJ in a timely manner.
b) Upon termination of the assignment that requires the
security guard to be armed and the transfer of the firearm
from the security guard back to the PPO, complete a COA
indicating that the firearm is no longer assigned to the
employee and is in the possession of the PPO and file that
COA in a timely manner.
c) Notify DOJ within seven days if the firearms custodian
is no longer employed by the PPO in that capacity or
becomes ineligible to be the firearms custodian and within
30 days of the replacement firearms custodian.
d) If the PPO ceases to do business, ceases to possess a
valid PPO license issued by BSIS that is not suspended,
revoked, expired, inactive, delinquent, or canceled, ceases
as a business entity, or changes its type of business
formation, sell or transfer all PPO-owned firearms, and
notify DOJ of the sale or transfer or a PPO-owned firearms,
except as specified.
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12)Requires a security guard to possess a valid firearm
qualification permit issued by BSIS prior to receiving a
firearm from a PPO, and provides that a firearm shall only be
assigned to a security guard when his or her employment
requires the security guard to be armed.
13)Makes it a misdemeanor when a security guard does not return
a PPO-owned firearm within 48 hours of the PPO's request or
within 48 hours of separation of employment or revocation of
the firearm qualification card, and requires the PPO to notify
BSIS within seven days from the date that the security guard
was required to return the firearm.
14) Authorizes the Director of DCA to assess an administrative
fine of up to $1,000, to be deposited in the Private Security
Services fund, against a PPO or security guard for each
willful violation of these provisions.
The Senate amendments :
1)Automatically suspend a PPO's license if the PPO fails to
maintain sufficient insurance, or provide proof of that
insurance upon request by BSIS, until the licensee provides
proof of compliance with the insurance requirement
2)Require BSIS, prior to the automatic suspension, to notify the
licensee, in writing, that it has 30 days to provide proof of
the required insurance policy or the license will be
automatically suspended.
3)Require a certificate of liability insurance issued by an
agent or employee of the insurer to be submitted
electronically to BSIS, or in a manner authorized by BSIS, for
an insurance policy secured by a licensee to satisfy these
provisions.
4)Require an insurer issuing a certificate of liability
insurance to report the following information to BSIS:
a) The name of the insured.
b) The licensee's license number.
c) The policy number.
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d) The dates that coverage is scheduled to commence and
end.
e) The cancellation date, if applicable.
5)Beginning July 1, 2016, authorizes PPOs to be the registered
owner of a firearm if the PPO is registered with DOJ, and
authorizes a firearm to be assigned by a PPO to a security
guard only when his or her employment requires him or her to
be armed, as specified.
6)Provide that an assignment of a firearm pursuant to these
provisions is not a loan, sale, or transfer of a firearm.
7)Require DOJ to do all of the following:
a) Modify its DROS form to allow a PPO to be listed as the
purchaser and registered owner of a firearm.
b) Require a PPO to designate a firearm custodian, who must
possess a valid firearm qualification permit issued by
BSIS, for the firearm owned by the PPO who shall be
responsible for the firearm and serve as the point of
contact for DOJ.
c) Prescribe a COA to be used to identify the employee of
the PPO who has been assigned a PPO-owned firearm and to
identify an employee of the PPO who will use his or her own
firearm in the course of his or her duties.
d) Immediately notify BSIS and the PPO if a security guard
becomes listed on the Prohibited Arms Persons File, and
requires BSIS to take appropriate action regarding the
security guard.
e) Charge a fee, to be deposited in the DROS Special
Account, not to exceed the reasonable costs for filing and
processing a COA and for the costs incurred in the
implementation and administration of these provisions.
8)Require a PPO to do all of the following:
a) Upon assigning a firearm, complete the COA and file it
with DOJ in a timely manner.
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b) Upon termination of the assignment that requires the
security guard to be armed and the transfer of the firearm
from the security guard back to the PPO, complete a COA
indicating that the firearm is no longer assigned to the
employee and is in the possession of the PPO and file that
COA in a timely manner.
c) Notify DOJ within seven days if the firearms custodian
is no longer employed by the PPO in that capacity or
becomes ineligible to be the firearms custodian and within
30 days of the replacement firearms custodian.
d) If the PPO ceases to do business, ceases to possess a
valid PPO license that is not suspended, revoked, expired,
inactive, delinquent, or canceled,, ceases as a business
entity, or changes its type of business formation, sell or
transfer all PPO-owned firearms, and notify DOJ of the sale
or transfer or a PPO-owned firearms, except as specified.
9)Require a security guard to possess a valid firearm
qualification permit issued by BSIS prior to receiving a
firearm from a PPO, and provides that a firearm shall only be
assigned to a security guard when his or her employment
requires the security guard to be armed.
10)Makes it a misdemeanor when a security guard does not return
a PPO-owned firearm within 48 hours of the PPO's request or
within 48 hours of separation of employment or revocation of
the firearm qualification card, and requires the PPO to notify
BSIS within seven days from the date that the security guard
was required to return the firearm.
11) Authorizes the Director of DCA to assess an administrative
fine of up to $1,000, to be deposited in the Private Security
Services fund, against a PPO or security guard for each
willful violation of these provisions.
FISCAL EFFECT : According to the Senate Appropriations
Committee:
1)One-time costs to the Department of Justice (DOJ) of about $1
million (Special Fund*) to enhance the registration database
and update forms to accommodate the new fields for PPO
designation, offset by an undetermined level of fee revenue.
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2)Ongoing workload to the DOJ Bureau of Firearms of about
$500,000 (Special Fund*) for investigations, inspections, and
the processing of forms, offset by the authority to charge
fees.
3)Ongoing costs of about $175,000 (Special Fund**) to the DCA
for enforcement of the insurance requirements and the
registration process for assigning firearms. DCA
investigations would be initiated based on complaint
allegations of uninsured PPO operations, and ongoing workload
resulting from inspections for compliance by PPOs. Costs would
be offset in minor part by citation revenue of less than
$10,000 annually.
4)Likely minor non-reimbursable local enforcement costs offset
to a degree by fine revenue for misdemeanor violations by
security guards for failure to return an assigned firearm as
required under the provisions of this measure.
*DROS Special Account - staff notes the DROS Special Account
is operating at a structural deficit with a projected 2014-15
year-end balance of $1.3 million.
**Private Security Services Fund
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
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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,
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
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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.
Analysis Prepared by : Eunie Linden / B., P. & C.P. / (916)
319-3301
FN: 0005457