BILL ANALYSIS Ó SB 662 Page 1 Date of Hearing: July 3, 2013 ASSEMBLY COMMITTEE ON APPROPRIATIONS Mike Gatto, Chair SB 662 (Galgiani) - As Introduced: February 22, 2013 Policy Committee: Business and Professions Vote: 9 - 3 Urgency: No State Mandated Local Program: Yes Reimbursable: No SUMMARY This bill increases the minimum limit for liability insurance to $500,000 for a structural pest control company; increases the amount of the surety bond required to maintain a license or company registration to $12,500; and increases the upper limit of a surety bond required for issuance, reissuance, or restoration of a license or company registration, after a suspension or revocation, to $25,000. FISCAL EFFECT Any costs associated with this legislation should be minor and absorbable within the Structural Pest Control Board's (SPCB) current resources. COMMENTS Purpose . This bill is intended to increase the minimum liability insurance and surety bond requirements that a registered pest control company must carry in order to provide a guaranteed source of funds to satisfy consumer claims that might arise over work performance issues. The author argues that the current minimum insurance amounts have not been increased since the requirement for insurance was first enacted by legislation in 1960. The minimum bond requirement has not been increased since 1991, when it was raised from $2,000 to $4,000. This bill would increase the general liability insurance coverage pest control companies must cover from $25,000 to $500,000 to reflect present day property values in California and the amount of coverage needed to repair damage that may SB 662 Page 2 occur to those properties. The minimum surety bond requirement was enacted in 1969 and set at $2,000, and was increased in 1991 to $4,000. However, the SPCB notes that the bond amount can be easily depleted if multiple claims are filed against a pest control company's surety bond, leaving consumers unable to recoup their losses. This bill would increase the surety bond amount a pest control operator is required to maintain to $12,500, similar to the bond required of contractors. Analysis Prepared by : Julie Salley-Gray / APPR. / (916) 319-2081