BILL ANALYSIS
AB 2128
Page 1
Date of Hearing: May 4, 2010
ASSEMBLY COMMITTEE ON BUSINESS, PROFESSIONS AND CONSUMER
PROTECTION
Mary Hayashi, Chair
AB 2128 (Gaines) - As Amended: March 25, 2010
SUBJECT : Private security services: insurance policies.
SUMMARY : Increases the minimum amount of insurance coverage
private patrol operator employers (PPOs) must carry from
$500,000 to $1 million, as specified. Specifically, this bill :
1)Increases the minimum amount of liability insurance coverage
PPOs must carry to $1 million for any one loss due to bodily
injury or death and $1 million for any one loss due to injury
or destruction of property.
2)Requires PPOs that employ security guards to maintain an
insurance policy, regardless of whether they carry a firearm.
EXISTING LAW :
1)Provides for the licensing and regulation of private patrol
operators and PPOs by the Bureau of Security and Investigative
Services (BSIS) under the Private Investigator Act.
2)Defines "insurance policy" to mean a contract of liability
insurance issued by an insurance company authorized to
transact business in this state which provides minimum limits
of insurance of $500,000 for any one loss due to bodily injury
or death and $500,000 for any one loss due to injury or
destruction of property.
3)Requires PPOs to provide proof of adequate insurance policy to
BSIS upon demand.
4)States that failure of a PPO to maintain the required
insurance policy constitutes grounds for license suspension.
FISCAL EFFECT : Unknown. This bill is keyed non-fiscal.
COMMENTS :
AB 2128
Page 2
Purpose of this bill . According to the author's office,
"Legitimate security contracts require security companies to
show proof of general liability insurance coverage of $1 million
at a minimum, and most companies also have an additional
umbrella policy of $3 million in the event they need to cover
three claims in one year, albeit unlikely. Ultimately, the
amount of insurance coverage needed depends on the site of a
security company is providing services for - is it an office
complex or a chemical plant? Comparing the two, [one] would
suspect that a chemical site would demand much higher coverage.
"The $500,000 minimum allows illegitimate security firms to
under bid contracts, because they can offer their security
services cheaper - even if they know the contract they are
bidding for requires greater coverage. Some responsibility
falls on the procurer to ensure a contract has adequate
coverage, but many are just not well enough informed. The
bottom line is this - it hurts the security firms that are
trying to operate legitimately. Raising the minimum would
increase consumer protection, because security firms would be
required to show proof of adequate coverage when applying for a
license or during their renewal."
Background . Current law only requires PPOs who employ armed
security guards to carry an insurance policy worth $1 million -
$500,000 in the event of bodily injury or death and $500,000 in
the event property is destroyed. Currently, there are
approximately 2,453 PPOs and 241,793 security guards licensed by
BSIS. Of the security guards licensed, approximately 40,487 are
permitted to carry firearms or weapons. That is, PPOs are
required to carry an insurance policy for 17% of the total
number of licensed security guards in the state.
According to BSIS, insurance coverage for armed security guards
is more expensive than unarmed security guards because armed
security guards, with authorization, can use firearms, batons,
tear gas or non-lethal chemical agents. While one would presume
that only armed security guards require insurance because of
injuries and liabilities when weapons are discharged, unarmed
security guards also encounter situations where personal injury
and property destruction occurs. For example, a situation may
arise where an unarmed security guard is involved in a physical
alteration while on-duty, and the result is bodily injury to the
public and liability to the PPO. This bill requires PPOs to
carry insurance for all security guards.
AB 2128
Page 3
Support . According to the sponsor, the California Association
of Licensed Security Agencies, Guards & Associates, "AB 2128
would expand the current requirement - that PPOs offering armed
security services have minimum liability and bodily injury
insurance policies of $500,000 - to all licensed PPOs in
California and increases the minimum coverage on each policy to
$1 million?. Legitimate security contracts require at least $1
million in liability and bodily injury coverage with a general
aggregate policy. AB 2128 would add another layer of consumer
protection?"
REGISTERED SUPPORT / OPPOSITION :
Support
California Association of Licensed Security Agencies, Guards &
Associates (sponsor)
Opposition
None on file.
Analysis Prepared by : Joanna Gin / B.,P. & C.P. / (916)
319-3301