BILL ANALYSIS �
AB 2220
Page 1
Date of Hearing: April 29, 2014
ASSEMBLY COMMITTEE ON BUSINESS, PROFESSIONS AND CONSUMER
PROTECTION
Susan A. Bonilla, Chair
AB 2220 (Daly) - As Amended: April 10, 2014
SUBJECT : Private security services: private patrol operators.
SUMMARY : Requires all private patrol operators (PPOs) to carry
a minimum of one million dollars ($1,000,000) in insurance
coverage for any one loss due to bodily injury or death, and
one million dollars ($1,000,000) 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 one million dollars
($1,000,000) for bodily injury or death, and one million
dollars ($1,000,000) for destruction of property, whether or
not the licensee employs an armed security guard.
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.
EXISTING LAW
1) Provides for the licensing and regulation of PPOs and the
registration and regulation of security guards by BSIS within
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DCA, under the Private Security Services Act (Act).
(Business and Professions Code (BPC) Section 7580 et seq.)
2) Defines a PPO as a person who, for any consideration,
furnishes a watchman, guard, patrol person or other person to
protect persons or property, as specified. (BPC 7582.1(a))
3) Defines a security guard or security officer as an employee
of a PPO whose job duties include protecting persons or
property, as specified. (BPC 7582.1(e))
4) Requires a PPO that employs an armed security guard to
maintain an insurance policy that provides minimum limits of
insurance of five hundred thousand dollars ($500,000) for
bodily injury and death, and five hundred thousand dollars
($500,000) for injury destruction of property. (BPC 7583.39,
7583.40)
5) Requires a PPO to provide proof of an insurance policy to
BSIS upon demand, and provides that failure of a PPO to
maintain an insurance policy is grounds for suspension of the
PPO's license. (BPC 7538.41, 7583.42)
6) Prohibits any employee of a PPO from carrying or using a
firearm unless the employee has a valid guard registration
card and a valid firearm qualification card issued by BSIS.
(BPC 7583.12(a))
7) Requires an applicant for a firearm qualification card to
complete a written examination and training course in the
carrying and use of firearms that has been approved by BSIS,
as specified. (BPC 7583.23)
8) Exempts a duly appointed peace officer, as defined, from
having a valid firearm qualification card issued by BSIS if
he or she has successfully completed a course of study in the
use of firearms; is authorized to carry a concealed firearm
in the course and scope of his or her employment, as
specified; and has proof that he or she has applied to BSIS
for a firearm qualification card, or, in the alternative, if
he or she written approval from his or her primary employer
to carry a firearm while working as a security guard or
security officer. (BPC 7583.12)
9) Provides that a firearms qualification card expires two years
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from the date of issuance, if not renewed, and that BSIS
shall not renew a firearms qualification card unless the
cardholder filed with BSIS a completed application,
requalified on the range and successfully passed a specified
written examination, paid a firearms requalification fee, and
produced evidence of legal status, as prescribed. (BPC
7583.32)
FISCAL EFFECT : Unknown .
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
one million dollars ($1,000,000) for bodily injury and death
and also one million dollars ($1,000,000) 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)The private security industry . Security guards protect people
and patrol and inspect property to protect against fire,
theft, vandalism, terrorism, and illegal activity. These
workers protect their employer's investment, enforce laws on
the property, and deter criminal activity and other problems.
According to a report prepared for the U.S. Department of
Justice, the private security industry plays an important role
in the nation's security and safety, and is responsible for
protecting many of our nation's institutions and critical
infrastructure systems, including industry and manufacturing,
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utilities, transportation, and health and educational
facilities. According to the U.S. Government Accountability
Office, private industry controls more than 85% of the
nation's critical infrastructure.
Companies also hire security firms to perform functions such as
store security, private investigations, pre-employment
screening, and information technology security. Private
security services are used in a wide range of markets, from
commercial to residential, and security guards will continue
to be necessary to protect both people and property in light
of growing concerns about crime, vandalism, and terrorism and
in light of reduced local government law enforcement budgets.
According to BSIS, there are over 3,000 PPO licensees, and over
280,000 registered security guards in California.
4)Liability insurance . Only PPOs that employ armed security
guards are required to carry an insurance policy that, at a
minimum, provides five hundred thousand dollars ($500,000) in
coverage for bodily injury or death and five hundred thousand
dollars ($500,000) for property damage. According to BSIS,
43,000 of over 280,000 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 one million dollar ($1,000,000) insurance
coverage policies start at around twenty five hundred dollars
($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 one million dollar ($1,000,000)
liability insurance policies, or more, depending on the work
site and the nature of their work.
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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.
5)Certificate of workers' compensation coverage . California law
requires all employers to purchase a workers' compensation
insurance policy from a licensed insurer authorized to write
policies in California or become self-insured.
Workers' compensation allows employees, or their beneficiaries,
to receive covered medical treatment and other benefits for
on-the-job injuries, illness, or death. California's workers'
compensation insurance laws are administered by the State
Department of Industrial Relations through the Division of
Workers' Compensation, which can take action against an
employer who fails to secure payment of workers' compensation.
If an employee suffers a work-related injury and his or her
employer is not insured, the employer is responsible for
paying all bills related to the injury or illness, and the
employee may have to file a civil action against the employer
in addition to filing a workers' compensation claim. However,
if the employer has no assets or went out of business, an
injured employee would have little recourse, and may also try
to pursue a claim against the client.
According to the sponsors, insured PPOs are aware of other PPOs
that operate without proper insurance, including workers'
compensation insurance, but still maintain a valid license.
At least one state board, the Contractor's State License
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Board, requires as a condition of licensure that contractors
have a current and valid Certificate of Workers' Compensation
Insurance or Certification of Self-Insurance. This bill seeks
to level the playing field for honest employers and protect
employees from unscrupulous employers by making workers'
compensation coverage for employees a condition of licensure.
6)Firearm exemption for peace officers . Current law exempts
duly appointed peace officers from having to pass the written
and range examinations in order to receive a valid firearm
qualification card, but does not exempt them for purposes of
renewing a firearm qualification card. This bill would
similarly exempt duly appointed peace officers employed by a
PPO from meeting those range and written examination
requirements in order to renew a firearm qualification card.
7)Questions for the Committee . The Committee may wish to ask
the author why the state needs to require all PPOs, regardless
whether they use armed guards, the types of properties they
protect, and the nature of their work, to have an insurance
policy with minimum coverage of one million dollars
($1,000,000) for bodily injury or death and one million
dollars ($1,000,000) for destruction of property. Even if
most contracts require PPOs to maintain one million dollar
($1,000,000) insurance policies, it is unclear why it would be
necessary to double the insurance requirement that exists now
for armed guards without showing why current levels are
inadequate. Such a requirement may impact smaller PPOs whose
bottom line may be affected by an annual increase in the cost
of doing business, even if they have less risk of liability.
The Committee members may wish to enquire of the author and
sponsor as to evidence that the insurance limit is too low for
PPOs that use armed guards, or that insurance is needed for
all PPOs. For example, how many claims have been made in the
past year against PPOs where the claim or payout exceeded the
$500,000 limit? How often are parties with claims against
PPOs harmed because the PPO lacks insurance?
8)Arguments in support . According to the California Association
of Licensed Security Agencies, Guards and Associates
(CALSAGA), "?California has made major advances in
professionalizing private security by mandating [Department of
Justice] and [Federal Bureau of Investigations] background
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checks prior to security officers going to work, dramatically
increasing the training requirements for these officers, and
requiring private and proprietary security employers to
register with the State?. As more clients require an armed
presence at critical infrastructure locations and other high
security locations, companies should have a minimum level of
insurance to protect the public and its clients."
9)Related legislation . SB 385 (Block) of 2013 would authorize a
PPO to be the legal owner of a firearm, and establish
procedures for PPOs to assign its firearms to its employees
who are licensed to carry firearms. That bill was held in the
Senate Appropriations Committee.
10)Previous legislation . AB 811 (Hall) of 2011 would have
established procedures to allow PPOs to own firearms and to
assign those firearms to registered security guards, as
specified. That bill was held in the Assembly Public Safety
Committee.
AB 2128 (Gaines) of 2010, would have increased the minimum
amount of insurance coverage PPOs carry from five hundred
thousand dollars ($500,000) to one million dollars
($1,000,000), regardless of whether their security guards
carried a firearm. The Governor vetoed AB 2128 with the
following message:
"This bill would expand and increase mandatory insurance
requirements for private patrol operators and subject
operators to the same insurance coverage requirements,
regardless of whether or not their guards carry firearms.
"There has been no clear justification on why insurance coverage
for operators that use guards without firearms should be
required to carry the same coverage as operators that use arms
guards."
REGISTERED SUPPORT / OPPOSITION :
Support
California Association of Licensed Security Agencies, Guards and
Associates (CALSAGA) (sponsor)
Opposition
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None on file.
Analysis Prepared by : Eunie Linden / B.,P. & C.P. / (916)
319-3301