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Insurance
Issues
By Cliff Grumbles, Manager
Texas Private Security Bureau
Title 10, Texas Occupations Code 1702.124 addresses the Insurance Requirement that all licensees must have and maintain to operate within the state of Texas.
The section states in summary that the board may not issue a license unless the applicant files with the Department:
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evidence of a general liability insurance policy on a certificate of insurance form prescribed by the Texas Department of Insurance and countersigned by an insurance agent in this state; or
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a certificate of insurance for surplus lines coverage obtained under Chapter 981, Insurance Code, through a licensed Texas surplus lines agent resident in this state.
The general liability insurance policy must be conditioned to pay on behalf of the license holder damages that the license holder becomes legally obligated to pay because of bodily injury, property damage, or personal injury caused by an event involving the principal or an officer, agent, or employee of the principal, in the conduct of any business licensed under this chapter. �.
�An insurance certificate executed and filed with the Department under this chapter remains in effect until the insurer terminates future liability by providing to the Department at least 10 days notice of the intent to terminate liability.
The insurance requirement was put in effect by the Legislature for the State of Texas to help to ensure an avenue of recourse for parties affected by the actions of a licensee.
Many companies list that they are �licensed and insured� within their advertisements for business.
The board receives evidence of the general liability insurance policy on a certificate of insurance form prescribed by the Texas Department of Insurance. Based on the information contained in that document (providing all other criteria has been met) the board will issue and/or renew a license.
The matter of insurance was discussed at a board meeting where representatives of companies located within Austin, Houston and Waco had expressed their efforts in trying to obtain insurance coverage for locations that have been issued a permit and/or a license to sell alcohol in addition to locations that are deemed critical infrastructures.
Some of the representatives stated that they had to turn down some accounts because their insurance would not cover their services at those locations. Others stated that the coverage that they did find they could not afford.
During this same meeting it was asked, what type of violation is the company facing if they provide services to a location that is outside of the scope of the insurance coverage.
The answer received was that a licensee who performs the service without insurance that covers the activity at the designated location is in violation of 1702.124.
This matter brings into question:
How many companies have submitted insurance certificates to the board that represent that they have the state mandated insurance, while holding a policy that does not cover the activity at the locations where they are contracting?
How many establishments hire these companies believing that the guard company maintains insurance to cover their actions?
How many employees are under the impression that if events were to occur and they find themselves named in a lawsuit, the company insurance will cover them?
How many clients present at a location where these services are performed believe that the company maintains proper insurance?
If the company does operate outside of the listed coverage elements of the policy in effect and on file with the board, but still makes the decision to work the areas �excluded� from the policy, the company has put in motion an action that can place many at risk.
This insurance requirement is in place to help insure an element of public safety.
When a company bids on a contract and accepts the assignment to perform the service without the required coverage, the company has secured this contract by providing false and misleading information.
The legislature has put this board in place to ensure the standards of Chapter 1702 are met and adhered to. In furtherance of this goal, the Private Security Bureau will be reviewing all aspects of licensure and performing inspections to insure that all licensees have on file current insurance that covers all of the activities performed by the licensee in accordance with the law.
SOME OTHER THOUGHTS� As many of you are aware we are well into our program that expanded the Bureau�s Investigations Section. The deployment of new investigators has increased the number of investigators in Houston, Dallas/Fort Worth, San Antonio and Austin. In addition we have investigators stationed in Weslaco and Midland. The increase in the number of investigators has allowed the Investigation Section to significantly increase the number of criminal cases presented to local prosecutors. During the first quarter of Fiscal Year 2006 they have presented over 50 cases, the majority of which are for operating without a license. We are taking steps to also increase the number of persons in our License section to help with the processing of applications.
With the addition of investigators we have increased the number of inspections of both companies and individuals. Inspections are a tool to discover unlicensed activity and to assure that current licensed companies are following statute and administrative rules. You may want to check the following statute and administrative rules to assess your compliance status: 1702.127, 1702.128, and 1702.129 Texas Occupations Code and 35.11 (b) (c), 35.64, 35.65, 35.67 and 35.66 Texas Administrative Code.
We have also moved into our new office space in Austin which has contributed to our productivity. A meeting room in the new building, shared with other divisions, has provided an excellent facility for our manager testing and was used in December by the board for their quarterly meeting.
If you have not already used TexasOnLine for registrations and renewals I urge you to check it out. You can now do original applications and employment information updates on line as well as company and individual renewals. You can link to TexasOnLine through the DPS website or at
texasonline.com. The on line registration is convenient and efficient and provides you with documentation that your transaction has been submitted. It also assures that the proper fees are submitted for the type of transaction completed. The submission of improper fees is a large part of our �exception� processing and it causes extra time and work as our License Section has to return these applications. I really want you to give the on line registrations a try. Once you have, I think you will continue to use this new tool to help you increase the efficiency of your registration and renewal transactions.
We appreciate your support of our efforts and thank you for the cooperation we receive.
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