Northern District of California holds that security company had no coverage for failing to stop robbery under "professional services" exclusion

Recently, a Federal judge in the Northern District of California continued the trend of reading the “professional services” exclusion broadly.  This time, to exclude coverage for a security company for security guard work.  Burlington Ins. Co. v. Bay One Security, Inc., Case No. 17-CV-04734-YGR, 2018 WL 1730425 (N.D. Cal. April 10, 2018).

In Burlington Ins. Co., Bay One Security was hired to guard a San Francisco BMW dealership. An individual broke into the dealership, damaged the property, and stole a car.  Bay One’s security guards first realized a crime was in progress when the suspect crashed through the glass doors at the front of the dealership. The dealership sued Bay One Security for failing to stop the robber. Burlington Ins. Co., Bay One’s insurer, contended the “professional services” exclusion in the policy barred coverage. The exclusion stated that "This insurance does not apply to 'any injury or damage' arising out of the rendering of or failure to render any professional services by or for you."

The court agreed with Burlington after noting that state regulations impose strict licensing and training requirements to become a security guard, including 40 hours of initial training and 8 hours of “refresher” training each year.  It reasoned that this falls within the scope of “professional services," which generally involve activities “arising out of a vocation, calling, occupation, or employment involving specialized knowledge, labor, or skill, and the labor or skill involved is predominantly mental or intellectual, rather than physical or manual.” 

This decision leads one to wonder how Bay One ended up with an insurance policy excluding coverage for security guard work.  A situation like this requires analyzing whether the insured should file a negligence claim against the broker who sold them the policy.

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