Are Those Referring You To Others Exposed To Liability Does Video Sub Need Alarm Permit / More Negative News Re: The Hartford - April 4, 2014

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Question : are those referring you to others exposed to liability 
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Ken
    I recently spoke with a Real Estate agent and asked why agents are reluctant to refer security system companies to their clients.   I opened the door by asking if it was due to the threat of losing a sale by giving the perception of crime in the area.   His answer took me by surprise.  He made the statement that all of the training he had received as an agent and seminars he had attended advised agents from offering referrals due to the potential for liability.    My question to you is, would  it be possible to include referring sources into the liability protection clauses of our contracts much like the Dealer contract does for subcontractors?
Thank you,
Pat Lane
Central Station Manager
Dehart Alarm Systems
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Answer
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    The potential of liability to the referring person is negligable.  The referring person would essentially have to know that recommended company was so incompetent so that any one of reasonable intelligence would have to determine that the referral was made maliciously to hurt the person referred.  
    A real estate broker who refers its customer to a person who the broker knows is a convicted burglar, unlicensed and prone to robbing any customer he installs an alarm for, is sure enough sticking his neck out making that referral.  But that's about the fact pattern that would be needed for exposure.  
    Brokers don't like making recommendations because it appears that they either have some monetary alteria motive or know that they take the chance that their customer isn't going to be happy and take it out on them.  It's sort of why I shy away from recommending lawyers in other states; why should I ultimately be associated with an unhappy experience, especially when I am not getting any benefit.  
    Because the potential for liablity is so remote there is no need to cover the issue in the alarm contract.  We have enough that has to go into a proper alarm contract without thinking about every ill advised referral source.  
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Question - does video sub need alarm permit
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Ken
    Does a video verify customer need an alarm permit? I do know if they have an alarm panel they would need an alarm permit, but if they do not have an alarm panel does the same rule apply?
Thank You
Kit Brown, Director of Operations
CND View
Farmers Branch, TX  
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Answer
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    May depend on the jurisdiction, but more than likely unless the video system will cause a signal to a central station that results in dispatch to police, fire or EMT, no permit will be needed.  If you install a self contained CCTV system with local DVR you may need a license to install it, but no permit should be required.  If you install a Videofied System that sends a video clip to the central station who will then dispatch if the video shows reason for dispatch, then a permit for an alarm system would likely be required.  A system that send a video clip or picture to the subscriber's smart phone would not likely require a permit.    
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more negative news re The Hartford
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Ken:
    In regard to Hartford Insurance it seems that they no longer offer new Workman’s Comp insurance to companies in the security business, especially if you are a start up or a relatively small company.  If you are presently insured by Hartford they may not drop you as long as they don’t have an excuse. Warning, if they do drop you your in big trouble trying to get Workman’s Comp from another carrier. I wonder what others in our industry have been experiencing when it comes to purchasing insurance. For those who are not aware in my opinion Security America is the best thing that has happened to the security industry in years. That dosn’t include you Ken, your still number 1.
AS
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 Ken,
    I am surprised you didn’t add that Hartford may allow the alarm co to hire the attorney of its choice.   You may recall they allowed me to hire you, which worked out Great.  I appreciate what you and your firm has done for me. Feel free to share my story. Especially the part where the Hartford attorney said that my Contract, signed by the homeowner, that stated “the smoke detector will not work where the customer wants it installed“ might not be any help to the case.  You used it to get my company out of the lawsuit quickly and hassel free.
Thank you
Joe Sacchetti,  Operations Manager
Catskill Branch
Commercial Instruments & Alarm Systems, Inc.
DBA Scott Alarm Systems
Catskill, New York 
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Ken
    I wanted to comment on The Hartford question in this email and the availability of insurance programs for the alarm industry. I am a broker that specializes in the alarm industry providing insurance and risk management services. I am a board member and endorsed broker of the Maryland Burglar and Fire Alarm
Association.  I represent The Hartford along with approximately 10 other programs that provide options. My focus is on coverage in particularly because after all it does not matter how much you pay in premium if the policies are not put together correctly.
    My comment on The Hartford from a coverage standpoint would be that I have seen limitations. For example limitations regarding property in the care, custody and control;  also exclusions regarding electronic data liability. 
Brian J. Villari, CLCS
Risk Advisor
Consolidated Insurance Center
(301) 514-3518
Bvillari@cicinc.com
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Response
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    Alarm E&O is specialty insurance and you should be dealing with a broker who knows the alarm insurance business.   You can find them on The Alarm Exchange.  They have a choice of carriers to place you with, and they have their favorites.  You should find out why one carrier is preferred to another.  You can decide what priority you want to place on various factors, such as premium, outlook on coverage, claim handling issues, commitment to alarm industry and likelihood of staying in that market.  
    My remarks regarding Hartford was based on some involvement I've had with that carrier and its claims representatives and house counsel.  One alarm co demanded that I be brought in because it was convinced that the carrier's house counsel did not understand how to defend an alarm case.  He was right, and though I am sure the attorney could have learned, when a lawfirm is handling many different types of defense cases, primarily the car accident, slip and fall matters, it's not likely that the junior attorneys assigned to alarm defense matters are going to master that area of law, or have the experience to stratagize the defense.  
    Having to deal with coverage issues, especially when the alarm company expects to be covered when there is a burglary or over loss the alarm was designed to detect, only to be given some giberish about how there doesn't seem to be a coverered loss or some other nonsense - well that's just insulting and a waste of time, assuming it can eventually be sorted out by the broker to contacts the carrier and asks if they have any brains at all.
    Hartford isn't the only carrier that pursues subrogation cases against alarm companies.  Scottsdale is in that club too.  I questioned the Scottsdale claims rep when a claimant against the alarm company was in fact Scottsdale suing in subrogation.  When I explained that the alarm company was insured by Scottsdale, so how come it was suing its own insured, I was told, it's a different insured ... or some other nonsense.  I think that case is still pending.  Maybe Scottsdale can get the limitation of liability clause declared invalid.  Good job.  
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