Be wary of Insurance Renewal Form / RSVP to Holiday Party if attending November 18 2024

KEN KIRSCHENBAUM, ESQ
ALARM - SECURITY INDUSTRY LEGAL EMAIL NEWSLETTER / THE ALARM EXCHANGE
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Be wary of Insurance Renewal Form / RSVP to Holiday Party if attending
November 18 2024
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All times booked for private meeting with KK at ISC East
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Only waiting list available: contact: Stacy Spector,Esq at 516 747 6700 x 304 or SSpector@Kirschenbaumesq.com. Concierge Clients will have priority.

Be wary of Insurance Renewal

Ken,
We are with Philadelphia for our business insurance. We have been with them for many years. I don't have a problem with them but I thought you would like to know about their renewal questionnaire. This is the first time we have been asked to fill out such an extensive form. I do have a question regarding the form. If we were to answer a question incorrectly (by accident of course) what would the repercussions be? If we had a claim and they deemed we answered a question incorrectly or interpreted the question wrong, could they get out of paying a claim? The form seems overly specific in some areas, kind of like they are "setting a trap"
    Chris

Response

          I am going to give you my perspective on alarm industry E&O coverage as I think it has evolved over the years.  I got my first alarm defense assignment from California Union circa 1978.  I’ve represented many, perhaps most, of the carriers who wrote the alarm industry E&O coverage over the years since then; not so much recently.
          Alarm industry E&O was, I suppose, relatively rare in the 1970s, at least for many of the companies other than perhaps the largest.  The insurance was cheap, even in 1970-79 dollars.  But there was something very different about E&O alarm insurance, and I wrote about it extensively then. Carriers who write insurance, any insurance, expect to defense costs and pay some claims; they calculate the premiums so that they bring in more than they pay out [and they cover their bet with their own excess coverage].  The alarm E&O carrier was a little different; they didn’t expect to pay out anything other than defense costs, and that made the program profitable even with the low premiums.
          I’ll skip to the present, leaving the history to others.  Today’s premiums are not cheap, though at least you do have a choice who you get the insurance from as, unlike the old days, many carriers offer the alarm E&O.  Unfortunately too many don’t even understand what they are covering, so that when you get a claim for burglary, for example, the carry tries to deny coverage because the claim isn’t for property damage or personal injury [but that’s another article].  Today’s carriers do pay claims and some are loath to pay legal defense costs; they would rather pay a claim quickly and get it off their desk.  The problem with that is that it has encouraged more cases against alarm companies, loss runs showing claim payouts and higher premiums.
          Also, carriers being more selective and careful about who they insure. Hence the new Questionnaire.  You’re correct that it is rather detailed.  I also noticed at least two questions that, my guess, many of you would get wrong.  The first is, does your agreement have a hold harmless provision.  Note sure why that particular provision is of such interest to the carrier, but that provision is one of the first I agree to waive, because I think it’s the least protective provision and it causes the most trouble.  The next problem question is whether you subcontract work and if you require your subcontractor to name you as an additional insured on its policy.  Well, most of you do engage a professional central station as your subcontractor to monitor the accounts, and my guess, none of you get the central station to name you as an additional insured on its policy.  Quite the contrary, you are naming the central station on your policy as additional insured.
          So what happens if you make a mistake answering the questions?  It’s going to depend on a lot of factors, one of which is going to be the severity of the loss, the dollar amounts, which may influence a carrier to try and figure out a way to weasel out of the claim or the policy entirely. If you committed fraud that is a basis to terminate the policy, ab initio.  That’s Latin for, from the beginning; the policy never existed, which means there is no coverage for the claim.  But making a mistake and committing fraud are different matters.  Even if you are negligent by not looking carefully at your contract, modifications you agree to, vendor agreements or other matters, that may not rise to the level of fraud.
          You obviously should answer the questionnaire as truthfully as you can, and you should make some effort to investigate the facts so you will be answering truthfully.  If you see that you will be checking the “wrong” boxes on the form then better start looking for another carrier, one without a lengthy questionnaire.

Holiday Party 2024 – this is your invitation - rsvp if attending

          The K&K Holiday Party will be on December 12, 2024 in Old Westbury, NY from 6:30 to 9:30 PM.  You’re invited, but you do need to RSVP before December 1, 2024 so we can properly plan.  Format is casual dress, cocktails and plenty of pass-around hors d'oeuvres; you won’t leave hungry.  Please send your RSVP to Kathleen Lampert at 516 747 6700 x 319 or KLampert@Kirschenbaumesq.com or Amy Laveglia at 516 747 6700 x 313 or ALaveglia@Kirschenbaumesq.com.
          Come see old and meet new friends at this social event.  Looking forward to seeing you at the party.

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Ken Kirschenbaum,Esq
Kirschenbaum & Kirschenbaum PC
Attorneys at Law
200 Garden City Plaza
Garden City, NY 11530
516 747 6700 x 301
ken@kirschenbaumesq.com
www.KirschenbaumEsq.com