comment on insurance certificates / depositing checks marked paid in full / February 21, 2017

KEN KIRSCHENBAUM, ESQ
ALARM - SECURITY INDUSTRY LEGAL EMAIL NEWSLETTER / THE ALARM EXCHANGE
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comment on insurance certificates, depositing checks marked paid in full  February 21, 2017
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more on insurance certificates
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Ken: 
    I read Gene's response [February 17, 2017 article] and interpretation of my wanting the industry to promote Codes and Standards complying systems. Sorry to inform Gene that I do not live in an ivory tower or am unrealistic in thinking that Codes and Standards complying systems will be the norm. 
    There is absolutely a huge market and the need for basic systems that are inexpensive. The user can pay very little (or nothing) up front for a front door/back door/motion detector/siren and get email and/or text alerts that someone has entered or left their home. However, the point of my original response to Ken is that the insurance industry should not give premium discounts for systems that do not meet the standards set by, and reviewed by, Nationally Recognized Testing Laboratories (NRTLs) such as UL. Remember, the question I responded to was about where to get a certificate for the end user to give to his/her insurance company.  I am not saying that basic systems or DIY systems do not serve a purpose. They do. I just personally believe that they do not deserve premium discounts on homeowners insurance unless they are installed to the appropriate Standard, and a "certificate" attesting to the installation is issued by a NRTL.
    With regards to the comment about following one of the large national companies in on a giveaway residential alarm system, we passed on that model. There's an enormous amount of up front money needed to build up that business with high attrition expected. To do any amount of high volume a company would have to incur a good amount of debt to pay the up front costs. Right now the cost of borrowing is low but it will eventually get higher. My father taught us a long time ago that you can either service the customer or service the debt. We chose to service the customer.
Richard Kleinman, President
AFA 
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depositing checks marked paid in full
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Ken,
    Is here suggested (special) wording that you should have on the deposit stamp for checks received for services?  (I thought I remember something that even if the customer writes on the front paid in full, what we put on the back would enable us to possibly collect more if more is due?)
Gary Puckhaber, President
Action Security & Communications
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Response
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    If the check has conditions on the front of the check there are a few things you need to keep in mind:

• you cannot cross out anything on the front of the check without risking rendering it void and non-negotiable
• you may end up accepting the check as "paid in full" as an "accord and satisfaction".  
• Notations on the back of a check can be obliterated before depositing

    I would not accept a check marked paid in full on the front if I knew the payor was disputing the full charge and tendering the check as a compromise and payment in full.  The law between merchants, dealer to dealer, is treated differently, but I would still not accept it.
    I wrote this article in May 18, 2015 and found it on my website under alarm articles by using the search feature on the articles page:
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Accepting A Check For Less Than You're Owed - Can You Collect More
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    Your subscriber falls behind several months and you accelerate the balance of the contract, sending the subscriber a bill for the full amount.  You also cancel service and the relationship is clearly over.  Then you get a check for the months that were in arrears with the notation that it's "payment in full".  You deposit it.  Can you continue to pursue the subscriber for the balance of the contract?  What if you write "accepted without prejudice to collect balance owed" or "under protest"? 
     The answer is a lot more complicated than you might think.  But here's the gist of it.  If you accept the check marked payment in full then you will be deemed to have accepted that check in full satisfaction of the debt.  It won't matter if you write "without prejudice" or anything else.  If you give the money back within 90 days then the original debt will be reinstated.  This general rule applies in 48 states; it does not apply in New York.  In New York if you deposit the check "under protest" or some other limiting notation you will not be deemed to have accepted the lesser amount you think is owed.  The law in Oregon is not clear.
      Negotiating a check marked "paid in full" is deemed "an accord and satisfaction" of the debt, and as noted above, only New York permits a reservation to preserve the full debt.
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THE ALARM EXCHANGE

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
516 747 6700
www.KirschenbaumEsq.com
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