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Contract crucial to defend claims
August 24, 2020
Contract crucial to defend claims 
            Let me explain AGAIN the importance of a standardized contract such as those available at
            Recently, Security America prevailed again on a claim in Maryland.
            Undisputed facts:   alarm company sold a system in a residence. Alarm Company subcontracted out the installation (to a SARPG policy holder). The technician, while in the attic, lost his footing, and while falling through the sheet-rock ceiling found an unsupported and unprotected PVC fire sprinkler pipe and broke that as well.
            Claim amount was in excess of $85,000.00, which came in two categories.  First was the remediation and replacement from the direct cause, $30,000.00. The second was the relocation expense for the inhabitants of the residence for two months while the remediation was underway, $59,000.00.
            Initial defense offer: $30,000 which the subrogation counsel flatly rejected.
Outcome - Summary Judgement for the defense granted.
Defense costs - $12,250.00
File closed 4 years after the date of loss.
            At issue (and why this is in response to the August 15, 2020 article on updating contract terms and conditions), is to anyone that is looking for the easy way out on updating terms and conditions.  The subrogation attorneys focused on one central issue, was the contract valid.  The customer signed an electronic version of the contract on a tablet or some other device at the time of sale. The customer had no recollection of any attached terms and conditions, nor recalled if they got an executed copy of the agreement in the mail afterwards. The contract was not a K&K contract, but looked like a similar knock-off of the K&K standardized agreement.  [I suggest you stick with the real updated version K&K contracts]
            After depositions where conducted, a jury was empaneled and opening arguments made. Prior to witness testimony the Judge decided to hear final arguments on the defense motion for Summary Judgement, original made prior to depositions and renewed prior to trial. The judge, after two plus hours of consideration in Chambers, granted the MSJ and dismissed the case.
            Conclusion:  First if you don't have insurance (including E&O), and you are in this industry and faced this claim, you would be out of business. Second, if you have proper insurance for this industry ( you will not only have the best policy available but the best defense attorney and claims management leadership available and won't get clobbered at renewal on rate increases or just dropped as an excessive risk.  
            The contract and the way you get it, maintain it and update it is the life blood of your business. Taking short cuts is just that, you are short changing yourself and your life accomplishments. Knowing what I know, if I was on the other side the plaintiff would have prevailed. This is just another reason why you need to know who you are doing business with and who is going to care about not just you but now we have another case in Maryland that reinforces the standardized contract.
             What could be the worst case possible, with the same basic loss (water damage) and substandard contracts?  Let's assume it was a multi-tenant commercial building, the technician causes a huge water flow loss by accidentally disrupting a sprinkler system and causes a release. The primary tenant space is a suite of attorneys or doctors or a high tech business with lots of computers, servers and paper records. This tenant is on an upper floor and there are like tenants below. The water is flowing for 15 minutes before the shutoff is located and water is running down from floor to floor leaving more destruction in its path.
            The resulting claims, yes claims, are from the building owner, the primary tenant and every affected tenants. Loss equals 3 million in structure, loss of use of the business space, rent interruption, loss of business and equipment. You are only carrying 1 million/ 2 million in coverage. If you don't have the standardized K&K contracts you could be on the hook for claims and if found liable, and on the hook for the extra millions above your policy limits.
            So, you want to take the easy way out of updating your contracts, go right ahead. But know this, not Ken or I can save everyone from themselves.
Bart A. Didden, Executive Claims Manager
Security America Reassurance Group, Inc. - SARG
            I had one case where, during the fire alarm inspection, the alarm technician activated the wrong button, setting off the deluge system which flooded the high end clothing store.  The lawsuit was for hundreds of thousands.  I handled the defense and it was a K&K contract.  Outcome?  Case dismissed; zero recovery, and, by the way, long before it was ready for trial.
            Another case.  Alarm technician testing sprinkler alarm allowed water to discharge from a valve onto the sidewalk.  The water quickly froze and a passer-by slipped on the ice.  K&K contract.  I handled this case too.  Outcome?  Case dismissed; zero recovery, again very early in the case, not after a protracted agonizing 4 years.
            One more that I recall:  Alarm technician opened a basement door which was on the sidewalk in NYC.  Some fool fell right in.  K&K contract. Outcome?  We got indemnity from the subscriber who then had to defend the case, so we were done with it.  
            SARPG has big advantages over other insurance companies because it is alarm industry owned and operated, and it has the most talented claims administrator of any insurance company serving the alarm industry, Bart Didden.  Trust me I’m right; I taught him everything he knows [but not everything I know].  Good thing you get one or both of us if you have a claim and you’re insured by Security America.  I never would have offered the $30,000.  By the way, just about every other carrier insuring the alarm industry would have settled this case by making a payment, whatever it would have taken to settle;  My guess, $50,000 or more.  Bart made the right move holding out.
            But, more on this tomorrow when I will discuss the judicious use of the exculpatory and limitation of liability clauses.   

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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