KEN KIRSCHENBAUM, ESQ
ALARM - SECURITY INDUSTRY LEGAL EMAIL NEWSLETTER / THE ALARM EXCHANGE
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don't add risk by doing work you're not trained for
August 25, 2021
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don't add risk by doing work you're not trained for
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Ken
Restaurant Fire Caused by 15-Year-Old Freezer Ends in Policy Limit Settlement.
A subrogation firm recently recovered $300,000 for its client (insurance carrier) following a fire originating at a 15-year-old commercial freezer in a Restaurant. Because the subrogation firm was brought in the next day after the fire occurred, they were able to promptly assemble a team of expert investigators and secure critical evidence, including the freezer where the fire started, purchase and repair records for the freezer, and surveillance video from the restaurant’s security system.
A subsequent laboratory examination by multiple electrical engineers confirmed that the fire originated at the defrost timer for the restaurant’s 15-year-old freezer. The freezer’s service records established that the defrost timer had been replaced multiple times prior to the fire by a third-party service provider. That service provider was not approved by the freezer’s manufacturer as an authorized service provider, and most of the service provider’s other work had been on residential heating and air conditioning systems, not restaurant equipment.
Based on this thorough investigation, a $300,000 settlement demand was made for the service provider’s liability insurance policy limit, which was accepted shortly after we filed a lawsuit against the provider. The settlement was finalized before a single deposition was taken and before any expert reports were produced, which minimized expenses and maximized our client’s recovery.
So how does this apply to alarm companies, lets unpack the relevant topics.
First and foremost, the service provider was not approved by the manufacturer as an authorized service provider. Second, the service company was not known for working on commercial refrigeration equipment, but mainly residential HVAC systems.
What was said and not said. Not said was what was the total amount of damages caused by the freezer starting the fire? What was said between the lines, the service provider paid the policy limits, $300.000 without mounting any defense.
What can we surmise from these two items, the insurance carrier offered the policy limits to limit its exposure because the total damages where most likely much greater than the policy limits. Also, the service provider was under insured and may have been left at the courthouse steps by its own carrier to deal with any additional claims or indemnity owed.
How does this apply to the alarm industry? Well if you can't see the intelligence in staying in your own lane or knowledge and experience you will most likely end up here someday as well, left at the courthouse steps, under insured and with no assistance.
So be smart, focus on what you do well or go out and get more training and certifications before you tackle bigger or different projects and yes, buy as much insurance coverage as you can afford. You never know when you will need it, that day might be tomorrow or the last day you operate your company.
Bart A. Didden, Executive Claims Manager
Security America Reassurance Group, Inc. - SARG
877-872-1266
bdidden@securityamericarrg.com
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Response
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Risk assessment and risk management are certainly things any business person needs to think about. Being licensed and trained in the work you do is an obvious requirement and there is absolutely no justification or acceptable excuse for not have the proper credentials to perform your services, especially when you are in the life - safety business. Another good idea is to surround yourself with the best professionals to assist you. Be careful; be smart; be successful.
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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
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