KEN KIRSCHENBAUM, ESQ
ALARM - SECURITY INDUSTRY LEGAL EMAIL NEWSLETTER / THE ALARM EXCHANGE
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follow up on comment on 1986 contract and do you even need a contract by law
January 11, 2018
follow up on comment on 1986 contract and do you even need a contract by law
January 11, 2018
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follow up on comment on 1986 contract and do you even need a contract by law from January 4, 2018
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Ken
I have a question about Bart's response in the January 4, 2018 newsletter re: comment on 1986 contract and do you even need a contract by law.
When Bart says “WRONG ANSWER”, what does that mean? Was the alarm company not protected by its insurance provider because there was no contract? Or was the lack of a limit of liability and all the other protective clauses just an opening for a potentially large payout by the carrier and then ultimately significant premium increases or non-renewal for the alarm company?
I appreciate your time.
Charles
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Response, by Bart Didden
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In the SARRG program they were covered, but if they had a policy that required a contract they would have been screwed. The reason why I said "WRONG ANSWER" is clear, they performed work without a contract.
Any work, even if it is to change a contact on a door needs a contract that favors the alarm company; its just that simple. It make no difference if there is RMR or not.
Here is a hypothetical example assuming the worst:
Your guys are on a job site (installation or service, makes no difference) and the customer got a Nest thermostat for Christmas. Customer approaches your tech, gives him $20 dollars, "Can you install this for me? I got it as a present for Christmas."
It works, for 4 weeks, then it falls asleep, product defect from the manufacturer, the home freezes up, pipes break, extensive water damage and because you are on Eastern Long Island, its a weekend home in the Hampton's (remember worst case). Homeowners insurance pays the damages, $75,000.00 (its a nice house worth 1.5 million) and in their investigation they learn that your tech installed it (who is not licensed to work on high voltage). You are screwed because it was on your time, while you were working in the house, even if the employee gave you the 20 dollars. Why? Because that work was not listed in the work order or schedule of protection and covered by your contract.
Here is a real example: alarm is installed and completed. 1 year later the customer calls the office and wants a water sensor in the basement because the water table is high and they got flooded. The office quotes a price over the phone, customer agrees. Tech goes out on a Friday Afternoon (true, can't make this up) installs the sensor, does not test it with the central station and leaves the premises. There is no sales agreement, no addendum or rider to the original contract, no completion certificate, NOTHING.
There is no proof that the sensor ever worked.
The basement floods, I settled the claim at $35,000.00. What made it worse, after the loss the employee was about to quit and tells the customer tough, go sue us, I don't care. They did just that.
No contract, no service, period. Its not worth losing your company and everything you worked your whole life for.
Bart A. Didden
Executive Claims Manager
Security America Risk Retention Group - SARRG
Security America Risk Purchasing Group LLC - SARPG
877-872-1266
bdidden@securityamericarrg.com
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additional Response
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What Bart didn't mention is that there is good likelihood that the insurance underwriters are going to look long and hard at this alarm company's loss run and decide if the alarm company's practice of working without a contract makes it too much of a risk to insure, or whether a higher premium is going to be required for the same coverage.
A lot of you took advantage of the annual contract sale. I am happy that you saved money, and even happier that you will be using the most recognized, accepted and, if I do say so myself, the best, agreements in the alarm - fire - security - pers - fire protection - home automation industries. For those of you who didn't get the 2018 contracts yet, there is still time. Still time for you to start using the contracts that will help you grow your RMR faster and increase the value of your business. Still skeptical? Ask around. Check with your central station, your insurance broker, your business broker, your distributor, your alarm association director. It's never too late to start doing things right. Go to www.alarmcontracts.com and order your 2018 contracts today. Need assistance? Call Contract Administrator Eileen Wagda at 516 747 6700 x 312 for help.
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follow up on comment on 1986 contract and do you even need a contract by law from January 4, 2018
*****************
Ken
I have a question about Bart's response in the January 4, 2018 newsletter re: comment on 1986 contract and do you even need a contract by law.
When Bart says “WRONG ANSWER”, what does that mean? Was the alarm company not protected by its insurance provider because there was no contract? Or was the lack of a limit of liability and all the other protective clauses just an opening for a potentially large payout by the carrier and then ultimately significant premium increases or non-renewal for the alarm company?
I appreciate your time.
Charles
********************
Response, by Bart Didden
********************
In the SARRG program they were covered, but if they had a policy that required a contract they would have been screwed. The reason why I said "WRONG ANSWER" is clear, they performed work without a contract.
Any work, even if it is to change a contact on a door needs a contract that favors the alarm company; its just that simple. It make no difference if there is RMR or not.
Here is a hypothetical example assuming the worst:
Your guys are on a job site (installation or service, makes no difference) and the customer got a Nest thermostat for Christmas. Customer approaches your tech, gives him $20 dollars, "Can you install this for me? I got it as a present for Christmas."
It works, for 4 weeks, then it falls asleep, product defect from the manufacturer, the home freezes up, pipes break, extensive water damage and because you are on Eastern Long Island, its a weekend home in the Hampton's (remember worst case). Homeowners insurance pays the damages, $75,000.00 (its a nice house worth 1.5 million) and in their investigation they learn that your tech installed it (who is not licensed to work on high voltage). You are screwed because it was on your time, while you were working in the house, even if the employee gave you the 20 dollars. Why? Because that work was not listed in the work order or schedule of protection and covered by your contract.
Here is a real example: alarm is installed and completed. 1 year later the customer calls the office and wants a water sensor in the basement because the water table is high and they got flooded. The office quotes a price over the phone, customer agrees. Tech goes out on a Friday Afternoon (true, can't make this up) installs the sensor, does not test it with the central station and leaves the premises. There is no sales agreement, no addendum or rider to the original contract, no completion certificate, NOTHING.
There is no proof that the sensor ever worked.
The basement floods, I settled the claim at $35,000.00. What made it worse, after the loss the employee was about to quit and tells the customer tough, go sue us, I don't care. They did just that.
No contract, no service, period. Its not worth losing your company and everything you worked your whole life for.
Bart A. Didden
Executive Claims Manager
Security America Risk Retention Group - SARRG
Security America Risk Purchasing Group LLC - SARPG
877-872-1266
bdidden@securityamericarrg.com
****************
additional Response
*****************
What Bart didn't mention is that there is good likelihood that the insurance underwriters are going to look long and hard at this alarm company's loss run and decide if the alarm company's practice of working without a contract makes it too much of a risk to insure, or whether a higher premium is going to be required for the same coverage.
A lot of you took advantage of the annual contract sale. I am happy that you saved money, and even happier that you will be using the most recognized, accepted and, if I do say so myself, the best, agreements in the alarm - fire - security - pers - fire protection - home automation industries. For those of you who didn't get the 2018 contracts yet, there is still time. Still time for you to start using the contracts that will help you grow your RMR faster and increase the value of your business. Still skeptical? Ask around. Check with your central station, your insurance broker, your business broker, your distributor, your alarm association director. It's never too late to start doing things right. Go to www.alarmcontracts.com and order your 2018 contracts today. Need assistance? Call Contract Administrator Eileen Wagda at 516 747 6700 x 312 for help.
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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
516 747 6700
www.KirschenbaumEsq.com