QUESTION:

        How can some medical alarm companies not need or use a contract between them and the client?    What risks are they taking and how did they get insurance without a contract?

Advanced Alert

ANSWER:

    Any alarm company offering medical alert [also sometimes referred to as Personal Emergency Response] should use a contract with its subscriber.  All of the reasons that alarm companies need contracts for security systems apply to the medical alert service.  The potential liability is obvious and to operate without contractual protection would be more than irresponsible.

    In addition to potential liability issues some states do regulate medical alert contracts and require certain terms in the contract.  These terms generally pertain to cancellation rights that the subscriber has under certain circumstances, such as extreme illness or nursing home care.  Additionally the "cooling off" period - the time a subscriber has to cancel the contract without penalty after signing it - can be longer than the typical 3 day period.

    When your state legislates what terms need to be in a medical alert contract you are not complying by working without a contract.     A business practice of letting all subscribers out of their obligation to pay any time they want is not a substitute for complying with legally mandated contractual terms.

    Therefore, to answer the question, no responsible alarm company should provide medical alert monitoring without a written contract.  If any insurance company is willing to write errors and omissions insurance for medical alert service without contracts then that insurance company, and the alarm company, deserve all the claims and damages that are certain to come.  I actually doubt that insurance carriers, who seem to be more careful than alarm companies when it comes to contracts, do write E&O for alarm companies that don't have contracts.  In fact some of the carriers that will write E&O will want to exclude the medical alert subscribers, and if your alarm business is primarily medical alert you may find it difficult or expensive to get E&O insurance.

    If any of the insurance brokers out there offer medical E&O please let us know. 

   You can obtain a Personal Emergency Response contract at www.alarmcontracts.com