December 13, 2010
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Question:
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Ken,
As the alarm industry, and our company, move more toward using Alarm.com and other alarm systems that enable the end user to remotely control their alarms, I am wondering if we need to change or add an addendum to our contracts to protect us in the event of any failures due to the remote features? For example if a homeowner “activates” their alarm using a smart phone but the system does not actually arm. We currently use your All In One Contract.
Thank you in advance for your assistance.
Ann Hibberd
Sales Assistant
TECC Security Systems, Inc.
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Answer:
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I received more than one inquiry regarding this issue in one week. It's obviously a question on some minds, and it's a valid concern that should be on everyone's mind.
As technology changes and permits you the opportunity to offer more or at least different services you should consider whether your current contract(s) cover the new services and equipment. As I've expressed in my presentations, you're in the business of selling contracts, not any particular specific alarm or services. Your business is selling contracts with recurring revenue. New technology gives you the opportunity and tools to do that. How? Think about it.
You use to - if you're old like me - install a local alarm and bell. No recurring revenue there unless you leased the system. Then you added a dialer; still not recurring revenue, unless you leased the dialer. Then the digital - recurring revenue opportunity.
CCTV went through the same transition. From a local system with on site DVR to Central station hosting, viewing and responding. Through the Internet now subscribers can check their cameras on a computer or have Remote Video Monitoring, where their camera video data passes through a manufacturer's server and can be viewed on the subscriber's smart phone; recurring revenue required.
I'm not technical, but now you can apparently offer the subscriber the ability to arm and disarm the security system, remotely. So what issues come to mind? The device could get lost; or compromised; or not work. Subscribers, and we know that means the "least sophisticated consumer" may not know who to work the device or know if the system has in fact been armed or disarmed. More lawsuits likely to follow. Perhaps one of those lawsuits against you.
The Standard Alarm Contracts are written in sufficiently broad terms to encompass most new technology, and I think that includes these Remote Activation Devices. What the contracts do not specifically mention however is the actual equipment or use of the equipment; and the new "service" that is available. But that can be and should be spelled out in the description of equipment and services that are being provided. The legal terminology, containing the protective terms, such as the "contracting away liability for your negligence" does not have to be changed.
Though the contracts don't "have" to be changed, I am going to make a slight modification to provide that 'the Alarm Company is not responsible for lost or compromised devices." This should be obvious, but it's something that will be added to the appropriate Standard Contract Forms. This would not however, in my view, require you can change your contracts for this issue. Those of you who have not updated your contracts within two years or so, you should. - unless you're still using dialers - then you can keep using your 20 year old contracts.