KEN KIRSCHENBAUM, ESQ
ALARM - SECURITY INDUSTRY LEGAL EMAIL NEWSLETTER / THE ALARM EXCHANGE
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why you have trouble getting insurance for fire suppression business
July 14, 2017
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why you have trouble getting insurance for fire suppression business from article on June 10, 2017
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Ken,
In response to your reader about finding insurance where sprinkler/suppression is the primary activity of the company.
There is a very good reason as to why not only SARRG but other carriers have underwriting guidelines that limit the amount of work an insured can do in suppression, the RISK is crazy, remediation of water costs a lot because the water flow is insane as to how much water comes out of a sprinkler head or open pipe.
The other problems are crap contracts, altered contracts and NO contracts. Lets take these three one at a time.
1. Altered Contract, A long time fire alarm and suppression company took a contract that all of the "good stuff" on the back was crossed out. The tech thought he closed the riser to replace a sprinkler head, wrong riser, empty office space (lucky for SARRG), settlement $50,000.00.
2. Crap Contract, when the office assistant transposed the contract into the computer, they missed the no subrogation clause, the exculpatory clause, and the liquidated damage section was no longer $250.00. There was a freeze up. Defense still underway, cost over $65,000 so far, damages in the millions.
3. NO Contract, a riser pipe joiner (donut) broke during an inspection in a 8 story building 6 months after a repair was made that installed the new section of pipe. 7 units sustained water damage, claims still coming, will be in excess of $100,000.00. Statement from the alarm company, "there was no RMR so we didn't need a contract".
I have handled hundreds of claims and I am still amazed.
Under the crap contracts, we have refused to renew most of them for one simple reason, even after the incident, they did not take our advice seriously enough to go out and circulate new or first time contracts. For the most part, 99% of the time if I have a good (not even a great KK) contract, we get out of the claim without the use of an attorney. Mostly because Ken has counciled me along with other notable attorneys from around the country that have work for SARRG under my engagement.
USE THE DAMN CONTRACTS BEFORE YOU ENTER THE PREMISES EVEN IF IT IS TO CHANGE A BATTERY OR REATTACH A CONTACT MAGNET.
A one dollar part is enough to screw you forever.
Another example, you do a one time inspection on a required fire alarm, for what ever reason if failed one week after you said it worked. A fire started in a area covered by the system and was not detected in the designed time, or didn't report timely, the building is a total loss, 12 million. You don't have 12 million in coverage because you can't afford it, you don't have a contract because it was a one time event and there was no RMR. Jury trial, you are found to be partially liable, 25%, 3 million. You only have one million, good thing is that you listened to Ken or your accountant and you are incorporated as a sub chapter S or an LLC and not a partnership or sole proprietor. Bad news, they force a sale of your company because they can. Good news you still own your home.
Enough for today Ken, I ruined my own day writing this on a Saturday.
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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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
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