KEN KIRSCHENBAUM, ESQ
ALARM - SECURITY INDUSTRY LEGAL EMAIL NEWSLETTER / THE ALARM EXCHANGE
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Alarm contracts: Back to basics / Contract sale ends tomorrow
March 26, 2026
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Alarm contracts: Back to Basics
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There are a number of provisions that are expected to be in your agreement with your subscribers. Generally, these provisions are essential to establish the relationship with the subscriber, set expectations of both you and the subscriber and define the legal obligations and responsibilities. It is these parameters that create the equity, value, in your security and fire alarm business. The drafting of these provisions must be precise in order to provide the intended protection. While you can call an orange an apple, it’s not. Labeling a provision something doesn’t make it so either. The protective provisions generally run against general legal concepts and principles. They are understandable only in the context of the security and fire alarm industry when you have a good understanding of the dynamics the industry faces. The development of the protective provisions, while perhaps not unique to the alarm industry, evolved over time as alarm customers and third parties became more imitative in cooking up reasons when the security or fire alarm company should bear responsibility for burglary, fire and related loss.
Because the judges who are charged with interpreting and enforcing the contracts are reluctant to enforce these protective provisions the need to tighten the wording is constantly changing and evolving. Technology too contributes to the change in exposure, as more and more devices are touted as being essential to safety and maintaining life and safety environments. So while the title to the various provisions has remained constant, the wording changes with the times. Trying to capture the precise wording at any one time is a good start, but without continuous review, and monitoring, the most well written agreement becomes questionable over time. Nevertheless it is important to know what these provisions are and, to some extent, why they are included in the security and fire alarm agreements.
Suffice it to say that alarm dealers depend on various vendors; these include, first and foremost, insurance companies and central stations. Exit strategy is also a looming consideration almost from the start of the business; when and how you will sell your business and how much will you get for your [sometimes] lifetime endeavor?
You should be using agreements with your customers [a one-time sale and installation] and subscribers [those signing up for your recurring revenue services]; that is a given. Here are the provisions you should be looking for in your agreements, and if your agreements are not updated at least every two years they are not likely up to date. Even contracts from 2025 do not have the latest updates because the contracts evolve continuously because of change in law, technology, custom and practice.
Here are the provisions your contracts require, at a minimum:
Exculpatory Clause: This is the most basic of the provisions and the foundation of the others. It is a risk allocation provision which clearly and concisely provides that you are not going to be liable for loss, even if alleged to be caused by your negligence. The effect of the provision: no liability for loss suffered by your subscriber.
Limitation of Liability Provision: Should you be found liable for loss the damages your subscriber suffers are limited, again, even for your negligence. In view of the nominal amount of the limitation of damages this provision is often confused with the Exculpatory Clause.
Waiver of Subrogation: As most lawsuits against alarm companies are from subscribers’ insurance carriers suing in subrogation, a waiver of that right effectively bars that claim. This provision can eliminate or successfully defend against a subrogation claim.
Insurance Procurement Provision: Closer aligned with the Waiver of Subrogation provision, the Insurance Procurement Provision is important because it shifts primary insurance coverage to the subscriber’s insurance carrier. The rationale for the provision often escapes even the most astute attorney or contract administrator who sees this merely as a risk allocation shift. It actually has a more potent purpose, it bars the subscriber’s carrier from suing you because you too are an insured; a carrier cannot sue its own insured to recoup the loss insured against.
Indemnity: This rounds out the protective provisions. Though effective against the party who signs the security or fire alarm agreement, your contract cannot be used to bind a non-signatory to the agreement. This provision calls upon your subscriber to defend you and pay damages if necessary against claims.
All of these provisions are important in their own way. The drafting of the provisions requires expertise and constant review and revision, and negotiating change in terms is very tricky and fluid depending on the circumstances.
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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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