February 8, 2012
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Question
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Ken,
Great newsletter! Thanks for all the great information. I have just a quick question. We recently sold and installed alarms in a county that requires alarm user permits. An alarm had gone off and when our monitoring center contracted Dispatch they were told the Police would not respond because the user had not obtained the required permit. As an Alarm Company, what, if any, is the liability here? We have sent letters explaining to our clients that they will need to obtain this permit but who's responsibility is it really? Our contract states its the users. What's your legal take here?
Thanks!
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Answer
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There are a few issues that should be addressed. Liability often extends to more than just your subscriber. And liability can also mean different things, such as liability to your subscriber and others for damages arising from a loss the the alarm service was designed to detect, or liability to a municipality for doing something you're not supposed to. Alarm permits serve at least two purposes. The first, revenue for the municipality. The second, so that the end user is identifiable quickly in case response is necessary.
In consumer settings, in most jurisdictions, the contractor is required to procure necessary permits. This generally refers to necessary permits required to perform work, such as getting a work permit to perform alterations to a residence. This type of municipal permission is generally not required for alarm systems, except for commercial fire alarm systems [and in some jurisdiction I suppose residential systems as well]. But plenty of jurisdictions require end user permits. That permit is obtained after the system is installed, usually in connection with monitoring the system.
There have been some jurisdictions that have imposed the responsibility of obtaining the permit, making sure it's kept current and paying any fine for failure to comply with the permit ordinance. But most permit laws require the end user to obtain, pay for and comply with the permit law.
It's not unreasonable for the alarm company to be responsible for advising the subscriber that a permit or registration is required, and letting the subscriber know the cost of paying for the permit. My Standard Alarm Contracts provide for that.
So what happens when the subscriber doesn't get the permit or fails to pay to keep it current and active. Assuming there is no statute that requires action on the alarm company's part, it is the end user's responsibility to obtain, pay for and keep current and active the permit. Lack of response for no permit falls on the responsibility of the end user. The Standard Form Contracts make it clear that the recurring payments required under the contract are not suspended or terminated because of a no response policy by police or fire. You should however make sure that no action on your part is required.
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More on lock out codes
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Ken
With regards to Anonymous.
I give great credit to this man for having the common sense to avoid doing business under the conditions as stated.
Several years ago I refused to install an alarm system at a lumber yard when the customer wanted us to modify our sales agreement to cover any loss not covered by his insurance company. In the midst of the final presentation he mentioned that business was down considerably.
Quickly adding all of this up ...Business down + wanting us to be an additional unconditional insurer for a fire loss, in a lumber yard, resulted in politely excusing myself from a potential disaster. Sooner or later some fool will take the job. Better he lose his business than me.
Respectfully,
John W. Yusza, Jr., President
Monitor Controls, Inc.
Wallingford, CT
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Ken
We consider the program in the alarm panel our intellectual property. When we have a customer owned system we lock it up just like company owned
systems. Our policy dictates: Should they have a desire to use another
company for monitoring; We will restore to factory default and walk away.
Are we at risk with this policy?
Tim
*************** Response - Depends on your contract terms.
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Ken,
Lock out codes serve two purposes: to prevent other companies from suddenly taking over a monitored account and to protect the alarm dealer from customers improperly programming their security panels. The latter purpose serves to protect the dealer from liability. If customers have full access to their panels, they can change codes and entry/exit delays, but they can also delete or improperly program sensors, communicator formats, central station phone and account numbers, or any number of options that could lead to false alarms, failure to report alarms, or false alarms reported to someone else's central station account. The lock out code draws a line of responsibility that distinguishes the areas of responsibilities between the dealer and the customer.
That being said, it is vital to keep dealer lock out codes confidential. If a customer wishes to either discontinue monitoring or switch to another dealer, the appropriate action would be to set the lock out code to the factory default. In this way the confidentiality of the dealer lock out code is protected (and the dealer is no longer liable for the alarm system) and the customer has access to their equipment.
Chris Allen