Our subscriber wants to change the indemnity paragraph by removing the word "negligence" and adding at the end of the paragraph:
    "except for those damages solely caused by the negligence or willful misconduct of SM."
    Also this subscriber deleted the Limitation of Liability provision and wrote:
    "*We are not agreeing to your limitations of liability.  Basically we are responsible for our acts and you are responsible and on the hook for your acts."
    What do you think?
    You should not agree to either of these changes.  It's a holiday weekend so I'll keep this brief.  The Standard Form Agreements are written to:

  • protect you
  • grow your business through RMR services
  • identify and offer various services
  • maximize your potential for sale of the RMR accounts

    Protecting you and your business is closely related to the value of your business.  No potential buyer wants to buy your headaches and added risk contracts.  It's just not worth it, at least most of the time.  It's not likely that the subscriber requesting these changes is paying enough to justify the risk or enable you to obtain additional insurance from a carrier who understands the risk.  That carrier by the way would not be an E&O policy but a theft or fire policy that expects to pay out if there is a loss.  Your E&O policy expects NOT to pay if there is a loss because it intends to rely on the protective provisions of the contract you are supposed to be using.  If that contract is from www.alarmcontracts.com and has the KIRSCHENBAUM tm mark and copyright then you know you have the best available contracts in the industry.  
    A properly worded alarm contract will exclude liability for ordinary negligence.  While that may sound harsh, you, and your subscriber, need to understand that only by managing your liability exposure can you and the rest of the industry continue to provide affordable security services.  You're not in the insurance business and the insurance you carry isn't designed to cover losses suffered by your subscribers.  Look at the numbers for a fire alarm system in a house.  Maybe it cost $3,000 to install the smokes, $75 a month to monitor [you wish].  House burns down.  It was a 2 million dollar house.  You think the home owner's fire insurance policy costs $75 a month?  It doesn't.  If you told your E&O carrier that you were removing "negligence" from your contract and deleting the limitation of liability provision, your carrier, if it was willing to continue the policy, would want the same premium the subscriber is paying their fire insurance company.  That of course is in theory only because your E&O carrier isn't interested in writing your subscriber's fire insurance and if it finds out you entertain these changes in your contract it won't be too keen on continuing to insure you either.
    Your carrier expects you to get the best contracts available and to use them.  You get them at www.alarmcontracts.com.  Check with me before agreeing to changes.