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be sure to name anyone you indemnify as an additional insured on your insurance policy July 6, 2018

KEN KIRSCHENBAUM, ESQ
ALARM - SECURITY INDUSTRY LEGAL EMAIL NEWSLETTER / THE ALARM EXCHANGE
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be sure to name anyone you indemnify as an additional insured on your insurance policy
July 6, 2018
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be sure to name anyone you indemnify as an additional insured on your insurance policy
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Ken,
    A manufacturer located in Amityville New York is aggressively promoting their fire alarm transmitter to alarm firms as an alternative to what is currently in place. Unlike most of the other manufactures that provide such transmitter services, instead of working though the central station company directly, they have positioned themselves as the middleman/subcontractor and therefore charge that alarm company directly in addition to the central station charging them as well. 
    So the big question here is if they, the manufacturer providing this service, will provide a certificate of insurance [COI] naming the alarm company as an additional insured as required by almost all insurance companies that provides errors and omissions insurance. This COI has to be sent in when with the renewal or at some other time to prove such is in place. It is require for all sub-contractors of which because they are billing directly for this service qualify as for a service being provided. Every year we have to provide certificates of insurance from the central station firms doing our monitoring and it states on the COI “As per agreement ……. Is named as an additional insured”. This is not an option but a requirement for coverage. So how does this apply here and what are the risks and ramifications if this is not provided? It seems to me that there is a risk of denial of coverage without it. 
    Maybe an insurance rep can comment as far as the insurance policy that you work with would address this such a case (is a COI required or not naming the alarm firm an additional insured by the company providing this service)?
By the way is seems that the manufacturer/service provider has no official agreement (looking on the Web) to be executed by the customer and/or alarm firm engaging in this service with them, just a “Terms And Agreement” position paper with disclaimers and limitations of liability. 
    What is your take on this and is there exposure if not provided?
name withheld
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Response
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    Thank you for your most provocative questions and comments, though mixing them may cause some confusion, especially since I am not sure your statement of facts are accurate.
    The manufacturer sounds like Napco. I am not sure how it's product or service works, and I am not sure that it bills dealers directly instead of the central stations, like, I believe, most other manufacturers who provide automated monitoring services. But I think your point is that Napco is not offering to name the dealers on its insurance policy as an additional insured. You claim that "almost all insurance companies require a certificate of insurance" from the central station and the manufacturer who is providing monitoring services.
    I don't think that's the case. I think that manufacturers don't name central stations or dealers as additional insureds. I don't think central stations name dealers as additional insureds. In fact, I think central stations and some manufacturers require that dealers name them as additional insureds on the dealer's insurance policy. And, that would be a good idea, because if you use a central station and you use a manufacturer to monitor, like alarm.com, alarmnet, napco, you, the dealer, have probably agreed to indemnify them. It would be wise to back-up your indemnity with insurance coverage, which you do by naming the indemnitees as additional insureds.
    And the buck doesn't stop with the dealer, because every dealer should require every subscriber to sign an end user agreement [the Standard Form Agreements- the All in One] which requires the subscriber to indemnify the dealer and the dealer's subcontractors. Interestingly, if Napco by-passes the central station and dealer, and deals directly with the end user, then it should have a contract in place.  I assume it has a contract with someone.  Napco didn't ask me for advice, so best of luck to them. 
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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