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comment on additional insured and Certificate of Insurance / fire loss issue July 20, 2018

KEN KIRSCHENBAUM, ESQ
ALARM - SECURITY INDUSTRY LEGAL EMAIL NEWSLETTER / THE ALARM EXCHANGE

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comment on additional insured and Certificate of Insurance / fire loss issue
July 20, 2018
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comment on additional insured and Certificate of Insurance from July 6, 2018 article
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Ken,
            I'd like to respond as the “Insurance rep” regarding the article July 6, 2018 on naming an indemnitee as an additional insured. 
            There are so many things to consider here and I’m certain I won’t address them all – we could be here for days.  I preface all of this with that when we are discussing policy wordings and how they would apply in the instance of claim, we are speaking in broad terms.  Every claim is unique and there may be other policy limitations that apply.
            There are two scenarios that we should focus on here as they relate to the Security America policy:
1.    You naming another company as an Additional insured:
            We attached to all policies, the CG 20 33 04 13.  This endorsement provides automatic additional insured status to someone when you have agreed to do so in writing in a contract or agreement.  In addition, within the policy wording, under Coverage Part A, there is an exception to the contractual liability clause. Within that clause it states that coverage will apply if the insured has agreed via the contract to assume both defense and indemnity.  Lastly, there are other Additional Insured endorsements we have the ability to add such as CG 20 37 04 13 – Completed Ops and CG 20 10 04 13 – Scheduled Persons, for example.  So generally speaking, the Security America policy would pick up coverage where you have agreed to do so in a contract. It would be easy if those you work with have policies with similar terms and you have contracts in place.
2.    Another company naming you as an Additional Insured:
            Security America does not require you to be named as an additional insured. It is, however, highly recommended. We do not require copies of the COI’s you receive.  We do require a sample copy of the contracts you use in the underwriting process. There is nothing in the policy form that would preclude coverage for you failing to have a COI or failing to be named as an Additional Insured. 
            Certainly, outside of the realms of insurance, you want to make sure that you as a company are protected.  You should regularly review your contracts, require COI’s from companies you work with and, when it makes sense, require additional insured status.
            Other carriers:
            I obviously can’t speak for what other carriers require, but in my 16+ years of being a professional liability underwriter, I have never required an insured to provide me with COI’s before I would renew or write their policy.  I believe you would be hard pressed to find many carriers that have the requirement.  I may require a copy of a contract if you are requesting higher limits or something unique, but that is usually the extent of it.  As far as coverage is concerned, once your policy is placed, a carrier has the option (depending on the state) to 1. Cancel your policy if they feel the risk has changed or 2. Rescinding the policy if you have made a material misrepresentation.  In my experience, I have not seen a policy where coverage for a claim was predicated on the existence of Additional insured status under another company’s policy.  So, what’s your risk if you don’t provide them with the information they request?? They could non-renew your policy, they could cancel your policy midterm or they could rescind your policy all together.   
            In my opinion – it’s time to consider a new carrier.
Crystal Jacobs, RPLU
Vice President
US Risk Underwriters, partners with ESA & SARRG
crystal.jacobs@usrisk.com
866-315-3838
usrisk@securityamericarrg.com
www.securityamericarrg.com
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fire loss issue
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Ken
            Over the 4th of July holiday, one of our commercial fire subscribers burned to the ground and likely a total loss (the building was not sprinkled).  The subscriber has been under contract since 2014 using your Fire All in One contract for monitoring and inspections. We dispatched on the alarm and don’t believe there will be any issues with our performance, however I’m just wondering what, if any, steps we should take to help prevent a claim or litigation? Any thoughts?
            Also, the contract, which runs through 2019, is paid in full, but our Alarm Communicator (gsm unit) valued at $1,500 per section 17 is a loss – it feels like bad karma but should I send a bill for the communicator?
            If posting please use 
ANON
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Response
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            You can send an invoice for the communicator because the subscriber was supposed to insure that equipment and should include that equipment as part of its claim to its insurance company.  I don't think you need to give the pre-paid monitoring charges back, though the subscriber would not be wrong to claim that it should only have to pay 80% of the balance of the contract.  The sub may want an offset to the communicator charge.
            As far as preventing a claim, that answer changes depending on what the subscriber or its carrier does.  You should probably respond to inquiries, though the response will also vary depending on circumstances.  Rather than try to handle the matter yourself there are steps you should take, and steps you must take.
            First, notify your carrier of a potential claim.  If your carrier tells you they don't want to get involved unless you get an actual claim, then just ask them to acknowledge the notice and you can then deal with the subscriber on your own.  But notice is essential because you don't want to be told later by your carrier that it is denying coverage for the claim because of a late notice.
            Second, you should engage counsel to guide you.  I should probably be your first choice, but I suppose I'm not the only one.  This of course assumes that the claim is significant enough to cause you concern. Obviously a small loss may not warrant engaging counsel or even notifying the carrier.  But you better be sure it's a small loss.
            Be sure that your records and the central station's records are accurate and retained.
            Find the subscriber's contract; make sure it's signed by you.  It's a little late to be wondering if the subscriber signed it, but check that too because the contract has great influence how you respond to the subscriber and its carrier.
            Not to drag this out ... so if you have our Standard Form All in One Agreement, updated, you can just tell the sub and especially its carrier to kiss your a...   If you don't have our Standard Form Agreement and the claim is big enough, you can kiss your own a........  goodbye. 
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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