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Comment on challenges to contract provisions / Free book  today and tomorrow
September 11, 2019
Comment on challenges to contract provisions from article on August 31, 2019
            With regards to the article on August 31, 2019, the customer wanting to modify an alarm companies contract.  The industry needs to learn that some jobs are best "given" to a competitor.”  Let a competitor agree to outrageous changes to their contract and assume the risk.
            In your rebuttal I feel an important point was overlooked.  Every legitimate insurance carrier wants a copy of your contract in advance of providing coverage.
They want to know their exposure dealing with you and of course, where the legal loopholes are.
            Acceptance of your contract and issuance of the policy means they agree and will provide coverage under those terms and conditions.  If modified, you may have an agreement with your customer but, have now voided one with your insurance carrier.
            Any contract changes not approved in advance means they have every right to refuse to back any loss there is no contract.
John W. Yusza, Jr., President
Monitor Controls, Inc.
Wallingford, CT 06492
            John is right about letting a competitor assume the risk some subscribers insist on.  But, lucky for most of you, John is wrong about losing coverage on the claim if you have altered your subscriber contract.  I am not aware of any insurance carrier writing alarm E&O coverage that includes an endorsement that “an approved unaltered contract is required for coverage of a claim”.  Rather, most of the carriers ask to if you use alarm contracts that they approve so they can better assess the risk they undertake to insure you.  Your carrier, like your Monitoring Center and other subcontractors, rely on your contract with the subscriber.  When you change the terms of that contract you put not only yourself at greater risk, but others relying on you.  
            Though you will not likely face a “denial of coverage” for a single claim that you cannot produce an approved unaltered contract, you could very well face not only a denial of claim but termination of your policy.  The grounds would be fraud, your fraud.  That would be the case if you never use the approved contracts.  Say you get your hands on an approved contract and you tell the carrier that you use this contract, but you really don’t.  In fact, you use a proposal, or no contract or a subscriber’s contract, or some old form you’ve been using since someone invented a siren.  The carrier could take the position that you induced it to write the policy by lying on your application for insurance.  It would be a “material” misrepresentation, and the carrier would prevail in canceling your coverage for the claim and your policy.  And don’t they won’t do it if the claim is big enough.
            Every provision in the Standard Form Agreements is there for a reason, your protection.  The added benefit is that it also adds to your equity; your company is worth more because your contracts are worth more; they will fetch a higher multiple.
            Be sure to use only updated Standard Form Agreements.  It will make your Monitoring Center happy and your insurance carrier happy.  Yes, yes, me too.
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            Jay has made the transition from alarm industry executive to writer of entertaining novels.  He graciously offers his book at no charge to the industry through this forum.  Thank you Jay and I look forward to reading another fun story.

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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