KEN KIRSCHENBAUM, ESQ
ALARM - SECURITY INDUSTRY LEGAL EMAIL NEWSLETTER / THE ALARM EXCHANGE
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Comment on indemnity and additional limits of coverage / ISC Schedule
February 19, 2024
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ISC schedule
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I'll be at ISC in April and again sponsoring and conducting informative meeting. Vendors who wish K&K to schedule meetings for them should contact Stacy Spector,Esq at 516 747 6700 x 304 or sspector@Kirschenbaumesq.com now. Dealers who want to participate in private meetings with me or vendors listed on The Alarm Exchange should also contact Stacy to schedule a time. Meetings [private and group meetings on scheduled topics] will be schedule for half to one hour, without charge, and conducted at the Palazzo Prestige Lounge. Times and schedule is limited so please contact Stacy soon as possible to request a topic or schedule an appointment.
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Comment on indemnity article and additional limits of coverage from article on February 8, 2024
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Ken,
First and foremost – Hi! I’m back and it is good to be back! After a brief hiatus from my involvement in the Security America program as I moved companies, I am excited that Eff. Feb. 01, management of the Security America program has moved from the prior manager over to me at my new home, Balance Partners. No changes to carrier, rate or coverage – just day to day management with a familiar name or two.
I’m excited to be able to provide insurance insights to the industry again. I echo Ken’s commentary about making sure the contracts are in order. This is a first line of defense in any claim and can make or break us. We definitely appreciate our “Kenny Contracts” and even give insurance discounts for use of these contracts!
When it comes to liability – putting aside the limitation of liability – you certainly do not want to leave your business exposed in the event of a claim. The standard Professional (E&O/Errors & Omissions)/General Liability limits that are carried are 1M Per Occurrence with a 2M Aggregate, but lately I have been having more and more conversations about additional limits.
The biggest question is “Why should I consider” or “Why do I need” to carry either excess or umbrella. In insurance, we have something called PML (Potential Maximum Loss). It’s mostly used in property coverages for catastrophic events, but the same concept can be applied to liability when trying to determine if/when additional limits should be carried.
Here are the things I always tell business owners to consider:
* First, consider the work you are doing and the values of the property that could be impacted. Are these higher value properties? Are they large commercial enterprises?
* Second, consider that in a worst-case scenario, you will be dealing with a wrongful death claim. Property is replaceable, people are not. It’s hard to put the value on a person’s life, so these types of claims tend to carry the highest settlements/judgements.
* Lastly, it’s always – is the juice worth the squeeze? Consider the cost of the additional limits, what you can take on from a premium expense standpoint and the exposure you are potentially presented with. If you are a smaller business who doesn’t carry commercial auto or worker’s comp, you could get away with a simple excess limit over PL/GL that starts at $750 annual premium; If you do have commercial auto and/or work comp, you could consider carrying umbrella coverage which would sit over your PL/GL, Auto & Comp and starts around $885 – $1K.
It really boils down to what you are willing to take on from a risk perspective. You can keep the risk or you can transfer the risk.
Again, good to be back and I look forward to contributing to this forum again!
Crystal Jacobs
Security America
Industry Insurance Provider
P: 866-315-3838
E: info@securityamericains.com
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Response
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Keep in mind that the K&K Contract may get you off the hook, but you still need insurance to fight the fight; you’re going to be dragged into lawsuits no matter how careful you are. And you may end up having to pay something, nominal or significant. While personal injury is a real wildcard, fire loss and property damage and theft can often be just as difficult to predict [though if you do fire alarm or fire protection you know the enormous exposure in life and property.
You rely on the K&K contracts and so do a lot of others who you rely on. Who? Your central station for one. And don’t think you’re doing just the central station a favor by using a K&K contract, you have agreed to indemnify your central station, even for its negligence. Your central station is [or should be] smart enough to know that your K&K contract is what makes your guarantee worth something other than an empty promise.
Your insurance carrier also depends on your K&K contracts, one reason Security America actually gives you a discount in premium if you have the K&K Contracts. The carriers rely on the contracts to limit your, and its, exposure on claims by your customers.
Any subcontractors you engage also rely on your K&K Contracts. They are boots on the ground, doing the work, but they have no contractual protection, unless you cover them with your K&K Contract [which you do by using the K&K Contract].
Finally, and this seems to wake up even the most resistant to using contracts alarm owners, when you go to sell your accounts or company the potential buyers will be looking for and relying on the K&K Contracts, and so will you at that point if you’re looking for the highest price you can get for your accounts.
And one more thing, welcome back Crystal.
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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
www.KirschenbaumEsq.com
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