Comment on Why agree to customer as additional insured / Don’t miss final cs webinar next week October 28, 2023

KEN KIRSCHENBAUM, ESQ
ALARM - SECURITY INDUSTRY LEGAL EMAIL NEWSLETTER / THE ALARM EXCHANGE
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Comment on Why agree to customer as additional insured / Don’t miss final cs webinar next week
October 28, 2023

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Comment on Why agree to customer as additional insured from article on October 19, 2023
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Ken,
    Respectfully, this could possibly be the worst answer you have ever written and is not complete.
    When the alarm company agrees to add or issue a certificate of insurance with an additional insured status, I believe they just compromised the contract, the value of their company and opened the insurance carrier to a bad faith claim which penalties has no limitations,
    As an example, you and I have correctly written here in your forum many times, we as alarm companies have the insurance procurement clause for one primary reason that stands out above anything else, in a subrogation claim, the subrogator cannot seek indemnity against its policy holder. All entities listed as "an additional insured" is considered a "policy holder" and as such I don't believe that the contract with its limitations can withstand any claim made for damages of any type because it is brought by the policy holder.
     The point to be made at the onset is that an additional insured end-user can file a claim with the carrier without the approval or consent of the alarm company at any time, because they are an additionally insured. The end-user is not a "lessor insured" or "minor insured" or a "limited insured", they are an additionally insured with all the rights of the alarm company.
    Let's look at the worst case, bad faith claim. The additional insured files a claim, the damages can be adjusted by a public adjuster to reflect real conditions but I believe that a Court would see the limitation clauses and amounts as counterintuitive and a violation of the "meeting of the minds" between the alarm company and the end-user because why would an end-user ask for additional insured and agree to the substantial limitations in the service agreement? If the carrier refuses the claim that stems from a failure of the alarm system, bad faith would automatically attach.
    What you failed to discuss in your post is how can the alarm company can comply with the request but create a limitation outside of the contract terms and conditions right on the certificate that the alarm company can use to still protect itself.
    I have suggested for years to my USA Central Station Alarm Corp., customers and Security America RRG & RPG insureds is to print right on every additional insured certificate that goes out is that "this certificate is only in effect when the service company list above is physically on the premises". Many of those asking for additional insured status is concerned about trip and falls due to your poor control of the job site, a drill falling off the top of the ladder and hitting a guest to the property or damage to the subject property at the hands of the alarm company employee. This simple limitation language greatly narrows the exposure and does not open the door to third party actors that may create a loss such as a burglar.
    I encourage your readers to avail themselves of your Concierge Program especially now that I have filled in the hole you left. You’re welcome.
Bart A. Didden
Executive Claims Manager
Security America Reassurance Group, Inc. - SARG
877-872-1266
bdidden@securityamericarrg.com

Response
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    When I use, read or hear a statement preceded by “respectfully” I think it’s fairly disingenuous, but you, nevertheless, probably by mistake, make a few good points.
    Adding your subscriber as an additional insured is a good idea only when you have also agreed to indemnify the additional insured.  One great example in the alarm industry, and one that you should be aware of but may have inadvertently forgot to mention, is that all central stations [USA included] require dealers to add the central station as an additional insured.  And, that additional insured language is most definitely not limited to when the dealer or central station is on the subscriber’s premises, which the central station never is.
    What a dealer needs to try and negotiate is that the additional insured provision is subject to the alarm contract.  Your suggestion that it be worded to cover only damage while on the subscriber’s premises is also good advice, though not as good as my recommendation.
    Here’s the rub; sometimes the subscriber won’t budge and demands additional insured status, with no conditions, and sometimes the dealer wants to job and will agree to the demand.
    Additional insured can arise two ways.  The first is when the dealer calls its insurance carrier [or its broker] and asks for an additional insured certificate.  In that case the carrier is presumed to know that it issued the additional insured certificate and understands its exposure.  The carrier would be hard pressed to claim surprise or fraud when the subscriber makes a claim under the policy.
    The second way a subscriber gets additional insured status is when the policy has a provision that the policy coverage will extend to any party with whom the insured contracts to indemnify.  This is automatic coverage when the insured agrees to indemnify or name the subscriber as an additional insured.
    Coordinating insurance coverage and additional insured status should be a collaboration between the dealer’s counsel and insurance broker.  I can tell you who we won’t be consulting, with all due respect, the claims department at the carrier; they know a lot usually, but not about coverage issues.  Coverage issues are addressed by the carrier underwriters, not claims department, where, as Claims Manager of SARG, I think you reside.
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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