KEN KIRSCHENBAUM, ESQ
ALARM - SECURITY INDUSTRY LEGAL EMAIL NEWSLETTER / THE ALARM EXCHANGE
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comments on what is cost to increase to limitation of liability
September 11, 2026
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comments on what is cost to increase to limitation of liability from article on August 29, 2026
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Ken,
Your response regarding requests to increase the limitation of liability in industry contracts was basically correct on all accounts. As you alluded to, the genesis of providing the option to increase the limit came in New York from the old Melodee Lane case where the court stated that in order to comply with the Real Property Law (and that was a fire alarm case which they deemed to affect real property) the option had to be given in order to make the limitation valid.
Over the years I was in the business (over 45 in my capacity as an attorney) we did encounter a few requests to increase the limit (ours was $250 or 10% of the annual service charge, whichever was greater). We responded that we would raise the limit to whatever they wanted provided that we increase the annual service charge by 10% of the amount the subscriber was seeking to raise the limit to. This was to "cover our cost of obtaining our own additional insurance" to cover the new limit on the account. Realizing how expensive and redundant given their own insurance that would be, all decided to forego the option...except one. For some reason I did not understand, the subscriber wanted to raise the limit to $20,000, so we tacked on $2,000 each year to the annual charge.
It turned out that came into play years later when we were involved in litigation with another subscriber who was challenging our limited liability clause. They challenged it on the basis that the option to increase the limit on liability was in reality no legitimate option at all. Imagine our satisfaction when during a deposition we were asked if anyone had ever asked for an increased limit and actually obtained one from us. When their attorney heard the unexpected answer, you could just see the deflation in his attitude. It was beautiful. And of course, our limitation was upheld.
Bottom line: you should keep the clause, with the option to increase the limit, in.
Robert Kleinman, Esq
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another comment
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Ken
Thousand $ per million
Mike S
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Response
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Robert Kleinman was counsel and CEO of AFA Protective, large fire alarm company, until it was acquired a few years ago. AFA had a rich history well beyond the 45 years Robert was there, but his razor focused legal mind significantly enhanced the Company's growth. Known for his quick wit [some would call it obnoxious, but who am I to throw stones] he was 24/7 alarm industry law. Happy to see he is keeping his foot in the door and hope to hear from him more often. I almost got a compliment out of him but he just had to say I was "basically correct".
The older New York cases and those other state cases that followed NY did require a right to increase. Most decisions you see now, for many years actually, do not include the right to increase in the discussion regarding enforcement. But I agree with Robert that it's better to be safe than sorry, so the right to increase remains.
Mike's calculation is a bit off because $1000 increase in monthly payment won't get you $1 million limit, it gets you $6000. So $12,000 for the year gets you $6000 limit. Not very appealing if you ask me. But, it's a choice. Might lead to the discussion about you finding an insurance carry for coverage that the subscriber has to pay for; also not very appealing. Well, you're not in the insurance business and shouldn't be figuring out ways to cover for subscriber losses that you are not responsible for, contractually and practically [most of the time].
Often the limitation of liability provision is one of the trigger points when the entire contract is under review for unconscionability. Coupled with the other "protective" provisions, like the exculpatory clause, some courts have viewed the alarm contracts with skepticism [to put it mildly]. Your contract provisions must be carefully written and integrate well with the rest of the contract provisions. Get industry standard agreements at www.alarmcontracts.com and join the Concierge Program for significant savings on legal services and, more importantly, the advice you need.
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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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