December 30, 2011

 

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 I'd like to wish everyone a healthy and prosperous New Year. The inquiry I received that I am sharing with you today should really be an eye opener to any of you out there that still don't appreciate the need and value of a proper security contract.

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Question

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Ken-

We were referred to you by our new central station.

We currently provide alarm monitoring along with general sales and service work for security equipment at financial institutions (vaults, drive thru windows and drawers, cameras, alarms, etc). Although a minority of our revenue, the alarm monitoring is an important part of our business. We are currently unhappy with our third party monitoring services provider and are looking to change vendors. As part of this project, we want to take a good look at our user contracts (or lack thereof) and get any and all new agreements signed at the same time. I should note that although our current provider 'requires' end user contracts, we have many accounts with them and have never sent one in so I am guessing that both the third party provider along with us are pretty exposed.

The questions and areas that I would like your input on are:

1. Do we need an additional alarm monitoring contract between the end user and us in addition to the contract required by the new central station?

2. The new central station requires a separate contract at each customer location. If we need an additional contract, can we have a blanket contract between the end user and us covering any and all locations (one customer has many multiple locations)?

3. While we do not currently promote or even want to get into the fire business. We do have some customers that run their smoke detectors through our monitoring service. We had a customer facility burn down recently and a subrogation attorney contacted us because we were their 'fire alarm monitoring providerâ'. This was a bit of a surprise to me and has made me wonder if we have assumed additional liability by hooking up the smokes? Is this an area that we should potentially rethink our policy? In addition, does any language that protects from normal alarm monitoring liability also suffice for fire?

4. We have service agreement contracts (that were primarily pieced together from various other contracts) that cover our work on user's equipment. While we have never been overly concerned with holding customers feet to the fire in terms of contract duration (we seldom have any customer retention issues), I do want to make sure that I understand our exposure and that we are sufficiently covered from a liability standpoint in terms of that equipment not working properly during an event.

5. Final question. Is there a way to have a single contract that covers all of the above even if the customer doesn't use all of these services?

Name withheld

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Answer

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Yes you need your own monitoring contract. You can have a master monitoring contract for multiple locations, though you will need a separate writing for each location to establish the relationship and specifics for each location. You need a Fire All in One contract if you do any commercial fire. Commercial fire usually means any fire detection equipment, and even if a commercial location is not required to have a fire alarm, in many jurisdictions, once you put in any fire detection equipment you must then comply with all AHJ fire alarm requirements. You have no business installing any fire detection equipment if you don't have the expertise to install fire alarm systems in compliance with AHJ requirements. Fire alarm systems and services do have different liability exposure; more, not less.

You've pieced together a service contract? Really? You want to understand your exposure? Well here it is: You can lose your business, everything you own personally and perhaps go to jail for some level of felony manslaughter. How's that? Got your attention yet? Your security / alarm contracts are the most important part of your business and you've apparently neglected to appreciate this since you've been in business. One loss and you could be out of business. One fire death in a building where you installed a system, plus an aggressive prosecutor, and you could face criminal charges. I note that you haven't mentioned a license in the jurisdictions you conduct business. I hope you have all the licenses you require. If you don't, I suggest you contact my office for assistance in getting those licenses.

Can you have a single contract? No, unless you don't mind using a 10 page contract that you won't know how to fill out and your subscriber's won't want to sign.