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Question Re: The Hartford insurance
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Ken
In one of your post recently you did not speak highly of The Hartford as an insurance carrier for security alarm companies. This caught my attention because they are my insurance carrier of record. Fortunately in the 12 years I have been in business as a commercial alarm company I have never had to file a claim. I am sure that is just luck and my time is running out. Not every insurance company will write a policy for Security Businesses so our choices are limited. With that being said, can you elaborate on why you are not a fan of The Hartford? You are welcome to post this on your daily e-mails with your response if you so desire.
Protecting You,
Ken Kocher, President
FORCE SECURITY SOLUTIONS
Manassas, VA
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Response
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A few things first. Error and Omissions insurance coverage in the alarm industry is essential because a claim can arise even if you've done everything right and the cost of defense can be staggering. E&O insurance with any carrier is better than no E&O insurance at all. Although there have been times during my long career that alarm operations E&O coverage was difficult if not impossible to obtain, today you have many choices. You can find knowledgeable brokers on The Alarm Exchange and they have close to 10 different companies to chose from, though most have their carrier of choice.
There are a number of issues you should consider when selecting a carrier. Price of premium is an obvious consideration, but trust me, if you have a claim it's not going to be your biggest concern. So you should be inquiring about how the carrier handles claims; how often does the carrier decline or withdraw coverage? Why was coverage denied or reserved? How often has the carrier dropped or refused to renew a policy, and why? These are questions that effect you directly.
Here are a few questions that affect you indirectly. How does the carrier support, or hurt, the alarm industry? What is the carrier's policy on settling or defending claims, and how does that policy effect the alarm industry?
So why is The Hartford towards the bottom of my list of options? I don't know about relative cost of premiums or coverage levels, so that's not a factor. It's the claims side that troubles me. I have found that The Hartford prefers to use its "house" counsel rather than assign out the defense cases to experienced alarm industry defense attorneys. This affects you in several ways. Their unfamiliarity with alarm defense issues causes you, and them, to have to spend more time on the matter. As to how the defense is handled, suffice it to say that the house counsel typically handle lots of different issues and don't specialize in alarm defense matters. I'll leave it at that.
The Hartford has [or at least had] a separate Subrogation Department, handled by a separate group of people, and they sue alarm companies, making the same lame claims we see subscribers making against alarm companies, and challenging the very same contract provisions and legal issues that alarm companies [and alarm company insurance companies] depend upon. So that's just stupid.
I got a call a few weeks ago. Alarm Dealer was sued. This company subcontracted its monitoring to a wholesale monitoring company, as most do. Lawsuit came in claiming negligence in monitoring. Alarm company turned it over to The Hartford, who I was told initially denied coverage claiming that the E&O policy excluded alarm monitoring [so I was told by the alarm co]. What? Right that makes no sense. I didn't check it out further. Last thing you need is a carrier that looks to avoid coverage when a claim comes in. I still remember the days of California Union Ins Co in the late 70s and early 80s. It approved coverage when clearly there wasn't coverage simply as a matter of good will, knowing we would knock out the claim quickly. It also knew that protecting the law for alarm defense was important, and it often approved defense costs well in excess of settlement amounts so that alarm law could be made or preserved. Today's carriers still benefit from that attitude, but few subscribe to that philosophy. Today its more like how cheaply can we handle the claim and get out from under the claim, no matter what precedent we may establish and the consequences that may follow. It's no wonder we see an increase in claims against alarm companies. It would be interesting to see how many are brought by the same carriers that provide the defense.
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Question - adding smoke detectors
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Ken:
I am trying to get my Alarm Business started. I purchased your residential All-In-One contract. I just received my first request for a quote and sure enough it is in Queens (I'm in Westchester). The client is asking for a burglar alarm but of course he wants two smoke detectors with the residential system. It is a single family, attached home and it is NOT new construction. He has two old battery operated smoke detectors in the home now. Due to the fact that it is not new construction, and to keep labor cost and damage down, the system will be a completely wireless system.
My question is since this is in Queens and it is not cost effective to get master electrician involved for two wireless smokes, should I remove the smokes for the quote? I understand that a Master Electrician needs to install a fire alarm in NYC but does this constitute a fire alarm system? I find it hard to believe that companies like ADT get master electricians involved with every wireless smoke detector that install in a residential security system in NYC.
On a final note, I never expect anyone to work for free. Whatever, the billing time, and fee is to address this issue, just let me know your preferred method of payment. I just need to know if I can take these kinds of jobs in the future.
Also, I forgot to mention that this will probably be a monitored system by Rapid Response.
Thank you for your attention in this matter.
Sincerely,
Mark McLeroy, President
Patriot Electronic Security Systems, LLC
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Answer
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You can add the smoke detectors. The involvement of the master electrician is for commercial fire in NYC, not residential. The Residential All in One will cover you for the added smoke detectors. Make sure you program the alarm correctly so that Rapid can properly interpret the signal as fire or burg. Best of luck in your new business and I look forward to your participation in this forum.
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TO SUBMIT QUESTIONS OR COMMENTS REPLY TO THIS EMAIL OR EMAIL Ken@Kirschenbaumesq.com. Most comments and questions get circulated.
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Speaking Engagements
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