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Eroding contract protection 
November 12,  2019
Eroding contract protection
            Here is what's going on with a major property manager.  They decided that since they are so strong they can impose their contract on all vendors - alarm companies in particular - because alarm companies have such one-sided agreements.  This is a nationwide issue for the alarm industry.  
            I've had some success getting this property manager to back off where they were desperate for a system only my client could provide, but the property manager is getting inflexible; best to deal with the property owner and get them under long term contracts. 
            Question is whether this property manager will be able to mussel the NYC alarm companies to give up their contracts.  Keep in mind that there are only a few monitoring centers that NYC customers can use for fire.  
            You can sign this property manager’s contract if you can get your contract added as addendum - and signed by the property manager.  You can try and bypass property manager and go to the property owner with your contract.  
            If you decide you want the work and are forced to sign the contract, be sure to add the property manager and the property owner to your E&O policy and tell the monitoring center to do the same.  Try and increase your charges because your insurance rates are going to go up.  
            Of course property managers are not the only alarm subscribers with strong bargaining positions demanding significant changes to the alarm contract or demanding that a general vendor agreement be signed.  This trend is increasing in all parts of the country.  Bart Didden wears two hats.  He owns USA Central Station – a wholesale monitoring center, and he is the Executive Claims Manager for Security America – the insurance carrier owned by the alarm industry policy holders sponsored by ESA.  So Bart is concerned with covering his [considerable] butt and all policy holders’ butts.  Eroding contract protection is the crucial issue.  Here is his take:
            Thanks for giving me the opportunity to comment on this important and timely issue.  It’s a difficult issue and only if the industry stays together will the contract survive.
            What would be very telling is what does the contract that property manager signs when it agrees to manage a property? a.k.a the shoe on the other foot.
            I don't believe that the failure of the contract will happen in NYC with the very small pool of service providers.  Rather the deterioration will happen in the surrounding areas where there are many alarm companies willing to alter contracts for business.
But alarm companies should be very careful that their insurers don't alter the rules in the policies.
            I HAVE ASKED IN THE PAST for such an alteration to the SARRG Board and while not adopted, the idea is not dead.   Experience changes in the loss runs will determine the outcome.
            But here is a shortened example of why I asked for a policy change to deny coverage when a contract is altered.
            A considerably mid-sized but privately held fire alarm company had presented a claim for water damage from a sprinkler system that was being worked on at the time by its employee. The building management employee was on site and turned off the wrong riser when a sprinkler head was going to be changed. Managements employee gave the go ahead and the water damage occurred in excess of $60,000.00 to a vacant space. Imagine what the loss could have been if it was occupied. 
            When I was presented with all the documentation and contracts, the monitoring and service contract had ALL OF THE PROTECTIVE sections crossed out by the property management company.  I had nothing to defend the alarm company (my insured) left in the contract.  I went back to the company ownership and asked what happened?  I was told, "we wanted the business from this large property management company so we accepted the altered contract".
            Surprisingly the alarm company was unapologetic, understood the risk and showed no intent to look for any other altered contracts and either update them or cancel them.
            SARPG denied their next policy renewal.
            I think that this event clearly shows what will happen to companies far and wide who accept property manager’s or subscriber’s forms.  If the property managers feel so strong about this issue, I say, let them go out and start an alarm division and their own central station and then segway back to my earlier statement; let's see then what contracts they present to their customers.
Bart A. Didden, Executive Claims Manager
Security America Reassurance Group, Inc. - SARG

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Ken Kirschenbaum,Esq
Kirschenbaum & Kirschenbaum PC
Attorneys at Law
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