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follow up on indemnity and managing dealer risk September 26, 2017

KEN KIRSCHENBAUM, ESQ
ALARM - SECURITY INDUSTRY LEGAL EMAIL NEWSLETTER / THE ALARM EXCHANGE
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follow up on indemnity and managing dealer risk
September 26, 2017
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follow up on indemnity and managing dealer risk from article on September 18, 2017
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Ken
    In the September 18, 2017 article you mistakenly state the following....
    "It's not what your insurance carrier wants either, especially since with claims within policy limits it's your carrier who receives all the benefits of the indemnity clause [other than your deductible]."
     The alarm company should be greatly concerned BEYOND their deductible for many reasons, but I will only state three here and now.
    So if the alarm company has the base policy of 1M / 2M aggregate, any indemnity amounts after 2M are the problem of the alarm company and not the insurer.
    So Ken, your statement "other than the deductible" is not a demarcation point for the alarm dealer, it's just the beginning. 
Bart A. Didden, Executive Claims Manager
Security America Risk Retention Group - SARRG
Security America Risk Purchasing Group LLC - SARPG
877-872-1266
bdidden@securityamericarrg.com
www.
securityamericarrg.com
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Response
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    I did not mean to suggest that alarm dealers should care about the indemnity provision only in regard to the deductible.  What I did mean to say, and did say, is that the indemnity provision is crucial to the insurance carrier for the alarm dealer so it can pass along the defense and damage award, if any, and as long as the claim is within policy limits, it's only the carrier that is affected, other than the dealer's deductible.
    But, every word Bart writes is correct and worth noting.  Alarm dealers have a very selfish reason to avoid claims and be in position, through the Standard Form Agreements, to successfully defend claims.  There are two components to reducing the consequences of claims.
    E&O insurance is a necessary expense in the alarm industry.  As Bart points out, there are steps you can take to reduce the expense.  If you completely ignore these steps you risk not only increased premium expenses but the inability to even find a carrier willing to write your insurance.  Unlike auto insurance, there is no assigned risk pool, only carriers that charge huge rates because the carrier is willing to write dealers who ignore every wise suggestion to reduce exposure.
    The curious thing is that business practices that reduce liability exposure are exactly the same practices that increase the value of your business; increase equity by creating more value in your business through the use of proper contracts.  Maybe someone can explain why this doesn't make sense.
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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
516 747 6700
www.KirschenbaumEsq.com