I have your Fire Alarm All In One contract and some of my customers are starting to complain about the Insurance Section 15.  What can I say to them to explain it?
Thank you.
    The insurance clause is an insurance procurement provision.  It requires the subscriber to obtain and carry insurance covering its insurable interest in the premises and its contents and to name the alarm company as an additional insured.  Some subscribers balk at this provision.  The part they don't like is having to name you as an additional insured.  Most of them understand that they carry the insurance anyway.  Those that simply don't want to take the time to read it or consider the provision, including the part that requires them to carry insurance, will be the most difficult to deal with.  
    The insurance procurement provision serves a number of purposes.

  • It is one of the several "protective" provisions in the Standard Form Agreements that combine to convey the unmistakable intent that the alarm company is to have no liability if the alarm equipment or alarm services fail to prevent a loss.
  • It emphasizes to the subscriber the importance of obtaining insurance to cover losses that the alarm company has no intention of covering.
  • It will function as a waiver of subrogation since the carrier won’t be able to sue its own insured, in your case, additional insured

    Of course none of these explanations are particularly persuasive to your subscriber since they, like the insurance procurement clause itself, is primarily for your benefit.  Some subscribers may be satisfied when told that:

  • Our lawyers require us to use this Standard Form Agreement
  • Our insurance company requires us to use this Standard Form Agreement
  • You, the subscriber, carry the insurance anyway and adding us won’t cost you any more money and will avoid potential conflict later if there is a loss.
  • We can remove the provision but we will have to add an additional charge because we will need to obtain additional insurance to cover your premises.  This will be essentially a waste of your money since you already have insurance coverage.

     So what happens when your subscriber won’t budge and you want the job?  You can modify the provision in one of two ways.  First you can omit the entire paragraph.  Second, you can delete the part that requires you be named an additional insured.  
    Keep in mind that if you do modify or delete the paragraph you are diminishing your contractual protection.  Be careful to leave other protective provisions untouched.