Facts:
     Alarm company sues subscriber for breach of contract.  Subscriber
counterclaims claiming that the alarm didn't work, that alarm company
negligently maintained the system, that the subscriber paid another alarm
company to replace the system, and subscriber sues to recover all money paid
the alarm company and cost of replacement system.  Counterclaim is for $7500.
Alarm company sends the counterclaim to its insurance company to defend the
counterclaim and cover the loss.

Issue:
     Should the insurance carrier provide defense and indemnity under the
errors and omissions policy?

Decision:
     No coverage for this claim.

Discussion:
     The denial of this coverage comes in very technical terms and language,
but is really quite easy to understand if you know the underlying concept.
Errors and omissions, like all liability insurance is designed to protect
against losses, usually property damage and personal injury or death.  The loss
needs to be the result of an occurrence.  It is this "occurrence" that triggers
the policy.  In the above matter there is no occurrence.  In alarm situations
an occurrence can most easily be identified by a burglary or fire, or other
"event" which the alarm is designed to detect [i.e. environmental condition].
     It makes sense that a breach of contract, not accompanied by an occurrence
would not be covered.  If it were, a situation where an alarm company decided
for whatever reason, economic for example, that it no longer wanted to honor
its contract with a subscriber, could simply breach and when the subscriber
sued, turn the claim over for insurance coverage.  That's not what errors and
omissions insurance is designed to detect.
     When you look for errors and omissions insurance you need to be careful to
get the coverage you are looking for, and you need to be sure that the coverage
is designed for the alarm industry.  Many errors and omissions policies contain
general liability language which requires not only an occurrence, but property
damage or personal injury.  I have "uninformed" insurance claims representative
take the position that a burglary loss does not constitute property damage, so
it's not covered.  These same claims reps are at a loss as to what errors and
omissions coverage means for the alarm industry.  Obviously you need protection
for events which do not include "property damage," such as burglary loss.  Your
best bet is to stick with insurance brokers who understand the insurance
requirements you need as an alarm company, and who write for insurance carriers
who know and protect the alarm industry in a specially designed program, such
as the Gold Shield Advance Plan offered by the Izzo Insurance Services
[www.izzoinsurance.com] who writes for the North American Specialty Insurance
Company.