Insurance Coverage And Subscriber Form Agreement / More On Bart v Lee And Renewal Contracts - January 10, 2017
insurance coverage and subscriber form agreement
Thanks for all you do for the alarm industry.
I am working with a state agency to install a non-monitored security system on cabinets housing various items in a museum. They say the don’t sign contracts. However, they have a small contract for me to sign regarding payment that’s about half a page. I’m concerned about liability in the event some of these $30k items are stolen and they feel the alarm did not notify a guard.
My insurance agent told me the following: "Your carrier provides coverage for a covered loss but there must be a valid contract in force, your contract, in order to protect you and the carrier.”
The state also wants proof of insurance. Would it suffice to tell the state in writing attached to the proof of insurance that by installing the system they agree to the terms of the attached agreement (I use your standard contract)? Or, should I just run from this job?
You raise a lot of important issues.
It's not uncommon for a municipality to refuse to sign your Standard Form Agreement. You state that your subscriber first tells you it doesn't sign a "contract" and then proceeds to require you to sign its contract form. You describe that contract form as "a small contract". Sort of like you telling me, with your last dying breathe, that the caliber bullet your subscriber just shot you in the head with was a "small caliber 22". Does it hurt?
I assure you that the "small contract" contains a provision requiring you to indemnify your subscriber if it suffers a loss. I also wouldn't be surprised if your "small contract" refers to a few other documents that are hundreds of pages long, containing nothing helpful to you.
I am not suggesting you not do the job, only that you understand your risk.
I am surprised by what you say your insurance broker told you. Sounds like you were told that if you have a claim then as a condition precedent to coverage for that claim you will need to produce a signed copy of your Standard Agreement that the carrier previously approved. I doubt there is such a requirement. If there is then you need a new insurance policy; probably a new insurance broker too. Look on The Alarm Exchange under Insurance Brokers and if any of them tell you they have that kind of policy for you to consider let me know. Not sure they belong on The Alarm Exchange. Why?
You can have an insurance policy that requires that you have an approved contract signed for coverage of a claim, but you better know that is the policy you have and then you better make sure you have a signed contract for every job, every service you provide. You can't afford to be without insurance in the alarm industry.
Your final issue is asking whether you can lock the subscriber into the terms of your Standard Contract by referring to it in a document that you are sending to the subscriber with the statement "if you let me start the job you agree to the terms in my agreement". It's not going to work. If what you are trying to accomplish is an insignificant contract term then it won't matter when it's not enforced. But you need "contractual protection" when you do security,alarm or fire work, and you need to be as certain as you can be that your contract terms are going to be enforced.
You should be insistent that your contract needs to be signed. There are many provisions in your contract that describe the job, the system and functionality. Those provisions are not in the "subscriber's form contract". If the subscriber flatly refuses to sign your contract then the next step will be trying to negotiate the subscriber's form, hopefully incorporating as much of your form agreement as you can. If the subscriber won't budge then you may want to consider getting insurance specific for that job, assuming it is cost effective. Finally, if nothing can be negotiated you have to weight the risk and decide if it's worth the job. Sometimes it is; sometimes it's not.
MORE ON BART V LEE AND RENEWAL CONTRACTS
With all those comments from alarm company sales and purchasing professional representation firms (accounts that were never directly in this business, recycled past owners and employees now acting as experts in the sales and purchase of alarm companies, finance companies, central station operators that also sit on insurance company boards and wear two hats etc.), it is easy to say re-sign your customers every time their agreement ends. While I cannot speak on behalf what goes on in the country other than in the northeast, I am sure that it is agreed that this is not such a simple thing to do. People and firms are much more savvy then years ago and with all this talk constantly about no contracts from cell, cable and other alarm companies and there is much more apprehension to do so. On top of this there is review of all agreements by lawyers such as yourself that represent their clients plus insurance companies that do the same looking out for the best interests of the parities that they represent.
Yes I know the importance of a fully executed agreement for financial values and from a legal stand point, but from a business stand point it can and is an issue when it comes to renewals. I am speaking directly based on commercial not residential agreements. You can mail them to the client to get them signed but you take the risk on having them returned. If the client does not return them you can only call so many times before they get annoyed or suspicious and do not return them. Then they become prompted to shop for a cheaper price and they will always find many others to do the same work at half of your price.
You can visit them and attempt to have them sign the agreement but the longer it is and the more pages and conditions that it has they will request that you leave it and if so that is the end of that. Yes you and others will state that a good salesman can get it signed but even so that is not in all and many cases.
So the problem now is if you cannot get that renewal agreement do you continue to provide services and retain the customer? All those professions listed above will say are you willing to risk your business without the agreement. In the real world the big question is does the risk outweigh the financial benefit in doing so plus any future business? For example and a real one. You have ten larger customers that are paying over five hundred dollar a month let’s say equivalent to eight thousand dollar a month equal to ninety-six thousand dollar a year plus. These ten customers for some reason whether it is to keep their options open or something else will not sign a renewal agreement and the past agreement that was signed was done so many years ago without a month to month renewal clause. The certified renewal letters to renew them were never sent out to them and technically their agreement have expired.
You may say there is blame here for not doing so but these are real case scenarios for a large part of this industry so take it for what it is. Without being critical here and stating everything that should have been done to avoid this what should you do now? Should you cancel or threaten the customer to sign the agreement of go someplace else of just keep collecting the money and when the opportunity comes, attempt to sign a new agreement? I believe that most would keep collection the money. Let’s see what the response is here to this situation from those reading this. Those who respond please keep on subject as to whether to dispose of the customer if they do not sign the agreement or keep collecting the money. As to those listed above who buy and sell firms, there is no interest in your responses justifying what you do and the value of your services and in having contracts when buying and selling alarm companies. That have been hashed over and over again, we all know the value. Lastly, make note that there are still many firms that will buy accounts with guarantees from the sellers without agreements in place. They will buy companies and accounts without agreement especially on the commercial end at a lesser price but there is still value. With that understand they will then attempt to have new agreements signed and not pay for those after a period of time who do not sign an agreement so let’s make this clear. Ok, the flood gates are now open for comment within the guide lines set above.
“From The Real World” (not evil world even if you think so)
“So may the force be with you in the New Year”
Well that's a lot of crap. You need to have proper contracts in place or you risk losing your company to a single claim and you end of kidding yourself thinking that you are actually building a business with any value. Sure someone is out there will to buy your accounts, contracts or crappy contracts. That's because they are going to pay rock bottom and then require the subscribers to sign a proper contract or dump them, or they are as dumb as you are. A sucker is born every minute, stupid every few seconds.
Renewal provisions in alarm contracts are necessary because you, and your subscriber, do not want the service to terminate, especially without notice, and there is no reason you should agree to give notice. When subscribers insist on no renewal clause, even month to month, I advise my client to take the job, diary the termination date, and cut off service on that date, period. Alarm, security and fire services are not television service. And, by the way, your contract with the TV service ends, so does your reception; right then and there. Little more at stake if alarm monitoring terminates and the subscriber is not aware of no service. Also, you think you don't have a contract with "cell, cable and other alarm companies", well guess again, because you don't have cell or cable service without a contract. You don't remember clicking "I agree" on your phone or confirming service on a recorded telephone conversation, but I assure you that you did if you have the service. As far as alarm service, most if not all of the "no contract" alarm companies do in fact have a contract for the subscriber to sign or agree to and be bound by, it just permits cancellation without penalty. That's what the alarm company means by no contract.