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QUESTION:   INSURANCE PROCUREMENT PROVISION
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Ken:
    There was discussion within our company regarding the E&O clause within the contract and how it protected companies.  Is this still be enforced by Judges? Do you have any recent court cases you can site?
With regards,
Joseph (Joe) Pfefer, President
Jade Alarm Co
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RESPONSE
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    I think you mean the "insurance procurement" provision.  None of the All in One Agreements mention an E&O policy.  E&O [errors and omission] policy is insurance that you as an alarm company would and should carry.  The provision in the All in One Agreements regarding insurance requires the subscriber to carry general liability and other insurance to protect the subscriber's insurable interest in the premises and the property on the premises.  The provision goes on to require the subscriber to have its carrier issue an endorsement naming the alarm company as an additional insured.  
    As an additional insured you get two advantages.  First, if the subscriber suffers a loss it will be the subscriber's policy that covers the loss.  If you get sued by a third party or even the subscriber, it will be the subscriber's policy that you look to for coverage.  Perhaps more importantly, as an additional insured on the subscriber's policy, the subscriber's carrier will not be permitted to pay the subscriber's loss and then exercise its subrogation rights by pursuing you.  Why?  Because you are an additional insured and an insurance carrier cannot sue its own insured to recoup a paid out loss.  
    The insurance procurement provision is enforceable.  
    An issue that comes up often is that the subscriber typically doesn't bother getting the alarm company named as an additional insured.  The alarm company can then ignore the omission or press the subscriber to comply with the contract terms.  Most often the alarm company ignores the omission, but make no mistake about it, the failure of the subscriber to obtain insurance and name the alarm company is a breach of contract; you could default the subscriber and declare the contract in breach and seek your contractual remedies.
    The insurance procurement provision is one of several "protective" provisions in the All in One Agreements.  It's one provision that you may find yourself modifying or deleting, but be sure other protective provisions survive your contract negotiations.  When in doubt check with me.
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COMMENTS ON SERVICE PLANS
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Ken
    Regarding  service and or repair plans . They can Be a profit maker  and a profit killer at the same time . A customer with a plan will request service  many more times than a customer without one . A customer without a plan will take your over the phone advice -  Check for cobwebs , even adjust a motion detector per your instructions .     A customer with a plan is more likely to demand you come out  and address the problem.  
J.S.
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Ken
    Please don't venture into operations, guessing doesn't help anyone.   The industry standard is $5 per month for a basic service plan and that includes parts and labor and a healthy margin. Service is rare, for residential customers the average is one service call every 4 years.  
HS
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RESPONSE
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    I've seen $5 a month for a service plan or extended warranty for DIY sales, but I think that's a bit low for a professionally installed alarm system.  It won't cover one service call.  Anyone else want to comment?
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