KEN KIRSCHENBAUM, ESQ ALARM - SECURITY INDUSTRY LEGAL EMAIL NEWSLETTER / THE ALARM EXCHANGE You can read all of our articles on our website. Having trouble getting our emails? Change your spam controls and whitelist ken@kirschenbaumesq.com ****************************** Is indemnity provision prohibited in alarm contract December 17, 2022 ******************** Is indemnity provision prohibited in alarm contract ******************** Ken I note with interest a comment made by a Canadian lawyer relating to “nearly half the states have passed anti-indemnity legislation, prohibiting the enforcement of provisions that purport to indemnify the indemnitee for losses….” The article appeared in an electrical trade magazine “Electrical Business” I know that the Ontario Government has prohibited any indemnification clauses in contracts that require the Ontario Government to indemnify anyone for anything. This causes me concern since my company monitors many Ontario Government properties and a lot of them are residential with tenants that are not party to the contract or agreement. Perhaps the anti-indemnify legislation in the U.S. is something to cover in your newsletter. Best wishes for the holiday season and a happy New Year. Dave Currie Damar Security Systems https://damarsecuritysystems.com ********************* Response ******************** The indemnity provision is in fact prohibited by law in most municipalities. That’s one reason why when I am negotiating with counsel for a municipality I skip to the indemnity clause first and let them know I am deleting it. Next to go is the insurance procurement clause that requires the subscriber to obtain insurance and name the alarm company as an additional insured. Many municipalities are self-insured, at least for the first layer of coverage, and those that aren’t don’t want to name anyone else on their policy. So don’t bother asking. There is also anti-indemnity statutes in some states for specific circumstances. For example, some states may prohibit indemnity for work involving real property construction. Some states require that indemnity provisions be conspicuous in contracts and most likely every state is going to carefully and narrowly interpret and enforce an indemnity clause, so you better be sure the written provision is tightly written and otherwise complies with local law. That’s one good reason for using the Standard Form Agreements. Despite all the discussion on here, I am asked weekly how will the K&K contract work in “my state”? Well, K&K customizes the contracts state by state, every time a contract is ordered. Changes in law result in updated contracts, one reason I advise you to update the K&K contracts every two years [at least]. Even when the indemnity provision is enforceable I often agree to delete it if it’s a sticking point with the customer and the alarm company is desperate for the contract. Why? Well first of all, the alarm company has insurance, so in the first instance the indemnity provision benefits the alarm company’s insurance company. If the insurance company has not made a specific contract form, unaltered, a condition precedent to coverage of a particular claim [and I haven’t heard of a carrier who does have such requirement] then it’s the carrier’s problem, at least for that claim; as long as the claim doesn’t exceed the insurance coverage. The other reason I delete the indemnity provision is that indemnity is really not needed to protect against claims by the subscriber since the Standard Form Agreements have plenty of other ‘protective provisions” to protect you against claims. The chances of a third party claim is certainly possible, but less frequent and in such case there are still other contractual provisions and legal arguments that can be relied on [if your defense counsel can figure them out]. The indemnity provision can be engaged to recover the legal fees incurred by your carrier, but K&K is the only firm to pursue that kind of claim as far as I know. The carriers don’t typically pursue that kind of claim [I haven’t heard of it]. So, the indemnity will need to be stricken when dealing with municipalities, won’t be enforced in some situations and needs to be carefully worded and drafted in most states. How do effectively navigate this issue: use the Kirschenbaum Contracts™ [Standard All in One agreements] and join the K&K Concierge Program to get 10% off the contracts and hourly fees and a free half hour each month for contract review and negotiation. ************************ To order up to date Standard Form Alarm / Security / Fire and related Agreements click here: www.alarmcontracts.com *************************** To order up to date Standard Form Alarm / Security / Fire and related Agreements click here: www.alarmcontracts.com *************************** CONCIERGE LAWYER SERVICE PROGRAM FOR THE ALARM INDUSTRY - You can check out the program and sign up here: https://www.kirschenbaumesq.com/page/concierge or contact our Program Coordinator Stacy Spector, Esq at 516 747 6700 x 304. *********************** ALARM ARTICLES: You can always read our Articles on our website at ww.kirschenbaumesq.com/page/alarm-articles updated daily ******************** THE ALARM EXCHANGE - the alarm industries leading classified and business exchange - updated daily ************************* Wondering how much your alarm company is worth? Click here: https://www.kirschenbaumesq.com/page/what-is-my-alarm-company-worth ****************************** Getting on our Email List / Email Articles archived: Many of you are forwarding these emails to friends or asking that others be added to the list. Sign up for our daily newsletter here: Sign Up. You can read articles and order alarm contracts on our web site www.alarmcontracts.com ************************** 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 www.KirschenbaumEsq.com
