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limited liability during installation / lease or sale to customer / looking for central station June 9, 2018

KEN KIRSCHENBAUM, ESQ 
ALARM - SECURITY INDUSTRY LEGAL EMAIL NEWSLETTER / THE ALARM EXCHANGE 
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limited liability during installation / lease or sale to customer / looking for central station 
June 9, 2018 
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Limited liability during installation
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Ken,
            I have a client that was recently presented with the Residential All In One contract and they are concerned about our liability for property damage during the installation.   As an example, the technician accidentally starts a fire and burns the house down; our liability would be limited to $250. Obviously, we carry insurance for such events but the language states otherwise. The customer is completely ok with the contract language as it relates to ongoing monitoring and understands things don’t always work as intended. Can you tell us how this is best addressed?
Sincerely,
Brian 
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Response
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            The Limitation of Liability clause is one of the most ubiquitous provisions in a properly worded alarm contract.  Industry standard is $250 or 6 times the RMR charged at time of loss.  This limitation on damages is not common in construction or home improvement contracts because those engaging vendors or contractors, whatever you want to call them, expect the contractors to be responsible if they cause damage during the performance of their work.   A potential alarm customer may, therefore, challenge the Limitation of Liability provision.
            Here's how we deal with the challenge in most situations.  We except damage negligently caused by employees while actually working on the premises, though we try to limit even that exposure to losses covered by the alarm company's insurance.  Bottom line, the provision is negotiable, though it's best if you let me handle the negotiations and make the changes.  We don't want to omit the provision or render it useless.  
            And your observation that the Limitation of Liability provision will be more applicable to the RMR services that come after the installation is correct.
            I'd be remiss if I didn't remind you that before you think about modifying the Limitation of Liability clause you should make sure you have the latest updated contract with the most current wording for that provision.  Update your contracts at www.alarmcontracts.com.  Today.
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lease or sale to customer
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Ken,
            We have your residential all in one contract. Question for you.
            We are starting to offer security as a service, where they pay a certain amount every month that includes the monitoring services, service maintenance and payment towards equipment and updating the equipment when necessary. They would be signed up for a specific term, but the goal would be they would be a forever customer because we would be servicing everything for them.
            Would we still use the Residential All in One for this? Or would we need to use a Leasing agreement or something else?
Thank you! 
Respectfully
Megan
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Response
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            Clearly, the best way to hold onto the customer long-term, at least contractually, would be to lease the equipment.  Upon termination of the contract the equipment would be removed, or shut down and unusable.  It's really a matter of marketing and sales acumen.  
            With a sale you have to rely on the long-term service items, such as monitoring, repair service plan and inspection service.  There is also the access to thrid party vendor platforms that have to be paid for on an on-going basis or access will be terminated.  So there is some level of commitment by the subscriber to continue those services [what I sometimes refer to as the RMR services].  But unless the alarm company owns the equipment there is always the possibility that another alarm company can come along and take over the account.  With a lease that isn't possible, at least not without the customer being exposed to pay for the leased equipment., assuming the alarm company is willing to sell it and leave it in place.  The lease option is a potent issue when the system would be hard to replace.  It gives the alarm company a real competitive edge because replacing the alarm company means replacing the system, not just reprogram it.
            The All in One Agreements come in sale or lease format.  When you buy one format you can get the other format at half price if ordered at the same time.  Get them at www.alarmcontracts.com
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looking for central station
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Ken,
            I am searching for a monitoring station to handle my IP customers. I have spoken to one in my area. They sent me a package that included their contract. Are you familiar with them? Should I sign their contract? Should I have them sign yours also? If not, what do you recommend? Appreciate your knowledge.
S
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Response
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            The central station asked about [I edited the name out] is certainly a reputable one, and I did write it's Dealer Agreement, which of course is written to protect the central station.  
            Selecting a central station is one of the most important decisions a dealer has to make.  I recommend using one of the central stations listed on The Alarm Exchange.  Why?  These listed central stations are held to a higher standard. Dealer complaints, legitimate complaints where the Dealer is right,  that are not amicably resolved will result in the central station being kicked off The Alarm Exchange.  I've navigated a few disputes [for free I might add, so far] and all were resolved quickly.  Of course, all of the listed central stations have all of the bells and whistles and meet the highest standards in the industry set by those who set the standards - check their websites for their affiliations and qualifications.  Some specialize in certain type of accounts or monitoring, so watch for that.
            Once you select a central station it would be a good idea to engage me to review the Dealer Agreement, the one presented to you after it's been filled out, not a blank form, so I can guide you in some changes and make sure you understand your deal with the central station.  A modest charge applies.
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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
516 747 6700
www.KirschenbaumEsq.com