We normally send the potential customer a quote for the installation of a new fire alarm system and will get a completed fire alarm contract prior to installation. Does it matter whether the quote is called a quote or a proposal?  Is one preferable over the other?
    Second question.  If the customer questions why we should be named as insured on their policy what is the simplest explanation?   Thank you so much for your assistance.
    It doesn't matter what it's called,  just make sure it doesn't call for the subscriber to "accept" with signature - we dont want the proposal to be the contract.  A "quote" or "estimate" or "proposal" should be used carefully.  Whatever you call the document you have to be certain that it cannot be "accepted" by the subscriber and be deemed a formal contract.  As you know the Fire All in One, and all of the Standard Form Agreements, contain many provisions that simply are not covered in a proposal.  So whatever you call the document be certain it is "subject to" execution of your Standard Agreement and non of the terms are binding until incorporated in the Agreement.
    The "additional insured" is a tough one and you will probably end up having to omit the provision if someone questions it.  You can try a few of these explanations:

  • I dont know but our lawyer and insurance company insists on this provision
  • its to ensure that there is no conflict between us, your carrier and our carrier
  • our insurance carrier requires this provision in our contract to underwrite our liability insurance, which I know you want us to carry  
  • To open another can of worms, you could say, there is another provision that requires you to indemnify us, and we want to make sure that indemnity is backed by insurance

    There are several reasons the contracts require the subscriber to obtain insurance and name you as an additional insured.  One reason which you may not want to point out to the subscriber [in any more detail or emphasis than the contract provisions already read] is that the contract requires the subscriber to assume all the liability in the relationship; there is a complete shift of liability and it's supposed to be backed by insurance.  Also, your services won't prevent a loss and therefore your subscriber needs to be insured for any potential loss.  The extent of a potential loss is best evaluated by your subscriber, not you.
    By naming you as an additional insured you buttress the waiver of subrogation provision.  Though that provision stands alone as a solid protective provision, since an insurance carrier cannot sue its own insured for a covered loss, naming you as an additional insured ensures that the subscribers insurance company will not be able to sue you for subrogation.
    Naming you as an additional insured will provide an additional layer of insurance coverage if a third party sues you, and that happens often, especially in fire cases and catastrophic personal injury and death cases.  Though the Standard Form Agreement has an indemnity provision you may have agreed to omit that.  Being named as an additional insured will essentially reinstate that indemnity to the extent of the insurance coverage, which may be more or less deeper pocket than the subscriber.
    lots of conflicting opinions about False Alarms… no, yes, maybe.
I was asked… why/how the “false alarm problem” has continued for so many decades?
    The “false alarm problem” is a matter of definition by the very different stake holders.  Local law enforcement all across the country can use their own stats to prove that nearly all response to private property alarm systems is unnecessary, and often quote their results as 98-99% error/ false alarms.   
    However, it is also appropriate for the alarm industry to use a different tool for measuring their operational performance of the exact same data.  For example, if a motion sensor detects abnormal movement from an inside door blown open by air conditioning, it is not a false alarm, it did exactly what it was suppose to do, detect abnormal movement. But the cause is unknown to the monitoring center, thus a call for help is absolutely “unnecessary police response”.  Even the supplier of the motion sensor will confirm that it is not a false alarm, but police record it as false.  Another example of frustration… even if the industry could cut the number of calls for help by 50%, the remaining unnecessary police response could still be near 100% error/false.  It can get more complicated. Alarm associations are now trying to introduce a different formula that is based on the number of falses per number of alarm sites.  All parties are correctly measuring their own perspective.  Helps to explain the conflicts between correct police stats and correct industry stats.  And we cannot forget the role that politics play in the false alarm problem.
    We believe law enforcement will not adopt the traditional alarm industry formula.  They want to lower the response priority for “deterrent systems”, and increase response priority for “witnessed security systems”, as defined by 911 rules, and PPVAR.  Most of the 20 million monitored alarm systems could be considered deterrent systems, unqualified for emergency response.  We believe the next generation of property alarm systems will provide full customer disclosure and deliver low priority customer notification separate from high priority police notification, and priced accordingly.
 Lee Jones
Support Services Group