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Superseding Agreements And Purchase Orders / Comments On Should Contracts Describe The Alarm System - December 23, 2016


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SUPERSEDING AGREEMENTS AND PURCHASE ORDERS FROM DECEMBER 17, 2016 ARTICLE
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Ken,
    In response to this article "superseding agreements and purchase orders", you hit a nerve with me in my role as the Executive Claims Manager for SARRG. Here are just a few of the nightmare claims that I have had in the last 10+ years......
    1. Water detector in a sump pit - settled for 25K plus defense only legal fees of 10K+. At issue, water detector was installed after the initial installation into a "problem basement" on an alarm company provided "work order" with no language referenced or included. Basement flooded, plaintiff attorney was successful in arguing that the water sensor was not covered by any standard industry contract provisions.
    2. Burglary. System was attacked at a pharmacy through the wall from the exterior. Contract was deficient and contained no limitation of liability. Loss was 75K, settlement amount 25K, legal and expert fees in excess of 14K.
    3. Water damage, full house wood floor replacement. Plaintiff alleged that alarm company removed wiring and connection points from window screens that were experiencing false alarm issues and penetrations into the house were not sealed. Because the floor was throughout the whole house and could not be matched, a full replacement was required by state statute. 18K exposure, $9,500 settlement. The alarm company only had a third party monitoring agreement which offered no protections for design, installation or service.
    4. This one had all the right contracts - personal injury due to fire, burns on two minors. Plaintiff home owner / parent claims that they had a "full" fire system when in fact they only had a fire department call button on the keypad. Claim was for over $500,000 - settlement was made for $50,000.
    5. Again had all the right contracts - PERS system, failed to communicate because of an installation error, defendants where manufacturer, installer and dealer program who purchased account on day one. Claim for 4 million, settlement for $400,000 shared amongst three defendants. Combined defense legal fee's in excess of $300,000 (estimated).
    Until alarm companies fully grasp the exposures, these issues will continue. I currently have a claim that is still under investigation and does not present itself as a liability for the alarm company but they don't have the contract, the salesman doesn't think he ever had it. The system was installed on an approval by email to a proposal only. No contract and no terms. The property damage (fire) far exceeds the coverage under the policy (it would also exceed if they took the full 6 million available) and the damages is more than the net worth of the alarm company. This is one that would put 90% of your blog readers out of business.
    When will alarm company owners learn that they are signing away rights when they buy a TV at Best Buy, buy a new car or truck from a dealer, buy an airline ticket or even order cable TV service. Everything has a contract today.
    Someday I will do a seminar on these horror stories. 
Bart A. Didden, Executive Claims Manager
Security America Risk Retention Group - SARRG
Security America Risk Purchasing Group LLC - SARPG
877-872-1266
bdidden@securityamericarrg.com 
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RESPONSE
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    Let me know when you want to do the webinar.  We'll put together a series.
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COMMENTS ON SHOULD CONTRACTS DESCRIBE THE ALARM SYSTEM FROM DECEMBER 16, 2016 ARTICLE
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Ken 
    Good and important question.  I would say DON’T list the details, or even summaries of the parts and pieces.  In today’s world with so many IoT items, subscribers are adding (and sometimes removing) different features, and to make sure we are current with what is really being used and paid for, it becomes a nightmare.  In our case, we use a separate proposal form to get the basics of what are installing (or taking over) and that is not included in the contract. 
    Candidly, the subscriber is buying what the equipment delivers, and not really focused on the actual parts and pieces.  Even though I say that, I still don’t want to include the wording you drafted (below) because it just opens a larger can of worms when the sales person tries to explain it (even though they are not supposed to). 
David Meurer
Armed Response Team
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Ken
    My first thought…saying too much about what the system WILL do sounds too much like a guarantee.  I wonder if in this instance, less is more.  I feel like it’s best to stick to what the system will NOT do…as you are often reminding security companies to instruct sales people to do.  (Thanks for that!)  Also, the contract you currently have JUST fits on two legal pages front and back…consumers don’t love tons of paper to deal with so adding another page just to describe what system will do, to me, would not be worth it unless there is a legal reason to need it.  Your contracts have been carefully crafted to protect us so I am hesitant to remove portions of them. 
    Thanks for all you do & Merry Christmas!
Tena Edwards
A.I.D. Security, Inc
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Ken
    When getting a new contract from an existing customer, we don't describe the system again we include this line:  Security system as originally installed, includes perimeter and internal sensors as approved by Subscriber.  If we are installing a new system, we list the equipment installed.  Does this help
name withheld
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Ken
    At what point is the contract so scary to the customer that they don't want to sign?  We have problems easily getting long multi page contracts signed now. 
    What to do?
Thank you,
Bob Hanley
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