Why agree to customer as additional insured / CS webinars live and recorded continue October 19, 2023

KEN KIRSCHENBAUM, ESQ
ALARM - SECURITY INDUSTRY LEGAL EMAIL NEWSLETTER / THE ALARM EXCHANGE
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Why agree to customer as additional insured / CS webinars live and recorded continue
October 19, 2023

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Why agree to customer as additional insured

Ken,
          We are seeing that more and more large corporate chains like asking us to sign their agreement and provide additional insured coverage. We know this is a huge risk, but seems some alarm companies may be agreeing to this in order to get the large account and business.
          Alarm companies should be refusing to provide this coverage extension and I believe these companies would need to shift their practices to obtain life safety services.       Why is this not already happening?
          Who is the jackass that is agreeing to these risks?
Respectfully,
Roman

Response

          Many alarm companies routinely agree to add their customer as an additional insured to the insurance policies insuring the alarm company.  The practice is so prevalent that it would be naïve to say that it’s not done or can’t be done.  There are many reasons why it’s done and some even make sense.  What you need to do is be mindful of what you’re agreeing to and why; also, think about what effort you made to negotiate the terms of your agreement with the customer.
          Good business may be equated with greed, which would be a mistake.  Greed generally would be associated with a bad business decision, not a good decision.  Problem is that a good decision is only good, and not bad, until it turns bad.  For example, you agree to indemnify your customer, which is usually a required provision that goes together with the demand that you name the customer as an additional insured [this is called an insurance procurement provision].  So the first issue to confront you is that the customer is demanding indemnity.  If you agree to that then you better name the customer as an additional insured; otherwise you are offering to indemnify with the benefit of insurance coverage, making you the insurance carrier [which you most certainly are not and could go broke under the right circumstances].
          Many insurance companies writing alarm E&O permit alarm customers to be added as additional insured.  This actually creates an option for the alarm owner because if the carriers refused to permit additional insured that wouldn’t be an option.  Carriers permit it because there is a demand by their insureds [that’s you] to add additional insured which you have to do to get the jobs, some jobs [unfortunately the ones you want].  Most carriers will issue the additional insured certificate for little or no charge or added premium.  These additional insureds can affect your claim history and claim run, which directly impacts your premium and sometimes ability to even get the insurance.
          Should you avoid agreeing to indemnify your customer?  Yes
          Should you avoid agreeing to name your customer as an additional insured?  Yes
          Can either demand by even the largest customer be negotiated to either avoid agreeing to indemnity or additional insured and do you have the wherewithal [skill, conning, expertise] to engage in such negotiations?  The answer is that these provisions can be negotiated, they can be modified to make them more acceptable in the context of an alarm contract and alarm – customer relationship, but it’s doubtful you have the expertise to engage your customer [or most likely its attorney or “contract administrator or manager”].  For most of you the only options you have are to either agree to the indemnity and additional insured or walk away from the job.  Another alternative is to have counsel, me, assist and review the demands by the customer, negotiate acceptable changes and access [and let you know] the risks involved.  What to look for and how to negotiate these situations is really beyond this article and a bad idea for you to do on your own anyway.
          The K&K Concierge Program is your answer; you get a free half hour each month for contract negotiations.  If you think you don’t need the advice and assistance I think you’re being short sighted.  You don’t need to walk away from the job and you also don’t need to be an idiot with a fountain pen ready to sign whatever is put in front of you.  Call K&K’s Concierge Program Coordinator Stacy Spector,Esq now and join: 516 747 6700 x 312, sspector@Kirschenbaumesq.com or go here to read about the program and join: https://www.kirschenbaumesq.com/page/concierge
          I’m going to schedule webinars by the insurance brokers to discuss this issue and others.  Broker, you can reach out to reserve your spot and help organize the insurance webinar series
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          If you miss the live webinar, no worry.  It should be posted on the K&K Website for alarm webinars within a few days of the live presentation; go here to check: https://www.kirschenbaumesq.com/page/alarm-webinars
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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
www.KirschenbaumEsq.com