This is the fourth article in the series on central station selection
considerations.
Insurance; errors and omissions specifically. Why should
you care what insurance your central station carriers, or if in fact it
carries any insurance at all? Well, the answer is rather simple, when
both you and the central station get sued you are going to want to know
that your central station has sufficient coverage to respond to the
lawsuit and any damages that may be awarded. Remember as you read this
article, even E&O insurance is not a substitute for a proper alarm /
security contract. Update your contract today at www.alarmcontracts.com.
Errors and omissions insurance provides coverage for losses arising
from
the operation of the business, in this case monitoring service, and is
triggered by both an occurrence and damages within the scope of coverage.
While the insurance policy may contain familiar language that an
occurrence resulting in "property damage or loss" be sustained, in alarm
and security insurance policies the occurrence is failure to detect or
properly respond to the intended incident for which the alarm system is
intended to detect, and resulting loss to the property within the
premises. Thus a burglar alarm system is designed to detect a break in
and the loss of property is the items stolen [and not necessarily the
damage to the building where the break in occurred].
When a loss within the context of security alarm systems occurs, unless
the loss is easily reconstructed and the failure of the protection
identified, the subscriber is likely to sue for negligent design of the
system, installation, service and monitoring. Obviously the subscriber
will be suing the central station and the dealer, both of whom are
involved in one of more of the four elements of the system {design,
installation, service, monitoring]. While you will certainly be
responding to the first three elements the central station will have to
account for the monitoring.
There is much to be said for using a central station that has policy
from the same insurance carrier as you. If you both have the same carrier
and the loss is within the policy limits of the policies then it is
unlikely that the attorneys hired by the carrier will be looking to you,
and your attorney looking to the central station. [the carrier may want
to hire two attorneys, one for you and one for the central station,
though I have counseled carriers that this practice is unnecessary in
many situations, especially when I am the assigned counsel]. That sort of
in fighting is only good for the plaintiff in the action who can sit back
and wait for you and the central station to finish blaming each other and
making the plaintiff's case for it.
One thing you can take comfort in is that your insurance carrier cannot
sue you, and it won't even try. So if you and the central station have
the same carrier that carrier will try and have a united front defending
the lawsuit, which is the way it should be.
Some carrier's may be willing to give you a discount if you and the
central station both have policies with it. That is something worth
looking into.
Of course in the event of a catastrophic loss you want to be surethat
the central station has sufficient insurance. In this industry there is
never enough, but you know the type of accounts you have the potential
for exposure.
Don't be shy about asking for insurance coverage information from the
central station, and be sure to ask if it can arrange a discount for you
if you use the same carrier.