KEN KIRSCHENBAUM, ESQ ALARM - SECURITY INDUSTRY LEGAL EMAIL NEWSLETTER / THE ALARM EXCHANGE You can read all of our articles on our website. Having trouble getting our emails? Change your spam controls and whitelist ken@kirschenbaumesq.com ****************************** Check your E&O coverage April 25, 2025 ************************ Check your E&O coverage ************************ You buy Errors and Omission coverage for piece of mind. Mistakes are made, by you and your employees. The only way to really think about it is "when" not "if". And when "when" arrives it's likely going to be terribly aggravating, no matter what your tolerance level for pain and aggravation. Sometimes the claim can be for damages that are nominal and can be resolved with a credit for the subscriber against future charges. But sometimes the damages can be much more than you would prefer handling on your own. The claim for damage may also be something you dispute or disclaim liability for, in which case you may need to defend yourself, pre and post commencement of a lawsuit. Your K&K Standard Form Agreement is, hopefully, going to protect you, but you still have to defend the claim. You buy E&O insurance because of the "when". And when that finally arrives the last thing you expect or need is notice from your carrier that you have no coverage. Sometimes the coverage issue can be questionable, even for the carrier, so it might take on the defense under a Reservation of Rights, which gives it the right to bow out at any point it determines it has no responsibility to defend or indemnify you. Or the carrier may determine it has no obligation to cover the claim, in which event you get a Denial of Coverage Notice. That leaves you holding the bag; on your own; screwed. Before making snide remarks about insurance company underwriters and claim representatives; These are the ones you will be hearing from about coverage issues and how claims will or won't be handled, I issue my first warning: Your E&O policy is a contract between you and your carrier, and like any other contract, your coverage is laid out in the written contract [the policy]. You typically don't read it. If you have a broker perhaps he reads it, though he doesn't really know your business and what type of claims the policy needs to cover to protect your security and fire alarm business, including cameras and audio. So the first thing you need to consider is getting the proper E&O coverage for the work you do, all of it, without any exclusions. If you sign up for an Alarm Industry Program with a carrier you would expect coverage if the equipment doesn't work as expected and loss ensues. This article was prompted by a call from a frantic alarm company owner because lightening struck a house causing a fire causing extensive damage. Alarm did not send signal. Most likely the lightening destroyed the fire alarm system before it could communicate, but we don't know. What we do know is that the E&O carrier, one I can tell you claims to have an Alarm Program, thinks the claim isn't covered. I haven't seen the denial of coverage letter yet so I'll reserve judgment, but I can tell you that I suggested [I think I was yelling] at the client for not having insurance with Security America. Why? I could have resolved the issue with a phone call, and more importantly, I don't think there would be an issue; there would have been coverage unless the claim fell outside of the coverage period. If you haven't experienced the panic that hits you when a claim presents itself I assure you that you're not really ready for your reaction which can range from mild concern to outright panic. Don't add to that scenario by having to turn your attention to your insurance coverage. I am often surprised when I ask an alarm owner who the E&O is with and they don't know. I wonder if I asked who their car insurance was with if I'd get the same bewildered response. Your E&O coverage will be the most important thing on your mind when that claim comes in. Attend to it now, not when you have to. ************************** STANDARD FORM AGREEMENTS: To order up to date Standard Form Alarm / Security / Fire and related Agreements click here: www.alarmcontracts.com *************************** CONCIERGE LAWYER SERVICE PROGRAM FOR THE ALARM INDUSTRY - You can check out the program and sign up here: https://www.kirschenbaumesq.com/page/concierge or contact our Program Coordinator Stacy Spector, Esq at 516 747 6700 x 304. *********************** WEBINARS: https://www.kirschenbaumesq.com/page/alarm-webinars *********************** ALARM ARTICLES: You can always read our Articles on our website at www.kirschenbaumesq.com/page/alarm-articles updated daily ******************** Wondering how much your alarm company is worth? Click here: https://www.kirschenbaumesq.com/page/what-is-my-alarm-company-worth *********************** THE ALARM EXCHANGE - the alarm industries leading classified and business exchange - updated daily
