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Question
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Ken:
    We are Connecticut licensed security agency.   My company received a request from a Connecticut security alarm dealer asking us to contract with him to provide key holding and alarm response/verification services to some of his commercial clients. Ordinarily, we contract for this type of service directly with the end service user. However, while I  recognize that his proposed arrangement results in  a significant new source of RMR for  his company, it also works for me as I have the opportunity to build my customer base and hopefully my income.
    I would also  be required to name the dealer as an additional insured on my insurance policy but, this doesn't appear to be a problem. So,  the  proposal  seems to work for us.
    I'm wondering, however,  if there are any unusual or unique legal aspects to this type of business arrangement that either party should be aware of.
    Do you have contracts available to cover this  type of situation?
Thanks,
Frank Harsche, President
Metroguard  Security
www.metroguardinc.com
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Answer
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    Any "unusual or unique legal aspects".  Not really.  Just the same old risks that can put you out of business and wipe out your entire net worth.  Same risks the alarm industry owner faces every day.  So not that unusual.  In fact, it's usual, and you need to make sure you properly structure your relationship with the alarm dealer and its subscribers.  You do that with contracts, and you get them by clicking here.
    Most alarm dealers do not have their own guard response personnel.  They rely on guard response companies like yours.  From your perspective, why market your guard and patrol services to end users when the alarm companies already have many more subscribers than you are likely to reach.  Alarm dealers are use to subcontracting out monitoring to wholesale monitoring companies, and the spread on the monitoring charges creates the most significant RMR for the alarm company.  Subcontracting out guard response can be equally lucrative for the alarm dealer, and of course for the wholesale guard response company.
    Key holder service and guard response service typically involves:

  • alarm verification,
  • opening the premises to permit police or fire personnel access,
  • assisting with search and arrest,
  • effectuating repairs

providing stationary guard service until the alarm system is restored or the subscriber arrives and secures the premises.
    All of these services present their own risks.  Using proper contracts will permit you to "contract away liability for your breach of contract and negligence".  It's the alarm dealer who contracts with the subscriber for the service and if something goes wrong, it's the alarm dealer who is going to be sued.   If the subscriber knows that an independent guard company provided the service then that company is likely to be sued as well.  What kind of loses?  

  • failure to respond to a real condition timely
  • failure to discover a real condition exists
  • failure to perform as contracted, for example, forgetting the keys
  • guards actually involved in the theft or setting fire
  • guards injuring someone while making an investigation or apprehension

    Ideally the guard company will want a direct contract with the subscriber, even if that contract provides that the alarm company will be charging for the service and getting paid by the subscriber.  If a guard contract isn't signed by the subscriber then the guard company needs to make sure the alarm dealer has a proper contract with the subscriber that extends its protection to subcontractors, including the guard company.  Of course the guard company also needs to see what guard service the alarm dealer agreed to provide, because it's the guard company that has to provide that service.
    Who carries the insurance and who indemnifies whom?  Depends on who has the better bargaining position.  Both the alarm dealer and guard company will have their own insurance.  An alarm dealer may take the position that the guard company is providing the guard service and should therefore name the alarm dealer as an additional insured and indemnify the alarm dealer from claims by the subscriber or third parties related to the guard company's performance, or non performance.  Good argument.
    The guard company may take the position that it's the alarm company's subscriber, and the alarm company's contract and the alarm company who is making the "big" bucks on the account.  The alarm company should therefore name the guard company as an additional insured on the alarm company's insurance policy and indemnify the guard company.  Good argument.
    Be fair.  Be practical.  The rational solution is that both alarm company and guard company carry their own sufficient insurance.  If they each name the other on their insurance policy as additional insured, the tangle created can be sorted out by the insurance companies.  Same insurance company?  Then no problem, but since that may not be the case, the two carrier can fight it out.  Either way it turns out, both the alarm company owner and the guard company owner shouldn't lose too much sleep.  
    You can get a direct guard contract at www.alarmcontracts.com.  That contract is a stationary guard contract.  For alarm response service call our Contract Administrator, Eileen Wagda 516 747 6700 ext 312, and order the Guard Response Contract or special design the contract for your specific needs.

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