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MORE ON INSURANCE PROCUREMENT OR SUBROGATION WAIVER CLAUSE FROM MAY 6, 2015 ARTICLE
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Ken,
    While I understand your thought that the insurance procurement clause could be considered a throwaway to finalize a contract acceptance, I don't agree with your assertion that the subrogation waiver is the better option to keep. In fact I believe just the opposite and I rather give up the subrogation waiver over the insurance procurement clause.
    The waiver of subrogation can be viewed as a negative action against the interests of the subscriber because it may conflict with language in the subscribers policy denying the subscriber from agreeing to sign such a waiver from their carrier. On the other hand the insurance procurement requirement is agreed to at the time of the agreement and acceptance is never viewed as punitive to the subscriber as additional insured status is common in many different contracts. So accepted is the idea of additionally insured status is that many property loss coverage polices include language that state that additional insured status is automatically included when required by contract prior to loss. 
    As a final example of the power of the insurance procurement clause (which you first asked me to include in my USA Central Station contracts as a test back around 1995) I have managed a good number of claims for SARRG where there was a notice of claim filed from subrogation attorneys. Upon reviewing the contracts for the installation, service and/or monitoring functions that contained this clause, I immediately requested compliance with the clause from the subrogation attorney (not the subscriber), none of these potential claims have resulted in a filed lawsuit or settlement. It should be said that the alarm companies here were not at fault. 
    As to claims without this clause, 50% progress to a filed lawsuit regardless of whether there is no fault to potential fault or contribution to loss. 100% of the time there are so called losses or industry experts on the side of the subscriber or their insurance company there is a lawsuit filed.  
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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    Omitting any provision from the very carefully drafted Standard Form Agreements is always risky, and always diminishes the protection afforded by the agreement.  However, the reality is that dealers want and need at least some jobs and are forced to negotiate and accommodate when it comes to the contract terms.  Because the agreements are stacked with several protective provisions, giving one or more up to save the deal will not completely vitiate the agreement.  The real challenge is deciding how to modify the various provisions and knowing which provisions you can omit entirely.  The answer is not one you can universally adopt because often the protective provisions interplay and a change in one will affect another, and retaining one, even modified, can adequately compensate for giving up another.
    The waiver of subrogation clause will protect against the subscriber's insurance carrier pursuing its subrogation rights.  It is a potent provision, perhaps the oldest in terms of recognition from the courts, and also probably the most consistently enforced.  It's an important provision, yet one that is close to the top of the list of challenged provisions by subscribers.  I have not had a single case where the subscriber has lost its insurance coverage because of the subrogation waiver.  I have had plenty of cases where the subrogation waiver was a deterrent to a lawsuit or the primary defense used to extricate the alarm company from the lawsuit.
    That is not the case with the insurance procurement clause.  That too is an important provision, but a court may point out that the alarm company never sought compliance with that provision, never got the additional insured coverage, and could have obtained the insurance or declared the subscriber in breach for failing to provide the coverage.  I am not as comfortable using this provision as the primary defense in a security case.  I can't recall any cases that were dismissed based on the subscriber failing to get the insurance.  Also, unless the subscriber has contractual coverage its carrier will not be required to honor the insurance procurement obligation unless the carrier has actually issued the additional insured certificate.
    Seek counsel before modifying the agreements unless it's a business decision item, such as hours of service, length of term, etc.
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