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ADT and State Farm and how they would handle claims
September 20, 2022
ADT and State Farm and how they would handle claims
          State Farm Insurance Company, the largest home insurer in the US, is proposing to buy 15% of ADT.  How would a claim by state farm of negligence against ADT be handled if acquired or interrelated?  Any conflict of interest? 
          I believe that insurance companies have taken interests in alarm companies in the past.  Some insurance carriers required alarm protection as a prerequisite for insurance coverage.  I think this was, may still be, prevalent in NYC where carriers required certain businesses, jewelers in particular, to have UL Listed Certified Central Station protection.  Of course carriers offering discounts for alarm coverage is fairly common.
          State Farms efforts to buy into ADT, if it requires government approval, will likely be accepted.  Since State Farm insures many customers, some of whom no doubt will use ADT and suffer a loss for which they will seek to hold ADT responsible, the question of how the claims will be handled is interesting and important.
          More than likely there will be an “iron curtain” between underwriting and claims departments, as well as between ADT and State Farm’s claim department.  In other words, if State Farm pays a claim to one of its insured and decides to subrogate against ADT, or any other alarm company involved, the State Farm position in ADT is likely to be ignored.  Keep in mind that ADT carries E&O coverage and it’s not likely with State Farm.  
          I’ve been involved with carriers suing essentially themselves.  Both the alarm company and its customer share the same carrier.  Carrier pays a claim and send the claim over to its subrogation department who promptly sues the alarm company.
          I don’t know how other attorneys have defended such cases, but I can tell you how I did.  I sued the insurance company’s insured [who was the alarm company’s customer] for indemnification.  The stupid claims representative calls me and wants to know why and how I did that, even suggesting I couldn’t do it.  Of course the claim against the alarm company was promptly withdrawn.  My experience with carriers is that one department doesn’t have much to do with other departments. 
          It wouldn’t be strange at all for an ADT alarm customer to sue ADT even if the customer is an ADT stockholder.  Same logic, an insured may be a stockholder of the insurance company who insures and paid the loss. 
          Another interesting question would be what happens if State Farm starts offering a greater discount if the customer has an ADT alarm or insists that the customer have an ADT alarm?  I'm pretty sure that would violate anti-trust laws, but I'm not expert on that topic.

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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