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Comment on Alarm customer loses insurance claim because no automatic fire alarm in service 
February 14, 2023
Comment on Alarm customer loses insurance claim because no automatic fire alarm in service from article on January 30, 2023
          Regarding MAMA's Kitchen situation, I would like to chime in.
        It has been my experience (as a salesperson for ADT Corporate, not a dealer) that most owners of small businesses, 1) usually are in a rent/lease situation and do not own the premise and 2) cannot afford to invest in a true commercial fire alarm system and, 3) are usually uninformed (hate to use the word ignorant) about the HUGE difference between a COMMERCIAL FIRE ALARM SYSTEM and the more common BURGLAR ALARM SYSTEM.
        Here is a bad scenario: Papa's Kitchen calls a random alarm company for a burglar alarm. Papa sees the POLICE and FIRE panic buttons on the keypad. Customer asks about fire protection and/or the sales person suggests/agrees to install a couple of smoke detectors, 'just in case'.  Salesperson might even say Your insurance will give you a discount!  Customer believes everything the sales person says and signs the contract for a common burglar alarm to be installed in their business.  Supervisor/owner of alarm company AND technician see contract and still agree to proceed, either not knowing, or not caring what might happen to the customer, should they have a real fire.        Next, a real fire happens. Insurance won't pay. Alarm company gets an angry call from Papa or worse, the alarm company is not in business anymore.  Now, Papa's Kitchen will be bitchin to everyone he knows, what a S.O.B. alarm company he had/has and, he probably still has to pay off the rest of the contract!   And of course, Papa never read his contract.     
          It all goes back to the alarm company(s)' salesperson's lack of knowledge/training/experience and/or ethics. Misleading or misinforming customers is just wrong, especially when dealing with their security concerns. All for the sake of a commission from the sale.  Well, shame on those security representatives.  I think there is a touch of fraud going on in situations like this.  
          Here's another scenario: While at ADT I was invited into many new businesses that wanted an old alarm activated. Let's say it is a common ADEMCO burglar alarm panel, and the new business owner wants it activated and monitored by ADT in their name. Nothing was said about needing a fire alarm. However, during the walk thru and panel exam, I find 2 smoke detectors connected.  I now have to be the bad guy/gal and advise that ADT will monitor the burglar alarm but will not reconnect the smoke detectors.  Customer doesn't understand, so I would explain the difference between a small business burglar alarm vs a commercial rated FIRE ALARM SYSTEM. "I would also point out that Insurance companies will deny a non-commercial rated burglar alarm protecting a business for commercial fire protection.  "ADT's  technician will disconnect those 2 smoke detectors and we will not activate that FIRE PANIC button either." 
          New customer may be confused (maybe didn't even know they had smokes) or be even annoyed, but believes everything (the salesperson says) and signs a new monitoring contract. On the face of the contract, I write THIS IS NOT A FIRE ALARM and ALL PRIOR SMOKE ZONES WILL BE REMOVED and ADT WILL NOT  ACTIVATE EXISTING FIRE PANIC BUTTON. And I have the customer sign those statements. IF customer says, Oh, no, I must have a fire alarm to be insured, then that changes everything because this used burglar alarm system won't do. That be the case, I would have ADT's Commercial Fire Designer take over and design a system to meet local code and insurance standards because I was not qualified, trained, certified nor licensed for FIRE. Obviously, FIRE protection requires a different contract as well.  
When I asked my manager at the time why ADT would not activate the FIRE PANIC button(s) in these small businesses when other alarm companies do, I was told "They are not paying for fire monitoring" and "That's a corporate decision".    
          So it sounds like Mama's Kitchen fell into the trap of an inexperienced, uninformed, undertrained, ignorant or deceiving alarm salesperson/company.  Very tough lesson to learn. So what is their recourse if any? Can they try to collect damages from the alarm company who (may) have misled/frauded them? That is, if they are still in business.  I'm sure it all depends on the contract they signed.
Cynthia Branen-Hart
Retired Security Consultant – Oregon
          That’s a rather harsh indictment against alarm salespersons and companies, and I’m not buying it.  What kind of idiot buys a Chevy and then complains that it doesn’t perform like his buddy’s Cadillac? What kind of business owner rents commercial space, intends to occupy the space and conduct business with equipment, inventory, records, etc and doesn’t know the difference between a burglar alarm and a fire alarm? 
          Sounds like ADT has some specialized sales people.  How much training does it take for a sales person to tell a customer “this is a burglar alarm, not a fire alarm, and by the way Mr Commercial Businessman, you probably need a commercial fire alarm in your premises by law”. 
          What happened to Mama’s Kitchen is that they didn’t realize that the insurance policy had a condition precedent to coverage, “an automatic fire alarm”.  To add more blame on Mama’s Kitchen, it was Mama’s Kitchen who confirmed that they had commercial fire alarm.  I don’t know if this was in some California back-water town with free-for-all laws, no laws or no fire alarm enforcement, but how the heck did the restaurant operate without a monitored commercial fire alarm?
          This is a bit different than the idiot New Jersey jeweler who admitted to the judge during the trial that he let his burglary insurance lapse because he now had a burglar alarm installed and the insurance was too expensive [only to find out after the burglary that the alarm contract disclaimed all liability for the burglary]. 
          Either Mama’s Kitchen didn’t know about the insurance policy requirement [shame on Mama’s and its insurance broker] or didn’t know what representation was being made to the carrier or didn’t care.  What I am confident about is that the alarm salesman was not involved.  That salesman didn’t claim a fire alarm was being installed and didn’t encourage the representation to the insurance company. A Certificate of Insurance was not issued by the alarm company and an alarm company needs to be careful issuing the Certificate of Insurance making sure it is accurate.
          So I don’t see any fraud or misrepresentation unless it was on the insured and its broker’s part and I don’t think this falls under “the most unsophisticated consumer” criteria because it’s a commercial business and it’s broker and it smacks of stupidity or intentional misrepresentation.  Which?  The carrier didn’t need to establish either, only that the representation was not accurate and that was the end of the insurance coverage.
          Some of you might want to keep a case like this in mind when you’re asked by your E&O carrier, or your central station or a potential buyer of your alarm contracts what contracts you use in your business, do you make changes to the form and do you execute them properly.  Use the Standard Form Agreements and use best practices; that’s the ticket.

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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