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Comment on central station confirming dealer has contract with subscriber

April 7, 2023
Comment on central station confirming dealer has contract with subscriber from article on April 4, 2023
            Your statement requiring all 3rd party monitoring centers should be required to insist on an “approved” contract for each of the alarm company’s clients is an interesting one but how is this supposed to be audited by the 3rd party monitoring center?
            Realistically speaking there are 3rd party monitoring centers today that are monitoring for millions of accounts. Just walk the show floor and you will know who most of them are.      Many of the alarm companies who outsource their monitoring do so for a variety of reasons. Many of them are savvy operators who in fact do have monitoring agreements in place with each of their clients. But again how is this to be verified?
            And what exactly is the liability that the 3rd party monitoring centers incur since their relationship with the installing dealer is at arms-length from the client – who is in fact the client of the installing company.
            Thanks for all you do for the industry Ken and please – keep it up.
Please sign me as
            A central station who insists on proper contracts with dealer subscribers does not only itself a favor but a tremendous favor for the alarm dealer.  The dealer’s contract with the subscriber is the first and best defense against any claim for a subscriber loss.  Without the contractual defenses the dealer and the central station are left exposed to unexpected liability and damages. 
            There are a few matters we can all agree on:
  *  it’s the dealer who has the relationship with the subscriber
  *  it’s the dealer who sold the service to the subscriber [in this case, monitoring]
  *  it’s the dealer who charges the subscriber and collects the money from the subscriber
  *  it’s the dealer who keeps most of that money
  *  it’s the dealer who has the opportunity [indeed the responsibility] to get the subscriber to sign a proper contract
  *  it’s the dealer who is responsible for using a proper contract and making sure it is executed properly
  *  every dealer signs a central station Dealer Agreement [a form provided by the central station]
  *  every central station Dealer Agreement requires the dealer to indemnify the central station for all claims, including those arising allegedly by the central station’s negligence in its monitoring service
  *  most dealers carry less insurance then their central station carries. 
            With the above in mind you can see that it’s a matter of self-preservation to have proper contracts in place with subscribers.  So when you suggest that it’s too burdensome for dealers to get contracts signed and too burdensome for central stations to confirm that contracts have been signed, I think my best response is, too bad for you.  You need to be responsible enough to take care of yourself.  And, in this case, taking care of yourself is also taking care of the central station, and the reverse is true as well. 
            A central station that relies on the indemnity without checking contracts is kidding itself, at best.  Is that same central station remiss in checking if the dealer has insurance E&O?  That the central station is named as an additional insured? 
            Here is a worse-case scenario.  Subscriber suffers a loss.  It’s clearly a negligence failure in monitoring [missed signal, delayed response, failure to report trouble, etc].  Claimant sues for $15 million, cost of repairing building and contents [or hell of a lot of inventory, etc].  Dealer and central station sued [or just central station].  Dealer has one million and central station has 20 million in coverage.  Central station’s carrier settles for eight million. 
            Then the central station’s insurance company comes after the dealer for indemnity for eight million dollars.  Dealer’s carrier forks over the one million and runs, leaving the dealer exposed to the tune of seven million dollars. 
            Well, that’s the end of the dealer [most dealers].  That doesn’t help the dealer or the central station because the dealer will be out of business, the central station will lose the accounts [potentially] and the central station’s insurance company will reimburse itself [the central station may get back it’s deductible]. 
            All this because it was too burdensome for the dealer to get a proper contract signed and the central station to insist on and check that a contract was executed for every subscriber. 
            Before closing, let me warn you against using a Monitoring Contract provided by your central station.  Do Not Do It.  I’d go so far as to suggest that if your central station provides you with a Monitoring Agreement you should look for a new central station that requires you to get your own proper contracts [you will be referred to].  The contract provided by the central station is not only outdated but written for benefit of the central station and not you the dealer.  it is entirely inadequate for a dealer’s purposes.  This is a stern warning, and I stand by it.

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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