Why would anyone want to ''indemnify Honeywell if there is any claim, including, defective products manufactured by Honeywell''?
    Good question, and puzzling enough for me to wonder if I misread the dealer program agreement.  I'd be surprised if car manufacturers require its dealers to indemnify the manufacturer in the event there is a manufacturing defect in the vehicle.  After all, it seems to me that a car dealer is more invested than an alarm dealer with the manufacturer.  Maybe a car manufacturer should [and it may very well] require each consumer that purchases a vehicle to indemnify the manufacturer if the manufacturer gets sued as a result of an inherent defect in the vehicle that causes an accident.
    Perhaps Honeywell doesn't believe its product can ever be the cause of a loss and therefore its dealers who install and service the equipment should provide the indemnity.  
    A dealer would be wise to make sure that its E&O policy will cover Honeywell in the event Honeywell is named in a lawsuit and indemnity is demanded.  
    I confess that I am not aware if other manufacturers have this same language in purchase terms and conditions, but I think it would take a "dealer program" to get the indemnity, and not just a dealer buying equipment unless there was a continuing service provided by the manufacturer.
     It's not difficult to see why a manufacturer would think it can demand indemnity.  In this industry indemnity provisions are common in agreements entered into between the various parties, starting with the dealer's agreement with the subscriber, the central station's agreement with the dealer, and the agreement between the manufacturer of remote access software and the central station.  Starting with the subscriber and running right up the pole.    

      Keep in mind that as a seller of the equipment you are in the chain of distribution for a product liability lawsuit.  The good news is that it's rare for alarm equipment to fail as a result of a product defect.  Most lawsuits against alarm companies arise from equipment failure, not caused by inherent manufacturer defect, but rather by communication failure and human error at the central station.

     Two things are for sure:

  1. You need to have E&O insurance coverage and name everyone you may be required to indemnify, and
  2. You need to have a properly drafted, up to date agreement with your subscriber.

    You can get the insurance by checking the brokers and carriers recommended on The Alarm Exchange and you can get your up to date alarm / security / fire / home integration agreements at www.alarmcontracts.com.