Limitation Of Liability, E&O Insurance

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COMMENT ON LIMITATION OF LIABILITY FROM OCT 7, 2014 ARTICLE
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Ken,
   This is a two part response.
   First as an owner of a nationwide monitoring company - In response to HM, his section 23 and his complete lack of a liability limitation for monitoring operations, are you nuts?
   Second response in my role with SARRG - If you are a SARRG client, you better put SARRG on notice if you increase the limitation of liability because your premiums will be increased or worse we will not renew your coverages. The reason for this is that you may have made representations that you use Ken's standard contracts but by changing the provision you have exposed your carrier without its prior approval or knowledge to paying policy limits. No carrier would approve this language.
   If the subscriber's law firm has a problem with the $500 limitation, just raise it! Ask them to choose an amount and agree on something that you can afford. If your insurance deductible is $1000, tell them "okay, how about we double the $500 to $1000", they may see it as a substantial change and agree. Or if your insurance deductible is $5000, you can increase it by 10 times and look like a hero. Either way, get ride of that language today and at the first chance you get, fix your other deficient contracts by getting a contract with the correct terms.
Bart A. Didden
Executive Claims Manager
Security America Risk Retention Group - SARRG
877-872-1266
bdidden@securityamericarrg.com
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Response
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   Alarm companies that mess with the limitation of liability provision expose not only their insurance carrier but themselves to added potential damages. Keep in mind that those damages may well exceed your insurance policy limits and your E&O policy may very prohibit you from binding the insurance company from paying claims that you agreed to pay in a contractual indemnity provision.
   Believe it or not, E&O coverage is reasonably priced [in comparison to other liability coverage] because the insurers know they can rely on alarm contracts to preclude or limit liability for both the alarm company and the alarm company's insurer. Alarm Companies are able to pass this savings on to their subscribers, because if E&O insurance was much more expensive alarm companies would be forced to raise their prices to consumers. This, together with the very nature of providing alarm services, is the basis of recognized public policy accepting contractual limitation of liability provisions in alarm contracts.
   The alarm contracts contain several protective provisions, including the limitation of liability clause. You should change these provisions only with great reluctance, and if you do make sure your insurance carrier is not going to leave you in the boat without a paddle.
   SARRG is lucky to have Bart as its claims administrator. He understand the alarm industry and he understands claims. That combination is sadly lacking with most of the carriers insuring the alarm industry. More on that tomorrow. For now, if you're not with SARRG find out why. It's pricing is probably the best and it's claim handling is definitely the best, and when you get that claim, you'll agree that's what it's all about.
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Alabama Alarm Association. AAA's Fall Meeting and Trade Show - October 21, 2014 from 3 to 5 PM at DoubleTree Hotel 808 South 20th Street Birmingham, AL 35205 for more info contact AAA Executive Director: director@alabamaalarm.org (205) 933-9000

Comment On Limitation Of Liability / More On E&O Insurance - October 13, 2014