Comment on When to notify your insurance carrier of a potential loss July 11, 2025

KEN KIRSCHENBAUM, ESQ
ALARM - SECURITY INDUSTRY LEGAL EMAIL NEWSLETTER / THE ALARM EXCHANGE
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Comment on When to notify your insurance carrier of a potential loss
July 11,  2025

Comment on When to notify your insurance carrier of a potential loss from article on June 27, 2025
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Ken,
   When I was the triage person as the Executive Claims manager for Security America, I would receive calls just like this, but because my focus was our customers (insureds) I accepted the call and did not open a file. I would simply say that "you have satisfied any notice requirement, go gather all your records pertaining to this account such as 1) Contracts, ie sales contract, Service contract, Lease Contract 2) any and all correspondence from end-user from day zero 3) Central Station Contract 4) Dealer agreement with the Central Station 5) and if you get served with an action get it to me ASAP and put them all in a safe place that you can find them if you need too".
   With other carriers their claims offices are paid a flat fee per claim, so it is in their best interests to create files or "notice records". A notice record is just that, the insured called, and a file is opened and that file follows you for 5 years as a loss run experience with no reserves impact. But it is conceivable that if you call in a lot of notices your renewal will be affected because it demonstrates rick activity that probably exceeds the experience of the total average program per insured.
   For full disclosure, companies that called me with poor facts on losses or old poorly written contracts were either dinged or denied renewals. One that comes to mind had a rash of "Breach of Contract" claims because they used strong arm collection agencies and the customers filed counter claims for Breach to attack the underling contract. I issued opinions to underwriting not to renew.
   This is just one more reason why Security America, owned by the industry, for the benefit of the insureds and the industry is the best place to get a quote at your next renewal.
Bart A. Didden, President
U.S.A. Central Station Alarm Corp.
Port Chester, NY
Milford, CT
St. Paul, MN
Pasco, WA
877-872-1266

Response

   Valuable information, thank you. You have to be careful deciding whether, and when, to notify your carrier of a potential claim. You must notify your carrier of an actual claim, which is when you get a letter, a summons or even a phone call advising you of a claim. If it's a summons you need to follow up to make sure you comply with court procedure, which almost always will require that an Answer to the Complaint be filed.
   I am often consulted when a claim is suspected, or made. Most of the time I recommend that the carrier be notified. Keep in mind that you don't always know the extent of damages. If you guess wrong and don't notify the carrier you may find that your coverage is compromised or denied. It's one thing to take a chance if the claim is for damages that are manageable - meaning you can afford to defend and pay a claim on your own rather than risk an increase in your insurance premium, but it's another if the claim is sizable and you need the insurance protection. Keep in mind that damages may be unknown when you are first notified and tend to grow as time goes by and before a lawsuit may actually be filed. That possibility alone should cause you to be careful about deciding to go it on your own. You pay for insurance, I think you should use it.
   I've recommended Security American in the past and continue to recommend it. The carrier understands the alarm industry and alarm defense cases. That's a big advantage and one you will appreciate if you do get involved in a claim.
   Bart is also accurate when he mentions claims that are defensive in nature, made to deter a collection you have instigated against the customer. While most of these claims are bogus, they too need to be defended. K&K does considerable collection work for the alarm industry [you will need a K&K contract for us to represent you] and its not uncommon for a counterclaim to be threatened or filed. The Kirschenbaum Contracts TM allow us to dispose of those counterclaims quickly, very often before a carrier even has time to process the notice of the claim; we also know when you don't have to notify the carrier because we know the claim won't be covered anyway.

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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
ken@kirschenbaumesq.com
www.KirschenbaumEsq.com