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Customer insists you be liable for your negligence – now what to do
April 13,  2022
Customer insists you be liable for your negligence
          It’s almost a daily occurrence for me, an email from an alarm client asking me to review requested changes made to the Standard Form Agreement.  Typically the change involves the alarm company being liable for its own negligence.
          Sounds simple enough; seems reasonable at first blush.  The problem is that it’s not easy and you can’t agree to this kind of change.  The change in the contract, by the way, comes in many forms.  The customer can be looking to delete the Exculpatory clause, modify or delete the Limitation of Liability clause, delete the waiver of subrogation provision and the insurance procurement provision.  Another sneaky change is flipping the Indemnity Provision.
          You can deal with these requested changes in a number of ways.
  *  agree to all the changes and just sign on the dotted line
  *  refuse to approve or even discuss any change to the printed Standard Form Agreement, which might kill your deal on the spot
  *  navigate these changes yourself using your keen legal negotiating skills, in which event it may not be just the deal that you kill
  *  join the Concierge Program and get half hour legal time for contract review and negotiations per month
  *  engage K&K to assist with the contract review and negotiations
          There are a lot of issues you need to keep in mind when it comes to what liability you are willing to assume.  There is enormous risk involved in providing security and fire alarm services [and of course security cameras, PERS and medical alert and all the other alarm detection services you provide].  One easy way to explain the scope of risk is to consider the different expectations you and the subscriber has; you think detection and the subscriber thinks prevention.  That expectation is not significantly altered by the alarm contract for a bunch of reasons I won’t get into in this article.  Suffice it to say that if the loss is significant enough both the subscriber and its insurance carrier claiming subrogation rights will seek to ignore, circumvent or defeat the alarm contract in order to recoup their loss.  This conflict in expectation is the cause of constant claims against alarm companies as reliable as ocean waves beating shore rocks.  And to continue that analogy the waves constantly eroding the sand can be equated with the subscribers and their subrogation carriers trying to chip away at the alarm contract protection and impose liability on the alarm company, with or without justification. 
          Any change you make in the Standard Form Agreement is going to diminish your contractual protection.  That doesn't mean you can't accept some changes, you can, but you need to be careful.  You are not the only one depending on that contractual protection; your central station, your insurance carrier and the entire alarm industry depends on your contract provisions and the enforcement of those provisions.     
         Assuming risk can have consequences you haven’t considered. 
  *  You think you are exposed only for your insurance deductible?  Think again, the loss can quickly exceed your insurance coverage, leaving your pockets exposed, and the deeper those pockets are the more inviting you will be to claimants with loss exceeding your insurance coverage. 
  *  You think your loss is limited to your own performance?  Think again.  You have agreed to indemnify your central station.  That indemnity includes when the central station is negligent [ie failure to dispatch a received signal timely or at all].  So you are exposed for more than your performance. 
  *  You may have agreed to indemnify third party vendors who provide automated platforms for monitored signals, exposing you to risk for their mistakes.
  *  You think you can envision what kind of loss and what monetary amounts may be involved in a loss?  Think again.  Just about every loss can expose you to damages for personal injury, death, property loss and property damage.  Claimants can be one or many.  Claims can come from not just your subscriber but others, such as neighbors, tenants or landlords. 
          Consider this a wake-up call; hope it’s in time.

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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