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Do you need E&O when you have K&K Contracts

May 21, 2024
Do you need E&O when you have K&K Contracts
          A question for the forum:
          I carry all the right insurances, sourced on the K&K The Alarm Exchange.  All of my subscribers sign K&K contracts.  But someone asked me this week why I bother carrying any insurance at all, given that my K&K All-In-One Contract limits my exposure to just $250 in damages.  I do not plan on cancelling my insurance, but I will admit that I did not know how to answer his question.
          What are your thoughts?
  Thank you,
          A good way to start this response is to re-tell what happened in the New Jersey case by the jeweler who sued the alarm company for more than a million dollars after a successful burglary.  The judge interrupted the trial when the jeweler was testifying to ask “why didn’t you have insurance?”   The jeweler responded that “I had insurance, but it was expensive, so I had the alarm system installed and it only cost $35 a month, figuring I was fully covered.”
          The Kirschenbaum Contracts™ offer, in my opinion, the best contractual protection you can get with an Alarm Contract [and as you should know by now, I include any form of security or electronic alert system, cameras and access control included].  But even the best contracts can’t stop you from being sued, and that’s the first reason you need to carry E&O insurance.
          There are a bunch of reasons you should carry E&O insurance besides defense cost, though if you engage in best practices and use the K&K Contracts the defense costs will be the most apparent and frequent reason you’ll see.  But even the best contract can’t be assured to win every time for every scenario.  Bad facts make for bad law, and bad judges [defined sometimes by me as those that don’t agree with me] also make for bad law.  Go to the Reported Cases on the K&K website to read loads of cases where I or my firm were forced to go to an appellate court to reverse the trial judge to get a case against an alarm company dismissed.  And facts could be such that you may lose, and maybe you should lose.  Contract protection is not meant to shield you from egregious conduct.  In some states, in some circumstances, you will find that alarm companies cannot shield themselves from all liability for negligence in all circumstances.  Thus, there is always a possibility of a damage award against you; hopefully it won’t exceed your E&O coverage.
          Keep in mind that others depend on your alarm contracts, including central stations, third party vendors, subcontractors and potential buyers of your accounts, all of whom will appreciate your use of K&K contracts; some may even insist on it or in the case of potential buyers of your accounts pay more for the accounts when on Standard Form Agreements.  If you don’t have Kirschenbaum Contracts™ you do not have standard form agreements, simply as that. 
          Bottom line, you need to carry E&O insurance, at least the minimum, which I believe is one million dollars.   There are only a handful of carries that offer alarm industry coverage so be sure you check The Alarm Exchange in the Insurance Category; use these companies.

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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