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Does your insurance provide the E&O you need?
February 25, 2021
Does your insurance provide the E&O you need?
            You take a big risk using an insurance broker unfamiliar with the specific needs of the alarm industry.  The standard general liability policy, I believe it's called an ISO policy, does not cover you.  There are two [at least] issues of exposure that your policy must address, and unless you know a lot more than I do, you need to be sure that the policy is not written in mumbo jumbo, raising more questions than it answers.
            The general liability policy will cover claims for personal injury and property damage.  A burglary loss fits neither category and you won't be covered.
            If your general liability policy does have an endorsement make sure it's not for Product Liability or Completed Operations.  Product Liability is great coverage if you're the manufacturer of the product.  Completed Operations is great coverage if you installed the equipment and the loss relates to the installation.  I'm not sure it will cover after installation services, which I like to all RMR services [monitoring, inspection, repairs].  You need Errors and Omission coverage designed for the alarm industry.
            Make sure your alarm E&O policy doesn't exclude monitoring service.  If you contract for monitoring service and subcontract it out to a wholesale monitoring company, which almost all of you do, you are in the monitoring business and your E&O policy has to cover monitoring.
            That brings us to another essential issue. You have agreed to indemnify others regarding your services.  This would include the wholesale monitoring center who monitors your accounts; it also includes other alarm companies hiring you as a subcontractor and your subscribers who you have agreed to indemnify.  Your E&O coverage has to include your contractual indemnity. 
            I recently had occasion to ask alarm industry specialist insurance broker Crystal Jacobs [she is at US Risk, which writes for Security America - SARGP, which is listed in The Alarm Exchange in the insurance category] to review a policy that concerned me.  Her response is below.  It is vital that there be no doubt that when [not if] you have a claim that the claim is going to be covered by your E&O policy.  If the claim relates to any aspect of your alarm - security - fire - pers - medical alert - environmental alarm, you need to have coverage.  The last thing you want is some mumbo jumbo letter from your carrier telling you why you're not covered.
            I agree with your synopsis that there may be coverage lacking particularly with regards to personal injury or bodily injury and it also seems that they fail to address the burglary exposure for the industry.  While I think they are addressing property damage through the Exception language it seems it's only addressing it from a standpoint of if the insured has installed the alarm. So what about a situation where they may be providing work done on alarms that they did not install also what about monitoring services perhaps this is not part of their appetite.  I always like to look at the individual risk compared to the policy wording to determine if the wording is sufficient to cover their individual exposures. I typically find that standard ISO wording is not sufficient to address some of the unique exposures that the alarm industry faces particularly with regard to professional liability exposures. It seems this carrier is utilizing those standard forms.
Crystal Jacobs

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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