non-working cameras preclude insurance claim coverage June 25, 2025

KEN KIRSCHENBAUM, ESQ
ALARM - SECURITY INDUSTRY LEGAL EMAIL NEWSLETTER / THE ALARM EXCHANGE
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non-working cameras preclude insurance claim coverage
June 25,  2025

non-working cameras preclude insurance claim coverage

   Years ago, rumor has it, the alarm industry was instrumental in convincing the insurance industry to require their business customers, particularly the jewelry industry in NYC, to maintain burglar alarms as a condition of insurance coverage. That was a great sales tool for the alarm industry. Today fire alarms are required by law, another great sales tool for the alarm industry. It's common place for insurance policies to either offer incentive, discounted premium, or require as a condition of coverage, an alarm or security system.
I have frequently counseled that use of "words" matter; they are often crucial to determine an issue. A NYC jeweler had a theft insurance policy that required a "security alarm system" as a condition of coverage. The jeweler suffered a burglary loss. The insurance company determined that the cameras in the premises were not working on date of loss. The intrusion system was apparently working.
The insurance company disclaimed coverage because the cameras were not working. Lawsuit ensued.
The court noted what I have warned you about many times, words matter, and "every" provision in a contract is there for a reason. So the issue for the court was, does the "alarm system" include the cameras. Since the insurance policy, which is the contract between the insurance company and insured, required a "security alarm system", the court determined that the cameras were part of the system, the security alarm system. I almost feel validated when I refer to an alarm system as including all the other security systems, such as cameras and access control.
It's not just the homeowners looking for their discounts that need to be mindful about the security systems they are getting installed; commercial customers, and residential too, may be required by their insurance policy to have working security systems.
Here's the decision; be sure to have it in mind when selling your security systems.

Supreme Court, Appellate Division, First Department, New York.
CERTAIN UNDERWRITERS AT LLOYD'S, etc., Plaintiff–Respondent, v. ITZHAK NISSANOFF INC., et al., Defendants–Appellants, Khushi Diamonds, Defendant.
Index No. 652565/20
Case No. 2024-03765
Entered: June 10, 2025
Opinion
*1 Order and judgment (one paper), Supreme Court, New York County (Joel M. Cohen, J.), entered on or about May 13, 2024, which denied defendants-appellants’ (defendants) motion for summary judgment, granted plaintiff's motion for summary judgment and declared that defendants were not entitled to a defense or indemnification from plaintiff in the underlying action, unanimously affirmed, with costs.
Plaintiff insurer commenced this action for a declaration that it has no duty to defend or indemnify defendants in the underlying action which stemmed from the loss of a diamond. Plaintiff claimed that coverage was unavailable because defendants breached a warranty of the insurance policy and failed to meet a condition precedent to coverage, as there was no working security system at the time of the loss.
The court properly found that defendants breached a warranty in its insurance policy and failed to meet a condition precedent to coverage by failing to have a working security alarm system at the time of loss. Defendants’ argument that plaintiff waived its right to disclaim coverage is unavailing.
  Plaintiff's reservation of rights letter is irrelevant to whether plaintiff timely sent a notice of disclaimer. Even if a disclaimer was warranted, the strict timeliness standard under Insurance Law § 3420(d) applies only for denials of coverage “for death or bodily injury” and is inapplicable to the property insurance claim in this action. Plaintiff's explicit reservation of rights precluded any arguments as to waiver and equitable estoppel; defendants are not prejudiced, as the requirement to maintain an operational security system was explicitly stated within the policy terms.
Defendants’ contention that the non-functioning security cameras did not constitute a breach of the policy's alarm and protection clause is unavailing. The policy's alarm and protection clause must be interpreted so as to give meaning to every provision, so that no provision is left without force and effect. Section (d) of that clause — “[a]ll other protections provided for the safety of the insured property” — plainly pertains to the entire burglar alarm system at issue, including the security cameras, which must be operable at all times. Accordingly, this provision is material to the risk of loss under the policy (see Insurance Law § 3106), as functioning security cameras could have provided evidence as to how the missing diamond disappeared.
All Citations omitted;
--- N.Y.S.3d ----, 2025 WL 1634174, 2025 N.Y. Slip Op. 03529
End of Document   © 2025 Thomson Reuters. No claim to original U.S. Government Works.
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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