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Subscriber-Lawyer misconstrues Indemnity Provision  
December 1, 2021
Subscriber-Lawyer misconstrues Indemnity Provision
          We have a potential client (who is also a lawyer) for a residential security system (job is worth about $2,500) telling us he only has an issue with the first line of the indemnity clause. He said the problem that he has is his having to pay for someone else suing him.
          He told us that if a kid’s friend is sleeping over and there is a break-in or fire, and that kid’s parents sue him, the way it reads is that he has to pay for their legal fees.
          Can you tell us if he’s correct and what you recommend we tell him?
 Thank you!
          Your customer’s analysis is flawed, though it’s close.  The Indemnity Provision would not require him to indemnify or pay for the legal fees of someone suing him, such as the parents of the kid who slept over.  He would in fact be on his own on that lawsuit.
          The indemnity provision would be applicable if the kid’s parents decided to sue you, the alarm company or your central station, directly, or, if your customer got sued by the parents and he decided to bring you into the lawsuit.  The indemnity provision runs in your favor; it protects you and your subcontracts, such as the central station.
          So if your customer is concerned that he could be liable to pay for your legal fees to defend a lawsuit brought by a third party, maybe a guest in his home, he would be correct.  What he might not be able to rap his head around is why he should agree to that, or conversely, why you can reasonably ask that of him.
          Probably the best reason, for both of you, is that your customer has asked to remove the indemnity provision, but not the Insurance Procurement Provision, so he will still have to name you on his home owner’s insurance policy as an additional insured.  Essentially he is therefore providing you with indemnity through his insurance coverage.
          The next reason is, why not?  Why should you be exposed to third party claims when the Standard Form Agreements are clear that your subscriber cannot be prevail against you in a lawsuit for a loss where he claims the alarm didn’t work or the alarm service wasn’t performed properly or at all?  The subscriber can’t sue and third parties shouldn’t be able to either, though you can’t stop third parties from suing since they haven’t signed the contract.  
          Why should you be exposed because third parties decide to rely on your alarm services?  Maybe the kid sleeping over shouldn’t have left his expensive watch by the window, or the neighbor shouldn’t have decided to store his Rembrandt in your subscriber’s living room, or the neighbor shouldn’t be able to sue because your subscriber had a fire which spread to the neighbor’s house, or the faulty alarm in your subscriber’s house with multiple false alarms desensitized the police and they stopped responding to that house and adjoining houses.
          Whatever the argument, all of the contract provisions, when read together, present the unmistakable agreement that the alarm company is not an insurer and cannot be held responsible to the subscriber or anyone else for their loss.
          The Kirschenbaum Contracts ™ are the gold standard for alarm industry agreements, recognized by central stations, insurance companies and potential lenders and buyers.  If you aren’t using these contracts you are doing yourself a disservice that you will likely come to regret.  The best part is you can do something about it right now; order the Standard Form Agreements and if you already have them update them if they are more than 2 years old.

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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