KEN KIRSCHENBAUM, ESQ ALARM - SECURITY INDUSTRY LEGAL EMAIL NEWSLETTER / THE ALARM EXCHANGE You can read all of our articles on our website. Having trouble getting our emails? Change your spam controls and whitelist ken@kirschenbaumesq.com ****************************** What can you do when your insurance company leaves you hanging out to dry July 14, 2022 *************************** What can you do when your insurance company leaves you hanging out to dry *************************** You carry E&O coverage for peace of mind and to protect you [pay on your behalf] your defense costs and any damages that may be awarded against you for claims brought by your subscribers, their insurance carriers and sometimes third parties. If you’ve had a claim and turned it over to your insurance carrier you know that first you hear from a Claims Representative and often in the first communication you are advised that your carrier has assigned defense counsel to represent you in the lawsuit [assuming a lawsuit has been filed – typically your carrier won’t engage counsel for you until a lawsuit is commenced, which is often a poor decision since you are looking for guidance before a lawsuit is filed]. If you’ve had a claim you also know that your carrier will often focus on your deductible early in the claim assessment process, letting you know you’re on the hook for the deductible and that you either have to pay it out as defense costs are incurred or you can wait until the case is resolved to send in your deductible. Once your claim is accepted for coverage by your carrier and you’ve resigned yourself to having to pay the deductible and spend your time participating in the defense of the claim, you should be able to let the carrier protect your interests and resolve the case eventually. But what happens when your carrier may not fully cover the claim or lawsuit. This can arise when: * the carrier isn’t sure that it has responsibility to cover the claim but it decides it will cover the defense cost, at least until it decides if it has to cover the claim [this is called covering the claim under a reservation of rights], or * the claim exceeds your policy limits, leaving you exposed to damages in excess of your coverage The issue becomes more acute when the claim exceeds to coverage and you begin to believe that your carrier isn’t doing all it could or all it should, to protect your interest. You begin to suspect that the carrier is really looking to protect it rather than you. Let’s weave a scenario where there is a very good chance for liability and damages. You install an alarm system, without a proper contract, know you made a mistake and the subscriber suffered damages well in excess of your policy limits. Your carrier takes the defense. You want to move on so you send in your deductible and try to ignore the lawsuit. You’ve got one million in coverage. You know the loss exceeds 10 million in damages, but you’re not the only defendant in the lawsuit. You begin to have doubts that your case is being properly defended when the carrier sends you a letter advising you that the claim exceeds your coverage and you now have the right to engage your own counsel, at your expense, to advise you. You are under the belief that your carrier is exposed only to policy limits of one million, leaving you exposed to another nine million plus interest. One concern you have is, can the claim be settled for the one million now, eliminating your exposure and has your carrier tried to settle within policy limits, or is your carrier willing to risk a trial because its limit of exposure is only the one million? The role of your private counsel is to monitor the defense of the lawsuit. In New York, and most other states [if not all] your carrier owes you a duty of “good faith”. It must place your interests above its own. If your carrier is found to be in “bad faith” it can be liable for an award in excess of the policy limits. In other words, if your carrier could have settled and should have settled within policy limits but decided to roll the dice on a bluff, unreasonably exposing you, it can be held responsible for its bad faith and required to pay the excess award. If you’re in an excess claim situation you need to have experienced counsel monitor the case. ************************ To order up to date Standard Form Alarm / Security / Fire and related Agreements click here: www.alarmcontracts.com *************************** CONCIERGE LAWYER SERVICE PROGRAM FOR THE ALARM INDUSTRY - You can check out the program and sign up here: https://www.kirschenbaumesq.com/page/concierge or contact our Program Coordinator Stacy Spector, Esq at 516 747 6700 x 304. *********************** ALARM ARTICLES: You can always read our Articles on our website at ww.kirschenbaumesq.com/page/alarm-articles updated daily ******************** THE ALARM EXCHANGE - the alarm industries leading classified and business exchange - updated daily ************************* Wondering how much your alarm company is worth? Click here: https://www.kirschenbaumesq.com/page/what-is-my-alarm-company-worth ****************************** Getting on our Email List / Email Articles archived: Many of you are forwarding these emails to friends or asking that others be added to the list. Sign up for our daily newsletter here: Sign Up. You can read articles and order alarm contracts on our web site www.alarmcontracts.com ************************** 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