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What happens if subscriber doesn't add us as additional insured
January 30, 2021
What happens if subscriber doesn't add us as additional insured
            The All in One FireCommercial and Residential contracts we purchased indicate that our clients are to add our company as Additional Insured – what happens if they don’t add us?  Also, do we need to collect the Certificate of Insurance from each of our clients showing they have added us?
 Thank you.
 Best regards,
            Good question.  Most if of you are not going to pursue the additional insured issue once the contract is signed, especially for the residential customers.  The contract requires the subscriber to add you to the subscriber's policy and they don't.  There are consequences.
            The first issue is that the subscriber is in default of the contract.  Also, it's likely a non-curable default.  You could default the subscriber and accelerate the contract.  Before I leave this point, it's a more significant issue when you are on a big commercial job and you have agreed to name the contractor and owner as additional insureds, and you don't.  They will default you and they won't pay you.  
            If the subscriber fails to name you as an additional insured and a claim is made there are two possibilities.  One, a court will say the subscriber breached but the only damage you suffered is the cost of the insurance because you should have "covered" by getting your own insurance.  Since you already have insurance, E&O, the claim will end up being defended by your carrier.
            Another court may rule that since your subscriber didn't name you, the subscriber stepped into the shoes of your insurer, at least to the extent of the required insurance.  I've seen this argument rejected and I think it may depend on whether you take steps to ask for, insist on, look for the insurance, which you do by getting a Certificate of Insurance with an additional insured endorsement.
            I would not characterize the additional insured provision as one of the vital, essential provisions, a deal breaker if you can't get it.  Why do we ask for additional insured?  Because most lawsuits against you are going to come from your subscribers insurance company under its subrogation rights.  If you're also an insured on the policy the carrier can't sue you. We accomplish the same result with a waiver of subrogation in the contract; don't give up both provisions.
            Contract negotiations can involve serious legal issues that you should not be handling on your own, no matter how smart you are.  It's within your province to decide on equipment and pricing; you can change the limitation of liability from $250 to millions if you want; at least you understand what you did, even if you haven't thought about the consequences of your decision.  But many other provisions are complex and need to be read in conjunction with other provisions in the contract.  Changing one word can change the provision and expose you to liability and damages beyond your imagination.  Well, maybe not beyond your imagination, but beyond your expectation, that's for sure.  Contract negotiations should be conducted by experienced counsel, and that's why you should join K&K's Concierge Program, designed for the alarm industry.  There's plenty of reasons to join, but the "no brainer" reason is that it costs $145 a month and you get a free half hour of contract negotiation monthly.  That's a $250 value, presently, soon to be $325.  Each month.  But the real value is getting you to have contract changes reviewed and when necessary negotiated by counsel rather than flying by the seat of your pants praying nothing goes wrong.  Contact K&K's Concierge Program Coordinator Stacy Spector,Esq at 516 747 6700 x 304 or or go on line and join, click here.


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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