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Don’t Count on Your Central Station to Assume Liability

Think your central station will assume liability? Think again.



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An installing security company owner recently shared with me some concerns about liability exposure in the business’ relationship with its monitoring provider. In this case, the firm uses the standard monitoring contract my practice endorses, with a signed copy tendered for every new account. The installing company also signed a dealer agreement consenting to the monitoring firm’s limited liability, indemnity, etc. The justification on the part of the monitoring provider was, why take on high liability for just a few dollars a month per account? The installing company owner surmised he cannot look to a monitoring center to accept all liability; each party must cover their own backs and be properly insured.

As dealers (like subscribers) become more sophisticated and careful, they are questioning the central station contracts and requirements. The installing company owner is correct: the central station wants the dealer to indemnify the central and name the central as an additional insured on the dealer’s policy. Why not? The dealer asked this of the subscriber.

The central station figures that the dealer is the one that selects the subscriber and has the lion’s share of the responsibility since it installed and services the alarm system. But some claims do involve central station mishaps and the dealer should not be responsible to indemnify the central station for those claims. Except, it’s the dealer’s responsibility to make sure the subscriber has signed a contract that “contracts away liability for loss even if caused by negligence” by the dealer or its subcontractors, which includes the central station. Perhaps that is a reasonable requirement by the central station; just get the subscriber to sign a proper contract that protects the dealer and the central station.

I’m asked to represent both dealers and central stations, and depending on which hat I am wearing I advocate the position most favorable to my client. I know you’re thinking there’s a name for someone like that, and it’s not a lawyer, or maybe it is. But there is no reason both the dealer and the central station can’t be protected. The standard form contracts spread the protective provisions to cover both dealer and central station. That’s why central stations approve the monitoring contract in place of the three-party contract.

Dealers should recognize that central stations have standardized form contracts just like dealers do. Most got them from the same place the dealers get their contracts (alarmcontracts.com). Just like a dealer isn’t going to make many changes and assume more risk for a subscriber paying a minimal amount each month, a central station is less likely to want to change its standard form and policies for a dealer with only a handful of accounts. But like a dealer that has a subscriber with lots of work and promise, a central station is more likely to negotiate the terms of its standard form contract for the dealer with lots of accounts.

If you’re not getting the best deal then look elsewhere. There’s a list of central stations looking to do business with you online in The Alarm Exchange. By listing there they are signaling their interest in meeting new dealers and attracting new business for their central station business. Support them; they care about the industry.

Ken Kirschenbaum has been a recognized counsel to the alarm industry for 35 years and is principal of Kirschenbaum & Kirschenbaum, P.C. (www.kirschenbaumesq.com). His team of attorneys, which includes daughter Jennifer, specialize in transactional, defense litigation, regulatory compliance and collection matters. The opinions expressed in this column are not necessarily those of SSI, and not intended as legal advice.


Article Topics
Business Management · Central Stations · Legal Briefing · All Topics

About the Author
Ken Kirschenbaum
Security Sales & Integration’s “Legal Briefing” columnist Ken Kirschenbaum has been a recognized counsel to the alarm industry for 35 years and is principal of Kirschenbaum & Kirschenbaum, P.C. His team of attorneys, which includes daughter Jennifer, specialize in transactional, defense litigation, regulatory compliance and collection matters.
Contact Ken Kirschenbaum: ken@kirschenbaumesq.com
View More by Ken Kirschenbaum
Central Stations, Legal Briefing


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