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Help Homeowners Understand Value Exchange of Central Station Contracts

Why it is vital to educate the homeowner about contract terms.



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It’s not business but personal when selling to residential customers who want an alarm system to protect their family, treasured possessions and memories created within a home.

Even homeowners who are astute businesspeople at the office change their mindset once they cross the threshold, especially when it’s their family’s personal security being discussed — as well as accepting the terms of the central station contract for providing such services.

On the face of it, the contract may seem one-sided, but when you deconstruct the value of the services provided compared to the compensation sought, the terms will make more sense. It’s your job to help the homeowner understand how the monitoring contract is a balanced agreement.

Explain Contract Terms

It is natural for the homeowner to be taken aback by contract terms such as limits of liability, waiver of subrogation and negligence. Homeowners mentally calculate their potential loss to be a great deal more when they consider the total loss of a home, its contents and the possibility of loss of life.

For this reason, do not allow the homeowner to review the contract without explaining the reasons for those terms and the limitations that are outlined. If you’ve gotten your potential customer to the point of contract review, you just need to close this part of the sale and the deal is done.

Take the time to proactively explain that the central station is not providing an insurance policy, but instead a service that is designed to minimize losses. Interject that if a central station were to act as an insurer of property, meaning the company takes on the risk of being exposed to huge liabilities for property damage or other tragedies, a completely different calculation of cost would be needed to offset the potential risk with a just reward.

In fact, make a direct comparison: Insurance underwriters calculate each policyholder’s premium based on decades of historical data that factor in the likelihood of countless loss scenarios — including having an alarm system backed by central station service — and quantify the outcomes to predict potential claims.

That means that any potential failures by the central station are already factored into the premium being paid. To ask the central station to take on the same risk with increased monitoring fees would only be redundant and wasteful.

Spell Out the Benefits

Enforceable by law, a contract is a promise made by one party to another in exchange for adequate consideration, which reasonably and fairly compels the first party to fulfill their promises to the second. Relating to the central station contract, adequate consideration is the fee paid in exchange for monitoring services.

When explaining the contract to your customers, be sure they understand the primary function of a monitored alarm system is to detect an alarm event quickly and then transmit that alarm event information to emergency responders immediately, which helps minimize losses. Another benefit to the homeowner is they can then inform their insurer that there is a monitored system in place that will help minimize potential losses in the event of an emergency. For this, they may receive a discount to their premiums.

It must be clear to the homeowner that central station monitoring service is not an insurance policy but is intended to increase life safety and peace of mind. That accounts for the true value of the service.

By explaining the value exchange to the customer, homeowners should clearly understand the differences between monitoring service and an insurance policy that covers total losses, thus the “adequate consideration” is much lower than premiums to insure a property and its contents.

Kevin Lehan is Manager of Public Relations for Des Plaines, Ill.-based Emergency24 Inc. He also serves as executive director of the Illinois Electronic Security Association (IESA).


Article Topics
Business Management · Intrusion · Contracts · Kevin Lehan · Monitoring Matters · All Topics

About the Author
Kevin Lehan
In addition to writing for SECURITY SALES & INTEGRATION’s “Monitoring Matters” column, Kevin Lehan is manager of public relations for Emergency24 Inc. He also serves as executive director of the Illinois Electronic Security Association.
Contact Kevin Lehan: k.lehan@emergency24.com
View More by Kevin Lehan
Contracts, Kevin Lehan, Monitoring Matters


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