Who Foots the Bill for Alarm Verification Costs?
This month’s column was inspired by an interesting question I received related to the All-in-One security contract my firm offers online among a variety of copyrighted Standard Form Contracts designed to simplify many types of contractual arrangements and agreements for installing security contractors. Specifically, the inquiry concerned whether the term “signal (alarm) verification” is interchangeable with “weekly alarm test?” If so, how should it be dealt with if automated weekly testing is included as part of monitoring?
One of the features of the Standard Form Contracts is that they are designed to maximize RMR. This is accomplished, in part, by breaking down the various services you can provide so that each service can be separately priced. Alarm verification is developing as an additional service. In many jurisdictions it’s not voluntary; it’s required. In other jurisdictions it’s encouraged, sometimes to the point of letting you and your subscribers know that unverified alarms receive lower response priority. Even if not required, some alarm companies may offer verification as a selling tool, a way to lessen the risk of false alarm fines.
For the most part, alarm verification is going to be performed by the central station. Whether it’s going to have to make a few extra phone calls, view a video, activate a listening device or send a runner to the premises, clearly more than merely getting the alarm signal and immediately calling 911 is involved. It’s too late for me to coin the phrase, but “time is money.” In the alarm industry, operator time is money — money the central station has to spend. Alarm verification adds to the time an operator has to devote to an alarm signal and that cuts down on the number of signals one operator can handle, or put another way, effectively provide the monitoring services expected by the subscriber and acceptable to the industry. Centrals will need to hire more operators and find the space to house them and the equipment for them to use.
So how long will centrals continue to absorb this additional cost? Do central stations charge more per account if alarm verification is required or being performed? I haven’t done a survey, but anyone reading this is welcome to do so.
Getting back to the initial question, “weekly alarm test” is not alarm verification. You can charge whatever the market will support for your services and you shouldn’t be expected to give anything away for free. Each service you provide comes with its costs. Neither you nor your central station is going to provide runner service (like guard service, except the runner is sent for the purpose of verifying the alarm condition, not to assist police or open the premises for the police, though I suppose the runner could perform that service as well). I doubt you or the central is going to absorb that cost; definitely not for $2 a month, not even for $8.
Some obvious advice to dealers: Before committing to a monitoring charge with your subscriber, be sure to understand what requirements come with monitoring and how much you’re going to have to pay a central station for the service. If one subscriber is in a jurisdiction that requires verification, and another where it’s not required, should they be paying the same amount for monitoring? I don’t think you’d price inspection service on an annual basis if the frequency of inspection required varied.
Anyway, the point is the All-in-One contract has a provision for you to identify verification as a separate service, and one that you’re going to charge for, or throw in for free if you like, whether you’re being charged extra by the central or not. If not, please feel free to send the add-on to me monthly if you feel guilty about the charge!
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.
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About the Author
Ken Kirschenbaum, SSI Contributor
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.
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