Exploring the Extent of Protective Provisions

We know that alarm contracts are designed to protect alarm companies from exposure to liability. The law permits alarm companies to “contract away liability, even for their own negligence.” So, why not take advantage to the full extent of the law?

We’ve seen almost every type of claim imaginable, from those with merit to those that are obviously without merit. Thus some claims against alarm companies have no factual basis whatsoever, and others are justified by facts showing that the alarm services were performed in a negligent manner, without question.

The properly drafted alarm contract will insulate the alarm company from any liability, and on the off chance that liability is found, limit the extent of damages to a nominal sum. This will be the end result whether the theory of the case against the alarm company is breach of contract, breach of warranty or negligent performance or nonperformance.

It will be the end result whether it’s the alarm company who contracted with the subscriber did something wrong, or its sub-contractor did something wrong; both are protected by the contract.

There have been many cases through the years expressing the public policy favoring the enforcement of the protective provisions in the alarm contract. Just about every state court has opined on the topic, and all find that the alarm companies need the contractual protection so that they can continue to provide their services to the public.

The other justification is that alarm companies cannot continue to provide their services if they are exposed to the enormous damages that subscribers suffer when alarm conditions go undetected; alarm companies are not insurance companies and should not be in the position of reimbursing their subscribers for what should be insured losses.

So we routinely accept that the protective provisions should be enforced when there is alarm equipment or alarm service failure. Maybe it was no signal; or delayed response to a signal; or dispatched incorrectly or host of other reasons. These are the reasons the contract provisions were designed, drafted and enforced. But what about other more mundane issues of liability, those faced by any contractor entering upon a subscriber’s premises?

For example, what about an alarm technician putting his foot through a sheetrock ceiling while in the attic? There is nothing uniquely “alarm related” about this incident; any workman could put a foot through a ceiling. Is every trade entitled to protective provisions in their contracts? Who would allow a tile worker, carpenter, cleaning service into the house or office with the proviso that the worker and company would not be responsible for any damage it caused?

The obvious answer is no one. Of course it’s not likely that these trades face the same breadth of exposure as alarm companies, which is why they don’t rely on the protective provisions in their contracts.

The question is then, is it appropriate to rely on the protective provisions for any loss or damage? The literal reading of the contract would suggest yes. You must keep in mind that despite the near universal acceptance of the enforcement of the protective provisions the judges do go to great lengths trying to avoid enforcement; to find some reason not to enforce the provisions; to find some reason to allow a damage award.

This thought process has as its logical conclusion the issue of whether we (as in we who defend alarm companies against claims) need to be judicious in our use and application of the protective provisions. Maybe the alarm contract protective provisions wasn’t intended to insulate against liability for a foot through the ceiling as opposed to, let’s see, not wiring an attic smoke detector resulting in it failing to detect a fire that burned the house down, or a building down or a block down.

Claims against alarm companies need to be assessed very carefully and defended even more carefully. Insurance claims administrators and defense counsel would do well to remember that.

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