Fires happen and the best you can do is to install a top-notch fire alarm system that will detect the smoke and/or fire and alert occupants with enough time for them to escape with their lives.

Unfortunately, in our litigious society, not everyone is grateful just to get out of a burning house alive. Clients want miracles. They want the house to be saved and all of the possessions inside, and if that doesn’t happen, they come after the deepest pockets.

You never know which client is going to hire a lawyer and take you to court, so you don’t have the opportunity to weed out the “bad seeds.” You just have to wait until disaster strikes, and it will strike at least once in your career.

Are you prepared to go to court? Do you have evidence that illustrates that you installed the fire alarm system to the best of your ability?

In the case of Russell Benjamin, et. al. vs. Detect, Inc., the Superior Court of Connecticut, Judicial District of Danbury, found in favor of the defendant, Detect, Inc. Detect had installed a fire alarm system in the Benjamins’ home, and when a fire broke out, the home was partially destroyed.

Benjamin sued based on breach of contract, a negligent installation and the fact that the contract did not contain plain language that could be understood by a consumer.

In the end, Detect was ordered to pay the plaintiff $80, hardly enough to cover the property damage caused by the fire. Part of the company’s success was due to a Limitation of Liability clause that was within a 5-year monitoring contract signed by the plaintiff. Another portion of the case was taken care of by research that revealed past cases that applied to the Benjamin case where the defendant had won.

Fire happens and you must be prepared to defend yourself when it does. Some preliminary actions you can take include: having signed contracts that clearly define the functions of the system and the role you will play in a lawsuit; purchasing the most adequate insurance you can find; and documenting everything.

1. Cover Yourself With Adequate Insurance

Maintaining adequate insurance coverage is a necessity. You may believe you have enough coverage, but when there is a claim, the dollar amount of your policy doesn’t always cover it.

“Many dealers get $1 million worth of coverage and it’s not adequate based on the types of disasters that can occur,” says David Chanin, Esq., a partner in the firm of Tannenbaum & Chanin, LLP based in Philadelphia, Pa.

Not all insurance policies are identical. Be sure you know and understand your coverage.

2. Develop Concise Contracts for Clients

One step that will protect you in a lawsuit is having signed contracts. The contracts should be as iron-clad as you can make them. Seeking legal guidance to construct the contract is advisable. Then, the contracts should be reviewed from time-to-time to be sure it’s kept up to date and in compliance with state law, according to Chanin.

There are two clauses you should be certain your legal counsel puts in your contract:

The Limitation of Liability clause, which states that you are only liable for a specified amount in the event of a fire. One example may read something like: “Client understands and agrees that if company should be found liable for any loss or damage due from company’s negligence or a failure to perform any of its obligations or failure of the equipment to operate properly, company’s liability shall be limited to a sum equal to the total of one-half year’s payments or $500, whichever is the lesser.”

Third-party Indemnity which obligates the third-party to defend you. For example, if you install a system in a restaurant, the restaurant signs a contract with you which includes the third-party indemnity clause. The restaurant gets sued by a customer because the smoke detectors you installed do not work in an emergency. Because of the third-party indemnity clause, the restaurant, your client, is obligated to defend you if you are named in the suit.

3. Represent System Functions Honestly

Train your salespeople to know the capabilities and functions of the systems you represent like the backs of their hands.

“Sometimes an overly aggressive salesperson will say things during a presentation that later can be construed as misrepresentation,” says Chanin. “As such, the system owner can claim the contract should not be enforced according to its terms. Sometimes such cases are dismissed and other times, they go to a jury.”

4. Document All Client Transactions

Keep a record of every time a person within your company speaks to your client for any reason.

Complete records of conversations can be used in a courtroom to illustrate your relationship with the client. For example, Jeff Gorelick, a lawyer and partner in the firm of Carroll, Burdick & McDonough LLP in Walnut Creek, Calif., says that a clause in your contract that disclaims your responsibility for the adequacy of a security installation may not legally hold up in certain states.

“I advise my clients that when a walk-through is done, there be some form of written acknowledgment from the purchaser that additional protection has been offered and declined,” he says.

5. Comply With All Codes and Standards

Complying with codes and standards should go without saying; however, it’s possible for you to believe you are in compliance and when the chips fall and you’re in court, you find that you are not. Know the codes and standards for your locality. Know what is required by your local Authority Having Jurisdiction (AHJ) and what is required by the National Fire Protection Association’s (NFPA) fire codes.

Do not depend entirely on the AHJ to know everything. While the AHJ is knowledgeable, you are responsible for installing your system to code.

When in doubt, pull out your manuals or call NFPA.

Special thanks to: Jeff Gorelick, a lawyer and partner in the firm of Carroll, Burdick & McDonough LLP in Walnut Creek, Calif.; David Chanin, Esq., a partner in the law firm of Tannenbaum & Chanin LLP in Philadelphia, Pa.; and Michael Wm. Minieri II, president of Tolfan Corp., for their assistance with this article.

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