NOTE: The opinions expressed in this column are not necessarily those of SSI, and not intended as legal advice.

A recent TV news report focused on an alarm incident and the “fine print” of alarm contracts. The subscriber suffered a fire at their residence and the alarm didn’t work. All the alarm company owner had to say was that the subscriber should have tested the alarm, per the contract. The story goes well beyond that, however, referring to a “virtual no-fault contract leaving the consumer no recourse when the alarm fails.” A Tennessee lawyer, a “certified fraud examiner,” aided the report by pointing out the limitation of liability clause and his final conclusion that the alarm companies are trying to insulate themselves from liability “even if they cause the incident.”

Here is what is interesting about this news story and the issues raised about alarm contracts. The fine print is the point. The fine print is what’s going to get you in trouble, get your contract tossed out, cause bad publicity for you and the industry, and attract legislators. These double-digit IQ politicians (not all of them) will focus on the contract language and start chipping away at the protective provisions, exposing alarm companies to significant risk, crushing expense to defend cases, and possibly overwhelming (as in putting you out of business) expense if a case is lost and damages paid.

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Let’s start with the lawyer expert who suffers the same misperception shared by most subscribers, and their subrogation attorneys: that there is a loss and the alarm didn’t work as intended or at all equates to the alarm company being the “cause of the incident.” Really? Did the failure of the alarm to send a signal “cause” the fire? Or was it a candle left burning, overloaded electrical outlet, stored flammables, lightning or arson? Same for a burglary; did the alarm system steal the goods?

Every court (higher court anyway) in every state recognizes and accepts as sound public policy the principle that alarm companies should be able to limit their exposure in order to be able to continue offering their services to the public at reasonable rates. It also can’t escape these same courts that we still have in this country a strong policy that contracts should be enforced as written (subject to a long list of exceptions including unconscionability, overreaching or fraud). I am not aware of any state that has enacted legislation prohibiting the protective provisions in the alarm contract, though we see that challenge almost yearly in some jurisdictions, and certainly many jurisdictions have myriad laws that dictate what a consumer contract should look like.

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