The Hidden Gaps in Alarm Contractor Insurance
By Nick Hart – Three Arbor Insurance
Like in many industries, insurance for alarm contractors can be difficult to procure. The scope of work done by Alarm or Life Safety Contractors varies widely. It is not uncommon to find contractors that do some combination of fire alarms, sprinkler systems, CCTV, bi-directional amplification, ANSUL or other type fire suppression, car alarms, armored car services, and armed or unarmed guard services, among other services. Needless to say, carrier appetite also varies widely. Does the amount of fire alarm work you do as a secondary part of your business exclude you from the sprinkler insurance program that would cover the primary part of your business? Are you doing slightly more CCTV work than the alarm installation program allows for? Other operations that might move your business outside of a carrier appetite include design, consulting, monitoring [directly or through a 3rd party], residential work, using sub-contractors, etc. It can be a complicated field to insure.
Recently we were approached by a local company that was doing business with one of the “big name” insurance companies. The contractor had been with that carrier and the same agent for many years. As time passed, the contractor was able to get opportunities to do more and more in the Life Safety space [specifically with sprinkler systems] and always informed the agent when they were adding additional services. The answer always came back, “you have coverage”. The contractor eventually got his hands on his policy after many years of reassurances and found that many of the services involving sprinkler systems they had added over the years were excluded from coverage from the “big name” carrier. The carrier has a great alarm program but they do not write coverage for “fire suppression systems and sprinklers”. That verbiage is easily found on their 1 page marketing material for the program or by a thorough search of the 128 page full general liability policy.
The contractor was doing his due diligence in informing the agent about changes in operations. The agent was not communicating those changes to the carrier to confirm they were acceptable. It is important to have an agent that will approach the entire carrier market for you but who will also give you exposure to the carrier so that their can always be an open dialogue about changes in operation and carrier appetite.
The contractor performed work for several years that would not have been covered should a claim have occurred.
We were able to find a solution tailored specifically to the industry that had been formed out of one of the largest alarm contractor associations in the US. As we have worked with this carrier, we have been diligent to report operations to them several times so that there is no confusion as to what our client is doing. The response from the underwriter has been, “we understand their operations and coverage exists for them”. There is comfort for all parties in knowing the client is now being seen and heard and has coverage for all their operations
