Guard Tronic has provided burglary, robbery, and fire alarm systems and monitoring for over 65 years. Most customers will get a discount on their insurance premium by having one or all of these systems. These discounts typically range from 10-25%.
What happens if a customer tells their insurance agent or underwriter that there is a system and never get one installed, or if they cancel the monitoring of their system and fail to notify their insurance agent or carrier?
Many insurance companies are refusing to pay a claim on a loss if there is no fire alarm system or if fire alarm monitoring has been cancelled.
We strongly encourage our customers to notify your insurance company (agent or carrier or both) when you cancel your fire system monitoring, as it may be required by fire code. While we don’t know any of the details of your coverage, it would be better to pay the difference of the discount you were should have been receiving by having a system than getting denied a claim on a loss.
There have been several articles recently published by the self-professed “alarm industry attorney” Ken Kirschenbaum. In an email dated March 20, 2024, he states:
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Kinsale Ins v Sea Brook Marine. US Court of Appeals, Fifth Circuit [in Louisiana]
The insurance policy Kinsale issued to Seabrook contained a “Protective Safeguards Endorsement,” requiring “is a condition of the insurance,” that Seabrook maintain an “Automatic Fire Alarm, protecting the entire building, that is:
a. Connected to a central station; or
b. Reporting to a public or private fire alarm station.”
The summary judgment evidence established that, although Seabrook had a security and theft monitoring system, it did not have a fire monitoring system. Because it was undisputed that Seabrook failed to comply with the condition, Kinsale moved for summary judgment in its favor.
In opposing Kinsale’s motion for summary judgment, Seabrook contended that it “had a good faith belief that the property was covered by a centrally monitored fire alarm system, which included hardwired smoke detectors.” Seabrook argued that the language of the Kinsale insurance policy was ambiguous in light of prevailing Louisiana statutory law; that Kinsale’s interpretation of the policy led to absurd consequences after applying Louisiana jurisprudence; that the proper legal standard for determining compliance with the policy’s requirement under Louisiana law was whether Seabrook exercised “due diligence with no intent to deceive” and that, under that standard, there were genuine issues of material fact making summary judgment inappropriate.
Seabrook further argued that Kinsale either waived its right to exercise the protective safeguards endorsement or should be estopped from using it to deny coverage because the absence of a centrally monitored fire alarm system did not increase the “moral or physical hazard” under the policy. Specifically, Seabrook argued that “a centrally monitored alarm would not have alerted the New Orleans Fire Department any sooner in battling this conflagration” because “this fire’s origin was outside of the Seabrook office building and the wind driven fire would have started on the office building’s exterior in the same area as the alarm monitoring equipment.”
Although not clearly explained, presumably Seabrook was arguing that this fire would have rendered the alarm monitoring equipment inoperable at the outset of the fire.
The district court determined that Seabrook’s maintenance of a centrally monitored, automatic fire alarm was a condition precedent to insurance coverage under the policy; it was undisputed that Seabrook did not satisfy that condition; and the Louisiana statutes upon which Seabrook relied did not support Seabrook. It consequently granted summary judgment in favor of Kinsale that the insurance policy it issued to Seabrook provided no coverage for the fire occurring at Seabrook’s facility. Seabrook filed a timely notice of appeal.
The district court also denied Seabrook’s Rule 56(d) motion for continuance to allow time for further discovery and granted Kinsale’s motion to strike Seabrook’s third-party demand against Central Monitoring, Inc., doing business as Alarm Protection Services, Inc., et al.
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