Insuring Your Alarm or PERS Business

In the security and PERS industries, it’s important to make sure that your business is protected. But what kind of insurance does your business need?

Let’s take a look at the differences between general liability and professional insurance (also known as E&O), and the most important things to know about both.

The Types Of Insurance You Need

Covering your bases by purchasing insurance is a necessary operating expense for many business; so, what exactly do you need as a dealer? The bottom line: alarm and PERS dealers need:

• General liability
• Professional liability (E&O insurance)
• Good contracts

All three are necessary for proper risk management and an important part of protecting yourself and your monitoring company. Our sales team is often asked if the professional liability (E&O) is important for the dealers. The answer is an emphatic, “Yes!”

What Is General Liability?

General liability protects dealers against bodily injury and property damage arising out of premises, operations, products, and completed operations. It also includes advertising and personal injury liability.

General liability insurance does not cover the dealer in the event of an error or omission, or a perceived error or omission. “Perceived” being the word of choice because the dealer could do everything correct with no mistakes or omissions, but that does not necessarily prevent a lawsuit.

The end user has the right to sue the dealer for something he/she feels was “bad advice” (or advice that should have been provided, but was not).

General liability will not cover defense costs because there was not bodily injury or property damage involved. The cost to defend oneself can be very expensive—hundreds of thousands of dollars. That’s where professional liability comes in.

Professional Liability (E&O)

Professional liability (E&O) insurance protects dealers against liability for committing an error or omission, and it will defend against a perceived E&O claim. Generally, professional liability policies are designed to cover financial losses rather than liability for bodily injury or property damage (which is covered under the general liability policy).

A professional liability policy will typically include language resembling the following:

“… arising out of the rendering or failure to render professional services as described shall be deemed to be caused by an occurrence.”

These professional services are excluded in a general liability policy. Or, the policy language may include:

“… damages as a result of an error or omission to which this insurance applies. We will have the right and duty to defend the insured…”

Professional liability is similar to a doctor’s malpractice insurance policy. An alarm dealer offers advice to the end user through its employees, marketing materials, installers, and independent contractors*.

Professional Liability Explained:

* It’s also good to note that many policies will exclude independent contractors. It is important for dealers who utilizes independent contractors to get an endorsement to include the contractors under the definition of an insured.

Don’t Risk It

Now that you know the differences of each type of insurance coverage, you can see why they are both an integral part of protecting your alarm/PERS business.

The overall cost to ensure coverage is minimal, and the risk involved in not having it is extremely high. Attorneys practicing in the alarm/PERS industry talk of the importance and necessity of both general liability and professional insurance policies. Without it, dealers run the risk of being sued and incurring exorbitant costs without coverage.

Shawn Iverson, owner of The Insurance Center has this to say on the topic:

“This is not something new. We have been doing this for more than a decade. All insurance agents that deal with alarm/PERS dealers on a regular basis will also testify of requiring both professional and general liability: it is an industry standard. These policies can often be written under one packaged insurance policy.”

More About Insurance For Alarm Dealers

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