Basic Alarm Company Operating Guidelines and the Importance of Alarm Contracts

January 11, 2016

alarm-contractBusinesses in the residential and commercial alarm and security space face inherent hazards, as they are tasked with mitigating and/or eliminating the risk to both person and property from dangers ranging from burglary, fire, water loss, etc. These businesses have become adept at minimizing risk on behalf of others. Far too often, however, alarm companies fail to take basic steps to mitigate the risks that are associated with the very operation of their businesses, such as using properly drafted alarm contracts for every sale or service call the company makes.

What are some other common sense steps that alarm companies should take in order to survive and thrive?

Alarm Contracts and More

The following is a list of some of the basic measures (including operating with well-drafted alarm contracts) that an alarm company can and should take not only to avoid possible catastrophic liability from potential lawsuits, but also to maximize business value:

  • Incorporate – It is senseless to invite personal liability upon oneself for business-related activities; incorporation exists to protect business owners from the debts and other liabilities incurred by the business and it is crucial that owners shield themselves from potentially devastating personal liability.
  • Make sure that you are properly insured – It is critical to maintain adequate levels of insurance coverage to protect against the significant risk of liability from fire loss, property damage and personal injury claims made by customers. Ideally, an alarm company should strive for a relationship with an insurer that is familiar with the risks associated with operating an alarm business and that will provide an Errors and Omissions policy with sufficient coverage, offering the most competitive premiums.
  • Ensure compliance with all applicable licensure requirements – States, counties, and cities across the country have varying requirements to obtain and maintain licenses associated with operating an alarm business. Oftentimes, fire alarm license applications will also have different standard requirements than those for burglary and other manner of alarm licenses. Accordingly, it is necessary to remain cognizant of, and compliant with, the different requirements imposed by states and other authorities having jurisdiction.
  • Make use of properly drafted alarm contracts – Contracts are the lifeblood of an alarm company’s business. As such, it is absolutely imperative to use and maintain contracts that reflect the current state of the law, as well as technology used in the industry. The failure to employ up to date contacts can deprive a company of both necessary protections against crippling liability in the event of a lawsuit brought by a customer, as well as vital recurring monthly revenue.
  • Work with competent legal counsel – The foregoing steps can be most effectively accomplished by engaging in a working relationship with knowledgeable counsel that can review your business practices, and make sure that your alarm business has proper contracts that offer both the strongest possible protections and maximize business value.

If you are interested in this topic, or wish to set up an alarm or security venture, please e-mail us at, or call us at (212) 246-0900.

The material contained herein is provided for information purposes only and is not legal advice, nor is it a substitute for obtaining legal advice from an attorney.  Each situation is unique, and you should not act or rely on any information contained herein without seeking the advice of an experienced attorney.

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David Klein

David Klein is one of the most recognized attorneys in the technology, Internet marketing, sweepstakes, and telecommunications fields. Skilled at counseling clients on a broad range of technology-related matters, David Klein has substantial experience in negotiating and drafting complex licensing, marketing and Internet agreements.
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