This website requires certain cookies to work and uses other cookies to help you have the best experience. By visiting this website, certain cookies have already been set, which you may delete and block. By closing this message or continuing to use our site, you agree to the use of cookies. Visit our updated privacy and cookie policy to learn more.
This Website Uses Cookies
By closing this message or continuing to use our site, you agree to our cookie policy. Learn More
This website requires certain cookies to work and uses other cookies to help you have the best experience. By visiting this website, certain cookies have already been set, which you may delete and block. By closing this message or continuing to use our site, you agree to the use of cookies. Visit our updated privacy and cookie policy to learn more.
SDMmag logo
search
cart
facebook twitter linkedin youtube
  • Sign In
  • Create Account
  • Sign Out
  • My Account
SDMmag logo
  • Home
  • Magazine
    • Current Issue
    • Digital Editions
    • Archives
    • Monitoring Today
    • Professional Security Canada
  • Products
  • Newswire
  • Exclusives
    • SDM 100 Report
    • Top Systems Integrators Report
    • Annual Industry Forecast
    • State of the Market Series
    • Dealer of the Year
    • Systems Integrator of the Year
    • TMA Monitoring Center Excellence Awards
    • Blog
    • PSA Leadership Institute
  • Topics
    • Trends & Industry Issues
    • Video Solutions
    • Access Control & Identification
    • Smart Home
    • More SDM Topics
  • Columns
    • Editor's Angle
    • 5-Minute Tech Quiz
    • Security & the Law
    • Security Networkings
    • Digital Shuffle
    • Technology @ Work
    • Insider News & Business
    • Today's Systems Integrator
    • Marketing Madmen
    • Sales Stars
    • Smart Insights
  • Events
    • Industry Calendar
    • SDM 100 Gala @ ESX
    • Webinars
  • More
    • Videos
    • Podcasts
    • ISC West 2019
    • Photo Galleries
    • Newsletters
    • Classified Ads
    • SDM Store
    • White Papers
    • Sponsor Insights
    • More Resources
  • Directories
    • Buyers Guide
    • Take a Tour
    • Guide to Distributors
    • Guide to Central Stations & Monitoring
  • Contact
  • Advertise
Home » Security & the Law: Is Accepting Payments a Waiver of Exclusion?
Security & the Law

Security & the Law: Is Accepting Payments a Waiver of Exclusion?

January 1, 2010
Lessing E. Gold
Reprints
No Comments

There was a lot of finger pointing in a recent case involving the property owner of a shopping center and an insurance company. The finger pointing all revolved around whether or not the insurance company should pay a claim following a burglary.

The property owner of the shopping center filed a claim after an unoccupied retail unit in the shopping center was burglarized. The perpetrators apparently forced their way through a locked rear door, stealing copper wire and other electrical equipment. The same store had been burglarized approximately one year earlier and it is alleged that the unit’s burglary alarm system was rendered inoperable at that time and never repaired.
 
The insurance company declined to pay for the claim on the grounds that the property owner’s loss was excluded under the policy because the property owner failed to maintain a centrally monitored burglar alarm system at the unit and alternatively, because the property owner made a material misrepresentation on its insurance application saying the shopping center was protected by a centrally monitored burglar alarm.
 
The property owner filed a complaint against the insurance company and claimed that the contract provision the insurance company relied on to exclude it from paying the claim was ambiguous and that it actually had not made a material misrepresentation on its application. The property owner further claimed that the insurance company had waived enforcement of the exclusion by continuing to accept premiums after being put on notice that there was not a functioning alarm system in the unit.
 
The insurance company then filed a motion for summary judgment seeking to dismiss the complaint.
 
First, the court needed to decide whether or not the relevant provisions were ambiguous as the property owner claimed. The court pointed out that the insurance contract was issued subject to a “burglary and robbery protective safeguards endorsement,” which added certain conditions to the contract, including that no losses or damages would be paid for if the insured knew about a non-working alarm and failed to notify the insurance company or if the insured failed to “maintain” any alarm listed in the contract. 
 
Even though the property owner argued that these provisions were ambiguous as the word “maintain” did not imply that the “insured was required to install burglar alarms at all locations where they did not exist,” the court disagreed. The court pointed out that the property owner ignored the clear meaning of the verb “maintain,” which had three consequences. First, if such a system has been installed and is operative at the time the contract comes into effect, it must be kept operational through the life of the contract. Second, if such a system has not been installed by the time the contract becomes effective, it must be installed and kept operational through the life of the contract. Third, if such a system has been installed but is not operational at the time the contract comes into effect, it must be made operational. Therefore, the court found there was no ambiguity.

The next issue was whether the exclusion was waived by the insurance company. The court pointed out that a reasonable fact finder could find that the insurance company had waived its exclusion because after having received the report showing that there was not a functioning, centrally monitored burglar alarm at the site it still failed to cancel coverage, adjust the policy premium or demand that the property owner come into compliance. Further, even if it is true that the policy premiums were paid prior to the inspection, it is not merely acceptance of a premium, but also the continuation of coverage that can constitute a waiver of an exclusion defense. The motion for summary judgment to dismiss the complaint was therefore denied, leaving the property owner pointing the last finger.
Subscribe to SDM Magazine

Recent Articles by Lessing Gold

Is Alarm Company Responsible for Plaintiff’s Flood Damage?

Can Insurance Company Recoup in Fire Sprinkler Case?

Does Monitoring Contract With Tenants Entitle Building Insurance Provider to Reimbursement?

Prominent Liability Clause Protects an Alarm Company That Failed to Respond

Burglar Alarm Responding Sheriff Causes Traffic Accident — Was he Liable?

Les-gold-dscf0001

Lessing E. Gold of Mitchell, Silberberg & Knupp is counsel to the California Alarm Association and a contributing legal columnist. He can be reached at sdm@bnpmedia.com.

Related Articles

A Case of Fairness

Did Alarm Reset Lead to a Violation of Rights?

Standard of Care Deemed Question for a Jury

Is Failing to Report a Break-In Gross Negligence?

You must login or register in order to post a comment.

Report Abusive Comment

Subscribe For Free!
  • Print & Digital Edition Subscriptions
  • SDM eNewsletter & Other eNews Alerts
  • Online Registration
  • Subscription Customer Service

More Videos

Sponsored Content What Is Sponsored Content

Sponsored Content is a special paid section where industry companies provide high quality, objective, non-commercial content around topics of interest to the SDM audience. All Sponsored Content is supplied by the advertising company. Interested in participating in our Sponsored Content section? Contact your local rep.

Close
Featureimage_900x550__ovl0jlkbbj__
Sponsored By
Schneider Electric

New Digital Load Management System Drives Productivity and Enables New Business Models

Motor starter selection and configuration has always been a labor-intensive task. To address this challenge, machine builders and system integrators must adopt new technologies that simplify motor starter selection, installation, configuration and maintenance.

Popular Stories

Dealer of the Year(2019)

SDM 2019 Dealer of the Year: CPI Security of Charlotte, NC

Shiver Security

Shiver Security Expands With the Acquisition of Four Companies

GettyImages-1087183206

Whatever Happened to the Prediction of a Mass Extinction of Security Dealers?

STANLEY

STANLEY Security Partners With Indianapolis Colts to Honor Local ‘Security Champion’

Aiphone

Go Above & Beyond for Effective Emergency Communication/Notification

SDM 2019 Top Systems Integrators Report

Events

January 1, 2030

Webinar Sponsorship Information

For webinar sponsorship information, visit www.bnpevents.com/webinars or email webinars@bnpmedia.com.

View All Submit An Event

Poll

Hiring Women in Security

Has your company made any efforts in the past year to specifically hire and/or promote women in managerial/executive positions? (Please select the best answer.)
View Results Poll Archive

Products

Contemporary Security Management, 4th Edition

Contemporary Security Management, 4th Edition

 Contemporary Security Management, 3rd Edition teaches security professionals how to operate an efficient security department and how to integrate smoothly with other groups inside and outside their own organizations. 

See More Products

SDM Magazine

_FC_SDM1219 cover 144x192

2019 December

Check out SDM Magazine’s December 2019 issue, featuring "CPI’s Key to Success Is Controlling ‘the Experience’ in-House", "Monitoring Services: The Cutting Edge", and much more.

Check back throughout the month for new content!

View More Create Account
  • Resources
    • List Rental
    • Online Exclusives
    • Industry Innovations
    • Partners
    • Privacy Policy
    • Survey And Sample
  • Want More
    • Subscribe
    • Connect

Copyright ©2019. All Rights Reserved BNP Media.

Design, CMS, Hosting & Web Development :: ePublishing