A case was recently decided by the United States District Court in the State of New York regarding the impact of a claim for gross negligence on a contract’s waiver of subrogation provision.
An alarm company installed a system at a home. The alarm system was connected via telephone line to the alarm company central station that monitored the system. A fire originated at the protected premises. The alarm system failed to send a signal to the central station due to the fact that the telephone service was disconnected. For a period of several months prior to the fire, the alarm company did not receive any test signals from the premises at their central station, nor did the alarm company inspect, repair or otherwise service the alarm system. The premises and property were severely damaged, and following the fire, the home owner submitted a claim to its insurance carrier, the plaintiff. The insurance company paid the claim and became subrogated to the rights of its insured.