Three Things to Watch Out For in Alarm Monitoring Contracts

Three Things to Watch Out For in Alarm Monitoring Contracts

contracts
  • If you’ve begun the process of researching options for a monitored alarm system to protect your home, you’ve almost certainly noticed that almost all alarm companies require you to sign a contract or agreement of some type.

    As is the case with many types of contracts, these documents can sometimes be full of fine print and hard-to-understand legalese.  If you’re like many people, when you encounter a contract like this you just skim over it at best, or possibly even just skip right to the end and sign on the dotted line.  After all, the salesman more or less explained it to you, and he seems like a pretty nice guy, so it’s probably ok to just sign it, right?

    Unfortunately in the alarm industry, that answer to that question is not always “yes”.  While most alarm companies (especially locally owned and operated companies like Dynamark Security) are very trustworthy and honorable, there are unfortunately more than a few companies in our industry that are less than fully honest in their dealings with customers.

    One company in particular is notorious for their tricky contracts.  We won’t mention any names, but they are usually referred to using a 3-letter abbreviation, and you will certainly run across them if you are researching alarm monitoring.

    In the interest of helping you avoid getting trapped in a long-term contract with one of these less-than-scrupulous companies, we will warn you about three things you should look for in the fine print of alarm monitoring contracts before signing one.

    Why alarm monitoring contracts are necessary

    Before we get to what to watch out for in alarm monitoring contracts, we should mention that there is nothing inherently bad about these agreements.  In fact, they are a necessary part of the business model of just about every alarm company, for several reasons:

    • Knowing that they will monitor an alarm system for at least several years allows alarm companies to provide the equipment to customers at little or no up-front cost. Without an agreement in place, the customer would have to pay full price up front for the equipment.
    • Without signed agreements with their customers, it would be impossible for an alarm company to get liability insurance—and you definitely don’t want to do business with an alarm company that doesn’t have liability insurance.
    • Having long-term contracts with their customers provides a stable and predictable revenue stream for alarm companies. When it comes to your home’s security, stability is a good thing—you don’t want your alarm company to suddenly go out of business.

    So, as you can see, alarm monitoring contracts are beneficial to both the alarm company and the customer when they are represented in good faith.  It’s when they are not represented in good faith that problems arise, and that’s where our tips about what to watch out for come in handy.

    Escalation Clauses

    The first thing to watch out for in alarm monitoring contracts is an escalation clause.  This is a clause that allows your alarm company to increase the monthly rate you pay after a certain amount of time.    Most contracts allow for alarm companies to raise their rates after the initial contract term is up, but some of them allow the companies to raise their rates even within the initial contract term. 

    What usually happens with these types of contracts is that companies will advertise a low, “introductory” rate to get customers in the door, and then surprise them with a rate increase after a year or two.  The well-known alarm company we referenced earlier in this article is notorious for this practice, but others use it as well.

    When this happens, you are still locked into the contract for the remainder of the term and have no choice but to either pay the higher rate or buy out the contract.

    You should ensure that the alarm monitoring contract you sign does not allow your alarm company to arbitrarily decide to increase your rates within the initial term of the contract.

    Automatic Renewals

    Another thing to watch out for in alarm monitoring contracts is a clause that allows the contract to automatically renew for multiple years if the customer doesn’t cancel it by a certain point.  These types of contracts are actually now illegal in many states, including Virginia, but some states still allow them.

    Be sure that any alarm monitoring contract you sign doesn’t automatically renew for a term of more than one year, and make note of when your contract is up just in case you want to cancel it.

    Note that having an agreement in place that auto-renews for a one-year term gives you the peace of mind that your monitoring will not be turned off at the end of your agreement without your knowledge, so most monitoring agreements do have that clause.  It’s the ones that renew for multiple years automatically that you should be wary of and avoid (if they are still legal in your state).

    Open-ended Leases

    The last item on our list of what to watch for in alarm monitoring contracts applies more to commercial customers than residential customers, and that is open-ended leases of alarm equipment.  What can happen in this situation is a business may end up paying more for their alarm equipment than it is actually worth, and then still not be able to keep the equipment if they change alarm monitoring companies or move to a new location.

    We have actually encountered this situation several times with businesses who were trying to switch their alarm monitoring to Dynamark and did not realize that they didn’t own the actual alarm system installed at their business—or at least, they didn’t realize it until after they canceled their monitoring service, and the previous alarm company showed up to take back the equipment!  Needless to say, that was quite an unpleasant surprise.

    Although open-ended leases are less common in residential alarm monitoring contracts, homeowners should still pay attention to whether they or their alarm monitoring company owns the equipment installed at their home—and whether that equipment can be monitored by any company, or whether it is proprietary to the specific company that installed it.

    The bottom line is that if you are doing business with a trustworthy company, you shouldn’t have to worry about “gotcha” clauses in alarm monitoring contracts.  However, sometimes it can be hard to distinguish between good and bad alarm monitoring companies.

    Here at Dynamark Security, we are proud to have an A+ rating from the BBB, a 5-star rating on Google, and a track record of over 30 years serving customers in the Richmond area.  Contact us today if you’d like to do business with a company that you can trust not to plant unpleasant surprises in the fine print of your alarm monitoring agreement.