Jack Mitchell
The home security industry has had a poor reputation for more than a decade. Deserved or not, this poor reputation is the result of a small handful of local dealers who don’t do things by the book. Consumers end up purchasing equipment they don’t need and signing long-term contracts that are not in their best interests.
Most home security providers are reliable companies that treat their customers well. So how do you protect yourself against those who aren’t looking out for you? The most important thing you can do is read and understand a contract before you sign it. If you need to take the contract to your lawyer, do so.
Contracts are binding legal agreements that cannot be broken without consequences. So here is what you should know before you sign:
Why a Contract Is Offered
A home security contract is a service agreement. It is legally known as a Subscriber Monitoring Agreement, and it outlines the rights and responsibilities of both the customer and the company providing monthly monitoring services. Being offered a contract means the home security provider wants to monitor your system in exchange for a monthly fee.
You do not have to accept a contract. There are contract-free options, including HomeProtect from Vivint Home Security. With HomeProtect, you can pay for monitoring on a month-to-month basis. You could also choose a DIY system that you monitor yourself. It puts more responsibility on you, but you don’t have another expense to add to the monthly budget.
7 Key Contract Features
Because contracts are legally binding documents, the language they contain is intentional. Attorneys write up the contracts to safeguard the provider’s interests. That does not necessarily mean that your interests are given equal priority. As you read, pay attention to seven key contract features.
1. The Term
A contract term is essentially its length. Historically, the home security industry has relied on terms of 36 months as the baseline. There are some home security providers that insist on terms of up to 60 months. The most important thing you should know is that shorter terms generally mean higher equipment costs and installation fees.
2. Equipment Ownership
Contract language should explicitly state whether you are renting or buying the equipment. If you are renting, that means the provider will retain ownership of cameras, sensors, etc. Canceling the contract will require you to return everything.
If you’re purchasing, contract language may cover financing options. For example, financing may be built into the monthly monitoring subscription. You could pay the full amount upfront and avoid financing charges.
3. Monitoring Services
It’s a given that the contract contains language relating to monitoring services. But note that the contract should define the exact level of service for which you are paying. Monitoring services tend to be divided into several categories, with pricing reflective of what you are getting.
This particular section of the contract also tends to cover cloud storage, how your system is connected to the monitoring center, and price escalation clauses. Be especially sensitive to any such clauses. They allow the monitoring provider to raise monthly rates over the life of your contract.
4. Early Termination
Early termination is usually the most scrutinized part of the contract, and rightfully so. Most contracts include language mandating an Early Termination Fee (ETF) if you need to cancel before your term is up. The fee could be quite substantial – up to 75% of the total remaining value on your contract. It is not unheard of to face an ETF of 100%.
5. Auto Renewal
Second only to early termination in terms of scrutiny is auto-renewal. Some providers include auto-renewal clauses that stipulate exactly what their names imply: your contract will automatically renew for another full term if you don’t notify your provider, before your current contract expires, of your intent to not continue.
Some contracts auto-renew on a month-to-month basis. That’s certainly better than being auto-renewed for another full term. But it’s up to you to notify your provider within 30 days of term completion to prevent auto-renewal.
6. Relocation Policies
Next up are the provider’s policies for relocating equipment. Such language is a must because homeowners move. The question is whether they can take security equipment with them. And if they can, are they responsible for moving it, or will the provider send a technician to move and reinstall it?
Be careful of a provider that does not allow equipment relocation. Moving would mean having to invest in an entirely new system and starting over with a new contract. It’s not the most cost-effective way to go.
7. Legal Protections
Last on the list is the fine print every home security contract includes. The fine print is generally a selection of legal protections for the provider. The exculpatory clause is a good example. This clause states that the security provider is not an insurance company and does not guarantee that burglary or fire will never occur.
Legal protections also tend to extend to liability. In other words, the provider’s financial liability is limited in the event equipment fails during a break-in or fire. Liability amounts tend to be surprisingly low – as little as $500 in some cases.
Tips to Protect Yourself
Finally, you should be aware of some common tips that could protect you against making a bad decision. The first is to stick with a security provider that offers a 30-day risk-free trial. Check contract language to ensure you have the right to return equipment for a full refund if you’re unhappy.
The second tip is to learn about local permit laws. Your community may require that you register your security system and obtain a local alarm permit. Security providers don’t typically file permits or cover fees. That’s on you.
Again, no-contract home security is possible through programs like HomeProtect. But if you prefer the peace of mind that comes with a contract, just be careful to fully understand what it is you’re signing before you put your name on the dotted line.
