Owning a franchise can be very stressful but also very rewarding. Franchise owners must meet the needs of their franchisors, employees, and clients/customers all at the same time. Franchise requirements may include certain insurance coverage, but may not give franchisees the comprehensive coverage that will protect them in any situation. Here are five essential insurance policies that franchisees should carry.
General Liability Insurance
General liability insurance is a must-have policy for any business owners. General liability insurance protects the franchise and franchisee from claims that occur when a customer is injured on the premises. While a franchisor will carry their own general liability policy, it may not always cover the franchisee, especially if the injury is a result of something that was not a franchise requirement. For example, a customer trips on a doormat while entering the franchise and files a personal injury claim. This particular doormat was a cosmetic addition made by the franchisee and was not required by the franchisor, leaving the franchisee responsible for the claim and resulting settlement.
Equipment Breakdown Insurance
Some equipment may be covered under the franchisor, but that’s not always the case. Adding an equipment breakdown insurance policy helps to cover any losses that occur due to the mechanical or electrical breakdown of almost any type of equipment, from computers to refrigerators. It will cover the cost of repairing or replacing the equipment as well as any other property that was damaged as a result of the equipment breaking down.
Loss of Business Income Insurance
Loss of business income insurance is often associated with a specific liability event, such as a structure fire, that would cause a business to close temporarily. However, it also covers events that are beyond the owner’s control, such as natural disaster, government shutdown of a building, a driver crashing into the structure or even a freak accident like debris falling out of the sky and onto a business. Loss of business income insurance ensures that the franchisee is still able to pay their employees and fixed expenses while the business is unable to operate.
Commercial Auto Liability Insurance
If the franchise has a commercial vehicle that will be used by the owner or employees, commercial auto liability insurance is essential. Regardless of whether they are making deliveries, picking up or dropping off supplies or just running errands for the business, the franchise owner is liable for any accidents or injury that occur in a company vehicle.
Excess Liability Coverage
Excess liability coverage provides additional limits to the insured’s existing policies. Basic policy limits may not always cover the costs associated with a claim. Excess liability gives franchisees the extra coverage they need in a worst-case scenario. Unlike an umbrella policy, excess liability coverage may only be applied to one specific existing policy, and is typically used as a supplement to a general liability policy.
About The Insurance Store
The Insurance Store was created to bring ease and agility to Surplus Lines coverage placement for agents serving commercial and personal lines clients in specific regions throughout the country. We provide a wide variety of packages for hard-to-place products and risks that include earthquakes, floods, hail, and more. To learn more about how we can protect you in the event of an unforeseen event, contact us today at (425) 313-9605.