A franchise can be a highly enriching venture, regardless of the type of business you plan to start (restaurant, hotel, bowling alley, etc.). According to Statista, franchises in the United States (which employ more than 8 million people) generated $787.5 billion in output in 2019.
However, franchises aren’t immune from risk. Therefore, it’s critical to protect your company from certain liabilities by purchasing insurance. One particularly essential insurance is general liability coverage. Here is a close look at this subject.
What Is General Liability Insurance?
A general liability policy covers claims that arise from onsite customer injuries. For example, someone could slip and fall or get stung by bees if they run into a hive just before entering your building. This type of policy typically covers all medical expenses and associated legal fees.
Depending on the insurer, claims resulting from property damage to clients or advertising injuries may also be covered by general liability insurance. According to a recent study conducted by The Hartford, customer slip-and-fall accidents represent 10% of insurance claims against businesses and 40% of small businesses will likely incur a liability or property loss within 10 years.
Why You Need General Liability Insurance For Your Franchise
If you rent or own any type of commercial space (office or not), you should strongly consider acquiring general liability insurance. The same is true if your franchise has a website and/or you use social media to promote your products or services.
In fact, some clients may contractually demand that you have this type of coverage even though it’s not legally required. A certificate of insurance can prove that you have general liability insurance. Per The Hartford, legal counsel costs can amount to more than $100 per hour if you don’t have liability coverage.
What Does General Liability Insurance Not Cover?
As beneficial as liability insurance is, it doesn’t cover all types of claims. Here are some incidents that a general liability policy typically won’t cover:
- Auto accidents
- Professional errors & omissions
- Food spoilage and contamination
- Flood or fire-related damages
These coverages are often available either as their own policy or as an add-on.
How Much Does General Liability Insurance Cost?
The Small Business Association (SBA) estimates that a small company can expect to pay between $60 and $170 per month ($750 to $2,000 per year) for general liability coverage. Nevertheless, premiums can vary based on several factors, including:
Location (state, city, high-traffic areas, etc.)
Your franchise’s size (number of employees and annual revenue)
Industry
Your coverage limits and deductibles: many small businesses choose limits of up to $1 or $2 million.
Additionally, be sure to ask your insurer whether you can bundle several policies in order to save money.
Other Key Insurance Coverages For Franchises
Aside from general liability insurance, other essential coverages you should consider acquiring if you own a franchise include:
Loss Of Business Income Insurance
This type of insurance covers you after your franchise is forced to close down due to an unexpected event, such as a fire or natural disaster. Your policy can help pay for routine expenses such as rent and utilities.
Workers’ Compensation Insurance
Workers’ comp covers you in the event that an employee sues you for an injury or illness they sustain on the job. Each state has different laws regarding this, so be sure to look these up.
Employment Practices Liability Insurance
EPLI insurance covers risks associated with employment-related claims, such as discrimination, harassment, and wrongful termination.
Food Contamination Insurance
If your business handles and/or serves food, this coverage can help cover you if you’re forced to recall products if your customers develop food-borne illnesses like salmonella and E.coli.
Speak To The Franchise Insurance Pros
Reach out to the professionals at John M. Glover to learn more about franchise insurance and its benefits. Since 1916, we’ve been dedicated to providing clients throughout Connecticut, New Jersey, New York, Hawaii, and Massachusetts with high-quality insurance solutions. As an independent agency, we work closely with many well-established insurance firms.
If you own any type of franchise, we highly recommend that you purchase insurance. Our policies include coverages such as general liability, business interruption, equipment breakdown, commercial auto liability, property damage, workers’ comp, and excess liability. At JMG, we understand the many risks tied to starting a franchise and are here to help you face them.
Call JMG Insurance Corp today or visit us online to request a consultation or for more information about our policies.
