If you’re a franchise owner, you know how running a franchise can be both fulfilling and demanding. You’re responsible for employees, customers, and franchisors. There are many different risks that can arise from your relationships with all of these people. Here is a close look at the various franchise insurance coverage.
Types Of Franchise Insurance
Below are a few types of insurance that you should consider having as a franchise:
General Liability Insurance
Regardless of what type of business you own, general liability coverage is essential. This can protect both you and your franchise from claims that result from onsite client injuries. Keep in mind, however, that a general liability policy may not cover you against claims associated with injuries that result from additions to your business that franchisors didn’t require you to have (e.g. a personal injury resulting from an animal bite).
Commercial Auto Liability Insurance
If your franchise owns or frequently borrows commercial vehicles (cars, trucks, vans, etc.) to conduct its primary operations, you should have auto liability insurance. Whether your vehicles are used to transport people or make deliveries, you as the business owner are responsible for any injuries or accidents that involve these vehicles.
According to the Insurance Information Institute, (III) the minimum recommended level of auto liability coverage for any organization (including small businesses) is $500,000.
Equipment Breakdown Insurance
Equipment breakdown coverage can help cover losses that result from electrical or mechanical breakdown. Most equipment breakdown insurance policies cover items such as computers, manufacturing equipment, security systems, and built-in appliances such as refrigerators.
Your policy will pay for the cost of replacing or repairing these items and any property damaged because of the breakdown. Many such policies also cover food and beverage spoilage and damages that result from power outages.
Loss of Business Income Insurance
This type of coverage can shield you following an unexpected event such as a fire or natural disaster that causes your franchise to lose a significant amount of money. Such events often force businesses to temporarily shutter and even relocate. Loss of business income insurance helps ensure that you can still pay your employees and regular monthly expenses (rent, supplies, etc.) while your operations have been suspended.
Per the III, a standard business interruption insurance policy lasts 30 days, although you can extend it to up to 360 days with an endorsement. Waiting periods of 2 or 3 days also typically apply. Business interruption due to flood or earthquake damages or pandemics are not generally covered by this type of policy.
Excess Liability Coverage
As its name suggests, excess liability coverage protects you beyond your current policy’s limits. However, this type of coverage can only be applied to a single policy, unlike umbrella insurance. It’s most commonly used to increase the limits of a general liability policy.
Employment Practices Liability Insurance
This type of policy can protect you from many different employment-related lawsuits, including discrimination, wrongful termination, and sexual harassment. As with other types of insurance policies, premiums depend on factors such as the number of employees and your company’s history of employment-related claims. To avoid EPL lawsuits, be sure to document everything your workers do.
According to GlobalTrade Magazine, the top five challenges that franchise owners today face include lack of working capital, untrusting franchisees, securing the right franchisees, and finding the most qualified team.
Even if you are feeling unsure about whether you have the right resources and personnel to achieve your goals, these types of insurance policies can help protect you should you face any related risks. As always, be sure to ask for multiple quotes and ask your chosen insurer what each policy covers and doesn’t cover.
Speak to the Franchise Insurance Pros
Reach out to the experts at JMG Insurance Corp to learn more about franchise insurance and its benefits. Since 1916, we’ve been dedicated to offering quality insurance products to clients throughout Connecticut, New Jersey, New York, Hawaii, and Massachusetts. As an independent agency, we work closely with many reliable insurance carriers.
If you own any sort of franchise (such as a restaurant, entertainment center, hotel franchise), you can benefit significantly from purchasing insurance. At JMG, we understand the most common risks that franchises face and are prepared to work tirelessly to shield you against these liabilities. Our policies include coverages like general liability, business interruption, equipment breakdown, commercial auto liability, excess liability, property, and workers’ compensation. All of these coverages can potentially help reduce the amount of money you lose when facing a claim or lawsuit.