Franchise Insurance: What Kind Do You Need?
Depending on whether you are a franchisor or a franchisee, there are different types of franchise insurance to consider. The franchise insurance you need also depends on the business activities you take part in and the requirements in the franchise contract.
In this article, we will explain what kind of franchise insurance will protect your business and make sure you are always in compliance.
What Should Franchisors Consider?
Firstly, franchisors should ensure they have franchise insurance policies in place. This will help protect the business in case of unforeseen circumstances in each location.
The main policies that protect franchisors include:
- Errors and omissions insurance
- Management liability insurance
- Employment practices liability insurance
What is a Franchise Insurance Plan?
The best franchisors insurance considerations are to outline what coverage you need depending on your business activities in the franchise contracts. These contracts are also known as Franchise Disclosure Documents (FDD).
Most business activities are covered by the required franchise insurance policies, but some important policies are left out. As a result, franchisees should investigate their policies to see what’s covered and where extra coverage is needed.
After that, your next step is to create your franchise insurance plan. This plan will ensure all insurance required in the FDD is present as well as any other coverage you need.
What Types of Franchise Insurance Does a Franchisor Need?
Now that you understand what you need to look for in your insurance plan, we will define the required insurance for franchises.
Below are the five most common risks and the insurance needed for each one.
1. Bringing Clients in or Sending Employees Out
If a franchise invites customers in or sends employees out to interact with clients, public liability insurance is important.
2. Worker’s Safety
No matter the type of franchise, there’s a chance of injured and sick staff. Workers’ compensation insurance protects both the franchise and employees from workplace injuries or illnesses.
3. Product Liability
Franchises that sell physical products must ensure they have protection from lawsuits caused by injury due to products. With product liability insurance, franchisors can assure their business has protection from these claims.
4. Property Insurance
If a franchise owns or rents a property, it’s important to ensure policies are in place to pay for damage to the property. Commercial property insurance can assure this coverage.
5. Auto Insurance
Finally, if vehicles are part of a franchise’s operations, commercial car insurance needs to be part of the insurance plan.
Keep Track of Franchise Insurance Policies
Now that you have a clear picture of the insurance coverage you need, the final step is to make sure all the policies are in compliance. The difficult part of this is keeping track of multiple policies.
With SmartCompliance, franchises can upload and track the required certificates of insurance (COIs) for each insurance policy in just one click. Get started today with a free demo to see how we will help your business stay in compliance.