updated - April 23, 2019 Tuesday EDT
Whether you are the owner of a franchise or are a franchisee, insurance for your business is essential for your protection. But it is important to understand that there are a number of issues and challenges surrounding franchise systems that make choosing the right insurance a unique task. For this reason, it is imperative to explore all the options and seek advice from experts who have dealt with many other companies in the same field. Knowing you have the right coverage can give you peace of mind and let you focus on the day-to-day running of the business.
One of the most common types of insurance is liability insurance, and this is crucial for any business. Professional liability insurance, which is commonly known as E&O (Errors & Omissions), covers businesses against civil lawsuits and negligence claims. This is designed to cover anyone and everyone involved with a business, and is particularly important for franchisees. This is because the owner of a branch of the franchise may come under fire if another branch has lawsuits filed against them. It also covers franchise owners in situations when franchisees aren't happy or their expectations have fallen short.
When your reputation is on the line, having the systems in place to deal with the most unsavory situations is of the utmost importance. The insurance protects against copyright infringement, legal fees, advertising harm, and a number of other things which could often be honest mistakes made by businesses. Some famous examples of professional liability insurance cases include Marx v Hartford Accident & Indemnity co. in 1968 and Zuckerman v National Union Fire Insurance Co. in 1985.
Aside from professional liability insurance, there are other things that businesspeople involved with franchise systems need to consider. Public liability insurance is a must-have if your franchise involves having customers enter a shop. This type of coverage protects against any accidents that may occur involving customers. This could range from them slipping over on a wet floor or cutting themselves on an exposed nail. This insurance is one of the main things to consider for restaurant or café franchises, along with sports franchises. Any franchise in which the risk of injury is higher than normal should invest in good public liability insurance.
Product liability, as well as property damage, are other important things to insure. Any business which has an inventory needs product liability, in case damaged goods or equipment gets delivered. If the franchise is based in a physical property rather than online, property damage protects against things such as fire, flood, and vandalism.
Getting involved with a franchise without researching the types of insurance you need would be a seriously risky venture. In addition to the plans listed here, other things to consider insuring are business interruption, employment practices, and any vehicles registered with the franchise. Going through every aspect of the business and insuring it meticulously is the wisest option for those involved with franchises.
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