Franchisor Insurance

Commercial general liability (CGL) insurance is perhaps the most essential insurance coverage that a business can have. A CGL policy is designed to protect your business from financial losses that result from claims of bodily injury, property damage, libel, slander and advertising injury to others caused by your business or your employees.

Directors and officers liability insurance is a form of management liability coverage that helps protect a company’s directors, trustees and officers from claims alleging financial loss arising from mismanagement. It helps shield these individuals from the risk of personal losses due to lawsuits alleging wrongful acts or illegal business activities. While, typically, D&O insurance does not cover liability for fraud or criminal misconduct, it can help safeguard your franchise’s leaders against unintended transgressions and some forms of negligence.

Cyber liability insurance is a type of insurance that’s designed to cover a variety of liability and property losses that may result when your business engages in electronic activities, such as e-commerce or internal electronic data collection. And, importantly, cyber and privacy insurance can help cover your business’s liability for a data breach in which your customers’ personal information is exposed or stolen by a hacker or other criminal who has gained access to your electronic network. Cyber insurance can help cover expenses associated with data breaches, such as:

• Notification costs
• Credit monitoring
• Costs to defend claims by state regulators
• Fines and penalties
• Loss resulting from identity theft

Notably, cyber liability insurance does not cover theft of customer information by employees.

Professional liability insurance, also known as errors and omissions (E&O) insurance, is a form of liability coverage that’s designed to protect professionals from liability incurred as a result of errors, omissions or mistakes that are made during the course of performing their services.

Franchisors’ malpractice insurance, also known as franchisor’s errors and omissions insurance, is designed to protect your franchise from claims filed against you by current, former and prospective franchisees. A few examples of issues that could be covered under this policy include:

• Alleged misstatements and misrepresentations in the Franchise Disclosure Document (FDD)
• Statements made during the franchise development process
• Non-compete claims

Property insurance can help protect the property, buildings and facilities owned or leased by your business, along with equipment, tools, inventory and office furniture that are stored inside buildings or on your company’s property. It can help protect your commercial property from risks like fire, theft, burst pipes, wind damage and hail, just to name a few.

Crime insurance can help protect your company from business-related crime, such as employee dishonesty and criminal acts like forgery, funds transfer fraud, computer fraud, extortion and counterfeit money. Employee dishonesty coverage is a key coverage provided by a commercial crime policy, offering protection for employee theft of client property.

Common exclusions in a third-party crime policy include the mysterious disappearance of property, theft of insured’s property, money and acts committed by employees with prior “dishonest acts.”

Workers’ compensation, or workers’ comp insurance, helps to pay for expenses incurred if an employee is injured while on the job.

Costs covered under a workers’ compensation policy could include medical bills, rehabilitation, ongoing care and even lost wages. In the unfortunate event of an employee fatality, workers’ comp can help to cover funeral costs and compensation for the employee’s family. Workers’ compensation can also help cover costs from a work-related injury lawsuit filed by an employee, such as legal expenses, damages and settlements.

In many states, this coverage is more than just a business safeguard – it’s a legal requirement. Businesses that fail to comply with the workers’ comp requirements in their region, state or locale could face fines, penalties and jail time, in addition to paying damages sought by an injured employees. Because of this, many franchisors require workers’ compensation insurance for their franchisees, and may even require specific policy terms or limits to help protect the organization.