Franchising 101 – The Complete Guide to Franchise Insurance
Whatever category of franchise you wish to invest in, the most essential aspect of it is getting the right insurance. Unanticipated and potentially derailing events can put you and your franchise off track. Insurance is as important as other things associated with your initial process of starting a franchise like setting up a website and employing the right staff.
Sporting out your policies is the first step in making sure you’re not breaking any laws and are not risking your entire business along the way. Read ahead to find out the different types of insurances you can choose from and how they would be suitable for your franchise type.
Important insurance types that are vital for Franchises
Employers’ Liability Insurance
This policy entails a mandate that each franchise investor has to follow in the scenario where he or she employs staff. It is non – negotiable and pertains to the insurance cover that you’re provided in case a current or former employee decides to file a claim in your opposition due to unforeseen circumstances that might result in them getting injured or falling ill.
Employment Practices Liability Insurance
This insurance is not mandatory but would be nothing but beneficial if you do get it. This insurance comes into play to provide cover if one of your employees files a lawsuit associated to any kind of discrimination in the workplace. The grounds for discrimination can range from discrimination based on sex, discrimination based on gender or caste to discrimination based on age and religion too.
It also includes some other issues that employees might face which in turn would affect the employer like harassment and termination of contract without proper reasoning and proof. It’s always better to get this insurance the moment you actually begin your interview and selection process.
For example, if someone points fingers towards you for choosing someone over them by discriminating on the basis of age. In this situation the above mentioned insurance will be your best bet to wade through.
Vehicle Insurance
It is more than likely that you would use at least one means of transport like bus, car, motorbike etc. If your business expands and reaches the anticipated market levels, you might even level up and need more. So, this type of insurance is a necessity.
Motor insurance refers to getting cover for each vehicle that your business uses to operate and for each individual driver as well. It would provide relief in case of injuries or damage to property.
Professional Indemnity Insurance
Professional indemnity insurance is nothing but cover against claims of negligence or breach of any kind of duty that falls upon your shoulders. This type of insurance is mandatory but not for all businesses, sometimes you do have the option of not getting it. It is advised that you get this type of insurance is you’re any one of the following:
- Solicitor
- Accountant
- Financial Advisor
- Architect
- Chartered Surveyor
This insurance comes in handy when a customer files claims against you for a particular professional or financial loss that he or she might have incurred at the hands of your business. Further, it helps to steer clear from the below mentioned claims:
- Defamation
- Loss of data and important documents
- Sharing of confidential information
- Infringement of copyright
Public Liability Insurance Policy
This insurance will look after your business in the scenario where your business incurs third party losses which are bound to happen if your business interacts with the public. Despite not being made a mandatory policy, it would be in your best interest to get it as it will help you in case you’re asked to pay insurmountable amounts as fines or claim fees.
Product Liability Insurance
As the name suggests, this policy is associated with the products you hand out among the masses, if your business deals in the supply of goods to the public. It is your moral obligation and responsibility to draw them completely safe to use and keep.
Most franchises feel that if they put sufficient effort into making the products safe from the very beginning of the manufacturing process, they might be let loose when it comes to this policy or that they might not even need it at all.
In contrast to this, you must get this insurance in the name of your business because it’s exactly these types of incidents that disrupt the image of a certain business for times to come.
Business Interruption Insurance
If you ever face an adverse situation which interrupts the flow of your business and results in temporary closing down of it, this insurance will help you sail through tough times. The cause can be anything from a natural calamity like flood or excessive rains, any kind of robbery that might take place to other unprecedented disasters like fires.
This insurance would help you with funds that will shorten the period in which you stay out of business and you can jump back quicker and faster.
Cyber Insurance
In the technology driven world that we live in, every small and big aspect of a business is recorded and stored somewhere online. Chances are that you would face data theft or loss of data at least one in your business life. To avoid this very hurdle, investing in cyber insurance is a must for the continued prosperity of your business. In the technology driven world that we live in, every small and big aspect of a business is recorded and stored somewhere online. Chances are that you would face data theft or loss of data at least one in your business life. To avoid this very hurdle, investing in cyber insurance is a must for the continued prosperity of your business.
Common Franchise Insurance FAQs
Should you get insurance if you’re a home business owner?
Home based businesses are tricky to get covered since the same rules that apply elsewhere don’t necessarily apply here. It becomes imperative to evaluate your work conditions and then cover for things that can go wrong even in the comfort of your own home.
How to figure out what insurance your business is in need of?
The first step towards devising an appropriate insurance plan is to study your business in detail and point out pain paints that might pan out into something bigger in the future. It is essential to list down the insurance policies in the franchisor-franchisee agreement beforehand. You can take advice from your franchisor and a certified financial advisor too. The first step towards devising an appropriate insurance plan is to study your business in detail and point out pain paints that might pan out into something bigger in the future. It is essential to list down the insurance policies in the franchisor-franchisee agreement beforehand. You can take advice from your franchisor and a certified financial advisor too.
Bottom Line
Choosing the right insurance policies for your franchise can seem like a puzzle at first but you’ll surely get the hang of it gradually. The key is to tread each aspect of your business with utmost attention to detail and not leave anything to chance.
If something looks a little problematic, get insurance immediately. It’s better to deal with issues before they become irreversible manic concerns for the entire team.
