Take cover - A guide to business insurance for franchisors

Unforeseen situations have the ability to derail even the best laid plans. Part of being forward-thinking is covering yourself by taking advice from a professional insurance broker. Moreland Insurance Director, Maurice Logie reports.

Insurance, these days, is a complex business and the requirements for any business to be satisfactorily covered range from compulsory elements to policies that are very advisable, with a vast number of policies in between. Below is a guide to help you ensure you are adequately protected.<br/>
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Compulsory<br/> In the UK, motor and employer’s liability are the two compulsory forms of business insurance. Employer’s liability is required to protect an employer’s legal liability for injury to employees.<br/>

Professional Indemnity<br/> There are still a significant number of franchisors that either don’t have cover – or, if they do, it may be inadequate. Proper PI insurance need not be expensive, but it will protect the franchisor from civil liability claims (awards and expenses). It should be taken out by the national (master)/international or regional franchisors.<br/>

Public/Product Liability<br/> This is not compulsory in the UK, but it is highly advisable – the risks protected relate to third party injury or damage cover.<br/>

Vehicle Insurance<br/> Some franchise networks will allow franchise owners to arrange their own vehicle insurance. The dangers here are as follows:

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  • Internet quote sites are classed as a ‘non-advised sale’ and must be treated with caution for business insurance purposes. We have come across franchise owners who mistakenly think, for instance, that a van policy covers their tools and equipment.
  • Commercial car insurance with the wrong class of use can mean that, technically, there is no cover.
  • A fleet policy may prove beneficial, as it will enable the franchisor to control the risk – for instance, ensuring proper business use, no young drivers and making sure that additions and equipment on the vehicle are properly covered.
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    Scheme-Based<br/> We are increasingly being asked to use the buying power of a franchise in the insurance market. Typically, you can save up to 20 per cent in premiums by doing this. Equally importantly, you can ensure contract certainty – that is, the same cover applies across the brand, so there are no gaps or ‘nasty surprises’.<br/>

    Sector-Specific Solutions<br/> Franchising is, by nature, a very diverse arena and so the insurance risk solutions we come up with will vary according to the client’s needs. Insurers have lines of cover that will apply to certain business types e.g. Retail, Working with Children, Domiciliary Care etc. <br/>

    Regularly Review<br/> Just like the franchise manual and agreement, your insurance arrangements need to be checked regularly. A review will pick up any changes in legislation; your business activities; new risks identified; and any claims experience issues that need to be addressed.<br/>

    Master Policy<br/> This is a common method of managing the insurance needs across a franchise network. One policy is issued, with the franchise owners receiving individual certificates.<br/>

    Web-Based Administration<br/> Franchisors are increasingly using the internet to deliver all kinds of management information across their network and insurance is no exception, thus creating a ‘paperless environment’. Commercial insurance products and services can be delivered in whatever manner the franchisor requires.<br/>