When purchasing franchise insurance getting the right level of insurance cover is essential. If you are over-insured you will be wasting profits by spending money unnecessarily. But if you are under insured the consequences could potentially be far worse. There are too many horror stories of people who thought that they were covered by insurance, only to discover that their insurance package was not sufficiently comprehensive. It is important to get the right level of cover for your business at this particular point in time. This is usually highly specific. Particularly for those new to the franchise industry it is a good idea to get professional business advice when choosing an insurance package. Wherever possible talk to others in the industry and try to follow their advice and learn from their mistakes. Of course, insurance providers will also be able to help you cover all your bases. A number of insurance companies offer specialised knowledge in the franchise sector. Franchise insurance is available from most major insurance providers, and in some countries there are also a number of insurers, which specialise exclusively in franchise insurance. Your personal situation, your geographical location, and the nature of your business will determine the provider that you choose. Whatever you decide make sure you have access to the best possible advice. Ask for a franchise consultant to help you determine the things that you absolutely need to insure.
As a word of caution, be careful not to leave yourself open to disaster. When starting out in a franchise business it can sometimes be tempting to cut costs. These days’ insurance premiums can seem astronomically high, especially if your business has yet to begin generating profit. However, for the franchisee, franchise insurance is an indispensable part of risk management. You can only be sure of your own preparedness for disaster if you are fully insured. This is especially important in challenging economic times. Some franchisees question the necessity of life insurance. For example, you are young and healthy and see no need for purchasing life insurance. However, consider the consequences for your family if you were to lose your life. What would happen to the business without you? Would this leave your family exposed to hardship?
When considering franchise insurance there are a number of components to think about. Of course, this will depend greatly on the nature of your business. The following is a non-exhaustive list of things to ask yourself when choosing an insurance package. Does your business have a motor vehicle, trailer, mower or truck? All of these need to be fully insured. Is all your specialised equipment insured to replacement value? Do you need insurance for public liability? As an employer you may need to purchase employers’ liability insurance? As well as life insurance is advisable to purchase disability insurance? Have you got insurance to cover your franchise fee in the event that you are unable to pay? These questions may sound daunting, but it is essential that you are able to answer them. Again, working alongside an insurance professional, especially a franchise consultant will help you isolate your specific needs.
Many franchisees choose to allow a consultant to draw up an insurance plan for them, which they then check and review annually. It is essential to review your insurance commitments at least once a year as your situation can change dramatically in that time. Having an insurance manager certainly frees you up to focus on running your own business. It also gives you the peace of mind that if it all did go badly wrong, you would be covered. Franchise insurance is also necessary to cover any loans that you have taken out to fund the franchise. Sometimes insurance will come as part of the loan package. While package deals can save you a great deal of time, it is important to shop around to make sure that you are getting the best value possible for your money. In short, any effort that you put into getting the best franchise insurance package will pay off, but whatever you do, don’t skimp on insurance. Get the best cover you can afford because you never know when it is going to pay off!