What is the minimum required excess liability coverage for a 1 800 Packouts franchisee?
1_800_Packouts Franchise · 2025 FDDAnswer from 2025 FDD Document
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Insurance. You must obtain and maintain in force insurance coverage necessary to comply with all laws and as is customary for similar businesses in the state or jurisdiction in which the Franchised Business operates or as we may reasonably prescribe from time to time. We currently require you to maintain the following insurance coverage: (i) commercial general liability insurance ($1 million per occurrence, $2 million general aggregate limit, and $2 million products-completed operations limit, (ii) contractor's environmental liability ($1 million per occurrence and $2 million aggregate limit (aggregate may be shared with CGL policy)), (iii) property insurance (100% of replacement value of Facility and contents), (iv) bailee legal liability coverage ($1 million limit), (v) vehicle liability insurance ($1 million coverage, including hired and non-company owned auto coverage), (vi) workers' compensation coverage, (vii) cyber liability coverage ($1 million limit), (viii) employment practices liability coverage ($1 million limit), and (ix) excess liability coverage (over and above CGL, vehicle liability and employer liability) of $1 million. The insurance coverage must be maintained under one or more policies of insurance of the types and containing such terms and conditions and minimum liability protection in such amounts, as we specify and as are issued by insurance carriers rated not less than "A-" by A.M. Best Company.
You must maintain these policies during the entire term of your Franchise Agreement. We may increase or decrease the amounts of coverage required under these insurance policies and require different or additional kinds of insurance at any time to reflect inflation, identification of new risks, changes in law or standards of liability, higher damage awards or other relevant changes in circumstances. All insurance policies must name us (and our officers, directors and employees) as additional insureds, contain a waiver by the insurance carrier of all subrogation rights against us, and must provide that we will receive 30 days advance written notice of any material modification, cancellation, or termination or expiration of the policy. You must provide us with a copy of the certificate of or other evidence of the procurement, renewal or extension of each insurance policy withi
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 27–29)
What This Means (2025 FDD)
According to 1 800 Packouts's 2025 Franchise Disclosure Document, franchisees must maintain several types of insurance coverage. One of these is excess liability coverage, which must be at least $1 million. This coverage is in addition to the commercial general liability, vehicle liability, and employer liability insurance that 1 800 Packouts franchisees are also required to carry.
The purpose of excess liability coverage is to provide an extra layer of financial protection beyond the limits of the other liability policies. Should a claim exceed the coverage limits of the commercial general liability, vehicle liability, and employer liability policies, the excess liability coverage would kick in to cover the remaining amount, up to its $1 million limit. This protects the franchisee from potentially devastating out-of-pocket expenses in the event of a large claim or judgment.
1 800 Packouts also mandates that all insurance policies must name the franchisor (and their officers, directors, and employees) as additional insureds. Additionally, the policies must include a waiver of subrogation rights against 1 800 Packouts and require the insurance carrier to provide 30 days' advance written notice of any material modification, cancellation, termination, or expiration of the policy. Franchisees must provide 1 800 Packouts with a copy of the certificate or other evidence of insurance within 30 days after signing the Franchise Agreement and each year thereafter.
The FDD states that 1 800 Packouts may increase or decrease the required coverage amounts or require different or additional kinds of insurance at any time to reflect inflation, new risks, changes in law, higher damage awards, or other relevant changes. All insurance carriers must be rated not less than "A-" by A.M. Best Company.