What are the required limits for Commercial General Liability insurance coverage that Aplus franchisees must maintain?
Aplus Franchise · 2024 FDDAnswer from 2024 FDD Document
ions elsewhere set forth above, you shall be liable to Sunoco hereunder, and you do agree to protect, indemnify, and save harmless Sunoco or any other person for claims, losses, and damages, whether caused in part by Sunoco's negligence, but not if caused by Sunoco's sole negligence.
- (F) This Section 2.16 shall survive termination of this Lease.
Insurance
(G) At your sole cost and expense, through the duration of the term of your franchise relationship with Sunoco, you shall obtain, keep, and maintain in full force and effect insurance through a financially responsible carrier (with a rating of "A-" or better by A.M. Best) acceptable to Sunoco which is primary as to any other valid collectible insurance. Sunoco must be included
as an additional insured on all policies listed in subsections (1), (3), and (4). Sunoco is entitled to all coverage limits equal to or greater than the minimum requirements. Such insurance at a minimum shall include the following:
- (1) COMMERCIAL GENERAL LIABILITY INSURANCE against claims for damage to persons or property arising out of your operation of the Franchise at the Premises, including product liability, completed operations coverage and liquor liability (if applicable) with a minimum limit of at least $500,000 for bodily injury and property damage, combined single limit each occurrence.
Source: Item 23 — RECEIPT (FDD pages 68–302)
What This Means (2024 FDD)
According to Aplus's 2024 Franchise Disclosure Document, franchisees are required to maintain Commercial General Liability insurance against claims for damage to persons or property arising out of the operation of the franchise. This includes product liability, completed operations coverage, and liquor liability (if applicable). The minimum limit for this coverage is $500,000 for bodily injury and property damage, combined single limit each occurrence. The coverage must also include contractual liability covering the indemnification and hold harmless provisions outlined in Section 2.16 of the agreement, subject to the Commercial General Liability Policy's standard terms and conditions.
In addition to the Commercial General Liability insurance, Aplus franchisees must also carry Excess Liability Insurance with minimum limits of at least $500,000 per occurrence in excess of the coverages described in subsections (1), 2(b), and (4). However, the document states that this Excess Liability coverage may be waived if the franchisee carries $1,500,000 in General Liability coverage.
Aplus also requires that Sunoco be included as an additional insured on all policies listed in subsections (1), (3), and (4), and Sunoco is entitled to all coverage limits equal to or greater than the minimum requirements. These insurance policies must be written by an insurance company licensed in the state where the franchisee operates and have at least an "A-" Rating Classification as indicated in the latest issue of A.M. Best's Key Rating Guide. Aplus retains the right to reasonably increase the minimum liability protection requirement annually and require different or additional insurance coverage(s) to reflect inflation, changes in standards of liability, future damage awards, or other relevant changes in circumstances.
It is important for prospective Aplus franchisees to understand these insurance requirements, as failure to maintain the required coverage can result in Aplus procuring the insurance and charging the premiums to the franchisee, along with a reasonable fee for expenses incurred, not to exceed $1,000. Franchisees must provide proof of the endorsements along with insurance certificates and/or other proof of coverage that Aplus requires within fifteen (15) days of receipt of such certificates, and these certificates must state that the policies will not be canceled or altered without at least thirty (30) days' prior written notice to Aplus and shall reflect proof of payment of premiums.