Who must be named as a loss payee on any collision or comprehensive damage policy for Aunt Millies Bakeries?
Aunt_Millies_Bakeries Franchise · 2025 FDDAnswer from 2025 FDD Document
vehicle(s) used in Distributor's business; and
- (iii) Collision and Comprehensive damage coverage with a deductible no greater than $500.00 on all vehicle(s) used in Distributor's business.
In the event a substitute vehicle is used by Distributor coverage will automatically apply to the substitute vehicle. In addition, the Distributor must carry policies or riders providing cargo insurance in an amount of not less than $2,000, and Inland Marine coverage of not less than $5,000. In the event equipment to be insured exceeds the value of $5,000.00, additional Inland Marine coverage must be purchased. The insurance contemplated shall be in a form acceptable to Secured Party, shall name Secured Party as an additi
Source: Item 23 — RECEIPT (FDD pages 44–196)
What This Means (2025 FDD)
According to Aunt Millies Bakeries' 2025 Franchise Disclosure Document, if a secured party has a lien on physical assets, that secured party must be named as a loss payee on any collision or comprehensive damage policy. The insurance policy should be acceptable to the secured party.
This requirement ensures that in the event of damage to the assets, the secured party's financial interest is protected. It is a standard practice in secured lending to mitigate the risk of loss or damage to collateral.
Furthermore, the policy must provide the secured party with 30 days' advance written notice of any material changes or cancellation of coverage. A certificate confirming the coverages are in effect and primary over any other applicable insurance must be delivered to the secured party upon request. This ensures the secured party is kept informed and can take necessary actions to protect their interests.