Can Budget require different or additional kinds of insurance from a Budget licensee?
Budget Franchise · 2025 FDDAnswer from 2025 FDD Document
Licensee will maintain such insurance, in such minimum amounts, and with such carriers as approved by Budget in its sole discretion or, as are prescribed in the Standards and in this Paragraph 9.4.
Licensee will annually provide a current certificate of insurance to Budget naming Budget and its affiliates as additional insureds as prescribed by Budget in the Standards, and the insurer must waive any subrogation rights it may have against Budget.
Budget may periodically increase the amounts of insurance carried by Licensee and require different or additional kinds of insurance to reflect inflation, changes in standards of liability, higher damages, Licensees specific claims history or other relevant circumstances.
Budget reserves the right to receive an administrative fee or commission for its endorsement of certain insurance carriers and/or programs for the sale of supplemental liability and related insurance to rental customers.
Source: Item 23 — RECEIPTS (FDD pages 80–426)
What This Means (2025 FDD)
According to Budget's 2025 Franchise Disclosure Document, Budget has the authority to modify the insurance requirements for its licensees. Specifically, Budget can periodically increase the amounts of insurance a licensee must carry and mandate different or additional kinds of insurance. These changes can be implemented to reflect factors such as inflation, changes in liability standards, higher potential damages, a licensee's specific claims history, or other relevant circumstances.
This provision allows Budget to adapt insurance requirements to address evolving risks and liabilities within the rental car industry. For a prospective franchisee, this means that the initial insurance costs outlined in the franchise agreement are subject to change. Franchisees need to be prepared for potential increases in insurance premiums or the need to obtain additional coverage during the term of their agreement.
Budget also retains the right to approve the insurance carriers used by the licensee. Licensees must provide Budget with an annual certificate of insurance, naming Budget and its affiliates as additional insureds. The insurer must also waive any subrogation rights against Budget. This ensures that Budget is protected under the franchisee's insurance policies and can mitigate potential financial losses.
Furthermore, Budget may receive administrative fees or commissions for endorsing certain insurance carriers or programs related to supplemental liability and related insurance sold to rental customers. This creates a potential revenue stream for Budget related to insurance products within the franchise system.