Can Budget require different or additional kinds of insurance to reflect a Budget licensee's specific claims history?
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 adjust the insurance requirements for its licensees. Specifically, Budget can increase the amounts of insurance a licensee carries and mandate different or additional kinds of insurance. This adjustment can be made 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 means that a Budget franchisee's insurance costs could fluctuate based on their operational history and external factors. If a franchisee experiences a higher-than-average number of claims, Budget can require them to obtain more comprehensive or higher-coverage insurance, potentially increasing their operating expenses. Similarly, if liability standards or typical damage awards increase, Budget can mandate higher insurance levels across the board.
Budget also 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. This could incentivize Budget to recommend specific insurance options to franchisees, potentially benefiting Budget financially.
Prospective franchisees should carefully consider these insurance requirements and their potential impact on their overall costs. It would be prudent to discuss with Budget the typical range of insurance costs and the factors that could lead to increased premiums or additional coverage requirements.