Under what circumstances can Budget increase the insurance amounts required for a Budget licensee?

According to Budget's 2025 Franchise Disclosure Document, Budget can periodically increase the required insurance amounts for its licensees. These increases can occur to reflect 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 could face higher insurance costs during the term of their franchise agreement. These increases are not arbitrary but are tied to factors that affect risk and liability in the car rental business. For example, if general inflation rises, the cost to repair or replace vehicles also increases, justifying higher insurance coverage. Similarly, a franchisee with a history of frequent accidents or claims may be required to carry more insurance to cover potential future losses.

For a prospective franchisee, this highlights the importance of budgeting for potential increases in operating costs. While it's impossible to predict the future, understanding the factors that could lead to higher insurance premiums allows for more informed financial planning. Franchisees should discuss with Budget what typical insurance costs and potential ranges of increases have been for existing franchisees to better prepare for these expenses.

It is also important to note that Budget has the right to approve the insurance carriers used by the franchisee. This ensures that all franchisees have adequate coverage from reputable providers, but it also means that franchisees may not be able to shop around for the lowest possible rates. 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.