Is Del Taco's insurance considered contributory to the Del Taco franchisee's insurance?
Del_Taco Franchise · 2025 FDDAnswer from 2025 FDD Document
All insurance policies required hereunder of the Franchisee: (a) shall be primary and Del Taco's insurance shall be non-contributory; (b) shall be issued by an insurance company(ies) with a rating of not less than "A-VIII" in the current A.M. Best Insurance Rating Guide or approved by Del Taco; (c) shall name Del Taco and its Affiliates, and any other parties as Del Taco may request as "additional insureds," and shall contain an "Additional Insured-Designated Person or Organization" endorsement (or its equivalent), except workers' compensation insurance only, without any qualifying language; (d) shall provide that the insurance cannot be canceled, materially changed, or non-renewed, except upon thirty (30) days' advance written notice to Del Taco; and (e) shall contain a waiver of subrogation rights of the insurer(s) against Del Taco, which waiver shall be effective regardless of whether any loss is caused by the act, omission or negligence of Del Taco, and shall contain a "Waiver of Transfer of Rights of Recovery Against Others" endorsement (or its equivalent). Franchisee shall require any independent contractors to have sufficient insurance specific to the work they are performing for the Franchisee. Franchisee understands and acknowledges that the insurance requirements set forth herein are in addition to and do not modify or replace any duty of the Franchisee to defend and/or indemnify Del Taco as set forth in this Agreement.
Source: Item 22 — CONTRACTS (FDD pages 58–59)
What This Means (2025 FDD)
According to Del Taco's 2025 Franchise Disclosure Document, the insurance policies that the franchisee is required to obtain must be primary, meaning that Del Taco's insurance will be non-contributory. This means that in the event of a claim, the franchisee's insurance coverage will be the first to respond, and Del Taco's insurance will not contribute to the payment of the claim.
This requirement is beneficial to Del Taco, as it ensures that the franchisee bears the initial responsibility for covering any liabilities. For the franchisee, this means they must maintain adequate insurance coverage to meet the franchisor's requirements and to protect their business from potential financial losses.
The franchisee's insurance policies must be issued by an insurance company with a rating of not less than "A-VIII" in the current A.M. Best Insurance Rating Guide or approved by Del Taco. The policies must also name Del Taco and its affiliates as "additional insureds" and provide thirty days' advance written notice to Del Taco if the insurance is canceled or materially changed. Additionally, the policies must contain a waiver of subrogation rights against Del Taco.