What is the minimum coverage period for loss of rents insurance required for a Del Taco franchise?
Del_Taco Franchise · 2025 FDDAnswer from 2025 FDD Document
- 11.1.1.4 "All Risk" property insurance covering: (a) the building (including tenant improvements, furniture, fixtures, equipment, inventory and other tangible property of the Restaurant), including plate glass coverage, on a full one hundred percent (100%) repair or replacement value basis; (b) Business Interruption/ Business Income insurance (at least one (1) year of actual loss sustained), including Extra Expense insurance, so as to re-establish normal business operations; and (c) loss of rents insurance covering a minimum of twelve (12) months' fixed minimum rent.
Source: Item 22 — CONTRACTS (FDD pages 58–59)
What This Means (2025 FDD)
According to Del Taco's 2025 Franchise Disclosure Document, franchisees are required to maintain loss of rents insurance covering a minimum of twelve months' fixed minimum rent. This insurance coverage is part of the broader "All Risk" property insurance that franchisees must secure.
This requirement ensures that in the event of property damage or other covered incidents that disrupt the Del Taco restaurant's operations, the franchisee will have coverage for at least twelve months of their fixed rent obligations. This protects the franchisee from financial strain related to rent payments during periods when the restaurant is unable to generate income due to unforeseen circumstances.
For a prospective Del Taco franchisee, this means factoring in the cost of this insurance coverage when assessing the overall financial investment. It is important to understand the specific terms and conditions of the loss of rents insurance policy, including any exclusions or limitations, to ensure adequate protection. Franchisees should also confirm with Del Taco any specific requirements or approved insurance providers to ensure compliance with the franchise agreement.