Under what conditions can a Remax franchisee obtain Cyber/Network Security and Privacy Liability Insurance coverage of less than $1,000,000, and what is the minimum combined single limit required in that case?
Remax Franchise · 2025 FDDAnswer from 2025 FDD Document
overage as you are required to obtain as set forth above; and (v) contains a provision that REMAX Regional, RE/MAX Holdings, Inc. and REMAX, LLC receive prior written notice of termination, expiration, cancellation or modification of such policy.
d. Worker's Compensation/Employer's Liability.
Workers compensation insurance in amounts prescribed by law. Employer's liability with a limit of $1,000,000 each accident, each occupational disease, and occupational disease aggregate.
e. Cyber/Network Security and Privacy Liability Insurance.
Cyber/Network Security and Privacy Liability Insurance (which must include coverage for phishing, social engineering, extortion, threats and ransom payments, incident and public relations response costs, business interruption loss, and similar claims) in an amount of not less than $1,000,000 combined single limit to cover civil, regulatory and statutory damages, contractual damage, as well as data breach management exposure, and any loss of income or extra expense as a result of actual or alleged breach, violation or i
Source: Item 22 — Contracts (FDD pages 108–334)
What This Means (2025 FDD)
According to Remax's 2025 Franchise Disclosure Document, a franchisee may be able to obtain Cyber/Network Security and Privacy Liability Insurance coverage of less than $1,000,000 under specific conditions. If, after using their best efforts, a franchisee is unable to obtain the standard $1,000,000 coverage due to the size of their office, they may obtain a lower coverage amount. However, in no event should the combined single limit be less than $500,000.
This provision acknowledges that smaller Remax offices might find it difficult or cost-prohibitive to secure the full $1,000,000 in coverage. By allowing for a reduced coverage amount, Remax aims to make the insurance requirement more manageable for these franchisees while still ensuring a baseline level of protection against cyber risks. The requirement to use "best efforts" to obtain the full coverage suggests that franchisees need to demonstrate they have actively tried to secure the $1,000,000 coverage before opting for the lower limit.
For a prospective Remax franchisee, this means that the size of their office could influence their insurance obligations. If they anticipate operating a smaller office, they should be prepared to demonstrate their efforts to obtain the standard coverage. It is also important to note that even with a smaller office, the minimum required coverage is $500,000, which still represents a significant financial commitment. Franchisees should factor this cost into their initial investment and ongoing operating expenses.
It is also important to understand exactly what is included in the Cyber/Network Security and Privacy Liability Insurance. According to the FDD, the insurance must include coverage for phishing, social engineering, extortion, threats and ransom payments, incident and public relations response costs, business interruption loss, and similar claims. It must also cover civil, regulatory and statutory damages, contractual damage, as well as data breach management exposure, and any loss of income or extra expense as a result of actual or alleged breach, violation or infringement of right to privacy, consumer data protection law, confidentiality, or other legal protection for personal information, as well as confidential information of REMAX, LLC and other Related Parties that we may designate, as well as their respective officers, directors, and employees.