Choosing insurance is one of the most important decisions you will make for your business. But coverage options can be confusing and complex. Here are answers to some of the most FAQs about business insurance for franchise owners.

FAQs about Business Insurance 

What Is Business Insurance?

Business insurance helps protect your company’s assets from losses that may occur due to normal business operations. Types of business insurance can vary, with coverage options that can protect against property damage, bodily injury, legal liability or employee-related risks.

What Is a Claim?

In insurance, a claim is request by a policyholder or an allegation brought against your business by a customer or other third party. Without proper coverage, you risk greater exposure to losses third-party claims that are costly and stressful to defend against.

What’s the Difference Between Claims-Made and Occurrence Policies?

Claims-made policies cover you from claims made while your policy is active. Occurrence policies protect you from covered incidents after your policy has lapsed or expired, for an additional cost. A tail coverage endorsement can also be added to a claims-made policy to provide added protection by extending the reporting period for claims.

What Is an Endorsement?

An insurance endorsement or rider is any kind of change to the original terms of your policy. Endorsements may add specific coverage or increase limits, or they may exclude or restrict certain types of coverage. Tail coverage is an example, extending the effective dates of coverage for an expired policy.

What’s the Difference Between General Liability and Property Insurance?

General liability protects your business against third-party claims by customers and others alleging damages for incidents such as bodily injury, personal injury or property damage. Property insurance protects against risks to your business’s property, such as fire, theft or weather damage.

Insurance Providers

What’s the Difference Between a Program Administrator and Broker?

A typical insurance broker works with clients to analyze and recommend suitable insurance options from one or more carriers. The program administrator (PA) plays a bigger role, and is authorized by a carrier to quote, bind and issue polices on behalf of the carrier. The PA may also handle claims. By working with a PA, you benefit from the PA’s experience and industry relationships within a specific area of insurance that may make buying more convenient.

What Happens if You Work with Multiple Brokers?

With brokers competing as order-takers, accuracy and completeness of submissions plummets.

This puts your business at risk of being under-insured and exposed to dangerous risk levels, or over-insured with coverages you can’t use. A broker’s role should be advisory, using expertise and established relationships with underwriters to help you find tailored, cost-effective coverage.

What Is a Carrier?

An insurance carrier is the insurance company that ultimately provides the policy and handles the execution and support of the policy. If you purchase insurance from a broker, you may have several points of contact for your policy. With a program administrator, you may have a single point of contact for all your policy needs.

Why Is Choosing a Dependable Carrier Important?

It’s important you choose a carrier that is financially sound and well-respected to ensure your business has adequate defense against claims and protection in the event a settlement or judgement needs to be funded. Insurance with the wrong carrier could leave you under-insured or overexposed to risk.

What’s the Best Way to Choose a Dependable Carrier?

A dependable carrier will maintain an ongoing high rating from A.M. Best Company, the industry’s global credit rating agency. A carrier’s length of history in the business and expertise in your area is also key for your decision.


Business insurance can be complex, especially for franchise owners, and it’s important to get all your questions answered. To learn more about your business insurance options, contact Lockton Affinity. Lockton Affinity work with you to ensure you receive coverage tailored to you and the needs of your business.