When you're starting a food truck business, it's easy to get excited about new recipes and potential marketing campaigns. However, don't let all the fun parts of operating a food truck distract you from more practical matters. Anyone who runs a food truck must also consider their insurance needs. Having the right food truck liability insurance provides essential protection for your business.
Why do Food Trucks Need General Liability?
As a mobile food vendor, you have a responsibility to keep your customers safe. Any time a customer is hurt or falls ill upon buying something from your food truck, they have the right to sue you for compensation.
General liability insurance is one of the most important types of cover for any food truck. It will cover expenses associated with lawsuits, including fines, legal fees, and court-ordered payments. This sort of insurance is often very affordable, and it can keep one little accident from bankrupting your business.
Why Do You Need Proof of General Liability Insurance for Your Food Truck?
There are several reasons to get liability insurance for your food truck. Of course, the most obvious reason is that it protects you in case of a lawsuit. However, there are also many other benefits.
Many wholesale retailers and other businesses will not work with your food truck unless they know you have general liability insurance. They worry that an injured customer could come after them. That’s why they require food trucks to show proof of general liability insurance before agreeing to let the truck park in their lot. If you want access to food truck rallies or popular spots for business, you will need a certificate of insurance as proof of cover.
If you want a business loan, liability insurance is even more important. No bank wants to take the risk of funding a food truck whose owner could be bankrupted by a single lawsuit. To qualify for a loan, you might need to show that you have liability coverage for your truck. Financing may be key in helping you survive the off-season.
How Much Does General Liability Insurance for a Food Truck Cost?
The cost for protecting yourself from lawsuits is generally quite low. The typical catering truck insurance policy costs around $45 per month. This adds up to roughly $560 each year. Keep in mind that there can be some variation in food truck insurance costs. Some policies might cost as little as $300 or as much as $800 per year.
Ultimately, it's a good idea to talk to an insurance agent if you want an estimate. Many factors can affect the price of general liability insurance for mobile food vendors, so you will need a personalized quote.
Six factors affecting food truck insurance cost
Here are six key factors that will impact the general liability insurance rate you’ll pay to cover your food truck:
Your insurance provider: Just like any other service, prices vary based on who you work with. You can shop around to find the most affordable rates.
The amount of coverage you want: If you want more coverage, expect your rates to be higher. A policy that covers more lawsuit costs will have a higher monthly premium.
Your deductible: The deductible, or the amount you pay before insurance kicks in, has a big influence on your rate. Policies with a low deductible cost more. However, if something does go wrong, you won't have to pay as much.
The amount of business you do: Larger food truck companies have more of a risk because there are more opportunities for accidents to happen. Expect your rates to increase if your business is larger.
The type of equipment you use: Certain types of equipment come with a bigger risk. For example, a gas stove could explode and harm a person waiting next to your food truck. Riskier equipment will cause higher rates.
Your location: Insurance rates aren't the same nationwide. Certain areas have a higher cost of living, so these regions will have a pricier rate. For example, California insurance costs might be a bit higher than Florida insurance costs.
Food Truck General Liability Insurance FAQs
Still curious about how exactly general liability insurance works? Check out the answers to these frequently asked questions. What sorts of issues will your food truck general liability insurance cover?
Food trucks face all sorts of risks. General liability coverage for a food truck generally covers anything that damages non-employees while the truck is parked and serving food. Some examples of problems your policy would cover include:
- A customer slipping on water that dripped from your truck.
- Food poisoning that causes multiple customers to get sick.
- A social media advertising post that slanders your competitor.
- A person burning themselves on the hot grill set up on the back of your truck.
- A customer having an allergic reaction to your food.
- Your awning falling down and hitting a customer in the head.
What does "additional insured" mean on your liability insurance for food trucks policy?
When you are running your food truck at a rally, farmers market, or other organized event, it is common for the venue owner to ask that you include them in your policy as an "additional insured."
The additional insured clause extends your policy to cover an extra person or organization associated with your business.
Depending on the way your policy is set up, you might be able to add others as additional insureds for free, or you might pay a small fee. Either way, you will need to clear the addition with your insurance company.
Is food trailer insurance different from regular food truck general liability insurance?
If your food truck is a trailer attached to another vehicle, read your policy carefully to see what situations it covers. Many general liability policies are only meant to cover a restaurant operating inside an automotive vehicle. If you use a trailer that you unhook for your towing vehicle, the trailer might count as an outside structure that is not included in your policy. If you operate a business from a trailer, you might need a policy that specifically addresses your type of business.
What's the difference between claims-made and occurrence general liability insurance coverage?
A claims-made policy is one that only covers claims you officially file while the policy is active.
Meanwhile, an occurrence policy covers any event that took place while your policy was active, regardless of when the claim itself was filed. Most food truck owners will need occurrence general liability insurance. This keeps you covered if someone is harmed by your truck during your policy's active period but does not sue you until your policy has lapsed.
How Do You Pick the Best General Liability Insurance Coverage for Your Food Truck?
When shopping for food truck insurance, you need to take a close look at the deductible and the coverage limits. The deductible is how much you will pay out of pocket in any lawsuit, and the coverage is how much money the insurance company will pay.
Most food truck owners need at least $1 million in coverage, though you might want more if you are in a high-risk business. A policy with a low or absent deductible can save you money when a claim occurs. However, expect to pay more in monthly fees. In the long run, the best policy will depend on your current financial situation, your own tolerance for risk, and your chances of running into any problems.
Interested in finding out more about your insurance options? The consultants at CoverWallet are happy to assist you with exploring your choices. We can help you figure out the best types of insurance for your food truck and discuss all the different policies with you. Contact us to get a quote or learn more about our insurance services.