Mobile food services like catering businesses are becoming more and more popular. With lower overhead costs and the ability to travel, it can be an extremely attractive business to many entrepreneurs looking to get their feet wet.
Most of the time all you need is a food truck, truck and food trailer, or some other way to transport and cook food, and then the ingredients to make it. A Mobile Catering Business can travel anywhere for any event or reason, and serve up delicious food to its patrons.
Regardless of whether you are serving baked goods like gourmet cupcakes, hot donuts, or fruit danishes or you want to provide a deep-fried food selection, there will be some unfortunate risks that you will face. When it comes to the foodservice industry the risks can vary and range in severity. Luckily, for almost all of these risks, insurance has an answer.
While many business owners, especially new ones, insurance can seem like just another daunting bill that you have to pay and not get anything out of.
This could not be further from the truth. As an entrepreneur, you should view insurance as an investment in the protection of your business, customers, and employees if you have any. Besides, one claim if it is severe enough can shut your mobile food service down quickly if you don't have the financial backing of insurance policies.
Depending on the type of food you are going to serve with your mobile catering business, the risks can vary. However, some are very common and you should be aware of them regardless if you are a seasoned owner, or brand new to the industry.
Accidents – Certainly you need your truck, trailer, cart or whatever you are using for your mobile services business and will be driving it from one location to another. This presents a risk that you will be in an accident whether it is your fault or not.
Food Poisoning – With any kind of food business there is always a risk of poisoning your customers. Even if you and your employees are highly trained in food safety, mistakes can happen. Chicken can be left out too long, someone can come to work sick, or an illness can start with the producer of the ingredient.
Theft or Vandalism – Unfortunately, in the real world some criminals will steal from you, whether products or your truck. There are also people, often young kids who don't understand how their actions affect other people, who may vandalize your truck. This can happen even if you do not leave it to sit overnight.
Equipment Breakdown – If you store food that has to be temperature regulated, or you use any kind of grill that is powered by the truck and any of these things break down you will be unable to run your business. Additionally, if your refrigerator breaks down and you don't realize it fast enough, you could have a lot of spoiled products to have to replace.
Business Interruption – A lot of the risks associated with a mobile catering business can cause your income to come to a halt since your business is so reliant on the truck itself. Losing money because you can't operate is the best way to go out of business.
Fire – Especially if you use a grill to cook your food, there is always a risk for a fire. Something else you might not consider is if you are attending a festival and your neighbor catches on fire and it reaches you. While their insurance should pay for it, it is not always a guarantee that they have insurance or that it will even be enough.
Bodily Injury and Property Damage – If the public becomes injured because of your operations, or you damage property, that can cause a huge financial risk to your business as you would be responsible for the damages.
Employee Injury or Illness – The foodservice industry is known for its fair share of accidents like slipping, cutting, or burning. Since you have employees, this increases the chance that someone will get hurt. Employees can be injured, or even develop an illness while working for you, which means you could be held liable for their damages.
Because of the many risks involved with the mobile foodservice industry, there are a lot of insurance policies available. Depending on your needs, you may not need all of them but you should know what they are and what they cover so you can be well educated when shopping for insurance.
General Liability – Usually the first policy that any business owner purchases is General Liability. This is an insurance policy that will provide protection for claims arising out of your business operations that allege bodily injury and property damage. If a customer slips on spilled liquid, or you damage property while at an event you will find coverage for that here.
Commercial Auto – Not only will the size of your truck, trailer, or cart not be eligible to be insured on a Personal Auto insurance policy but because it is being used for business, you will need a Commercial Auto policy. The good thing about a Commercial Auto insurance policy is that you can use the vehicle for personal use as well. You will get both your liability and physical damage coverage here, as well as first-party benefits and uninsured/underinsured motorist coverages.
Commercial Property – If you also have a stationary building, or you have business personal property even if it is stored in the truck, you need Commercial Property coverage. This includes utensils, cooking items that are not attached to the truck or trailer, and anything else that would fall out if you turned the truck upside down.
Food Poisoning – It is essential to note that General Liability will not cover lawsuits that arise alleging food poisoning from your product. You will need a separate food poisoning insurance policy. Hopefully, you will not need to ever deal with this because usually if it happens to one customer, it happens to several and this can add up quickly without proper insurance in place.
Food Contamination – If your food is somehow contaminated, you will need to throw it away and replace it. Depending on what you are serving this might not break the bank, but for those serving meat, seafood, or super healthy options this could be a huge bill. Food Contamination insurance will provide coverage to replace the food you have to get rid of.
Workers Compensation – Having employees is great if you want to take some time away, help your business grow, or simply need extra help. Unfortunately, this presents another risk for your mobile food services business. Employees will be given their lost wages and medical expenses associated with becoming injured or ill while on the job.
Professional Liability – Because you are so good at your job and people love your food, you might offer advice on the side. This presents a Professional Liability risk because if you give advice and this causes financial hardship to the person following the advice, you can be held liable for that.
Commercial Umbrella – While we hope that the limits on your liability insurance policies are sufficient in the event of an unforeseen incident, there is always a possibility that it is not. Especially in the litigious society we live in today. You can purchase an Umbrella, or Excess, Liability insurance policy to have an extra limit on top of your existing policies. Also, sometimes there will be gaps in those existing policies that are picked up on the Umbrella. As always, read your policies carefully to know what is included and excluded.
Liquor Liability – Are you going to serve alcohol with your mobile catering business? While this is not a risk we have discussed yet, it is a very real and potential one. Unfortunately, not every adult can control themselves when they become intoxicated and can be a big liability for your business if you served them. They could cause an accident injuring themselves or someone else, destroy property, or even damage your things. Liquor Liability will step in when it comes to these unfortunate events.
The cost of mobile food services insurance can vary. Because there are so many policies that cover different risks, you will need to work with an experienced insurance agent to make sure you don't have gaps in coverage.
Some things to keep in mind that the insurance company will consider when pricing your insurance is your claims history, the size of your business, how many trucks you have, what kind of food you serve if you serve alcohol, how long you have been in business, and if you have employees.
Remember, insurance is an investment to protect your business and if you have the unfortunate need to use it, it will be worth every penny.