How Food Liability Insurance Keeps You and Your Customers Safe

Food liability insurance provides protection to restaurants and eateries, food trucks, catering businesses and other food vendors by safeguarding your operation from claims for bodily injury, property damage and food spoilage. Depending on the types of coverage you buy and the limits you choose, food liability insurance can range from $25 per month to $200 and up.

Keep reading to see what food liability insurance can do for your business plus how much it will cost.

What is Food Liability Insurance?

Food liability insurance can protect your restaurant, food truck or other eateries from claims of bodily injury, property damage or food spoilage. The scope of coverage can vary depending on what insurance types you purchase. Purchasing general liability will provide multiple types of food service insurance coverage but your establishment may want to consider additional protection, like food contamination and business interruption coverage.

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How Does Food Liability Insurance Work?

Food liability insurance can help safeguard your business if someone who suffers some type of injury, illness or other loss files a liability claim against your establishment. For example, if a patron becomes immediately ill after dining at your restaurant, the patron may sue you for serving unsafe or contaminated food. Food liability insurance would step in and cover the patron’s losses, such as their medical bills, up to your policy’s limits. If the claim escalates to a lawsuit, then food liability insurance would cover your legal expenses, such as attorney fees and settlement costs.

In the next section, we list various types of liability insurance that can protect your restaurant or food truck and your customers.

What Does Food Liability Insurance Cover?

Depending on the level of coverage you buy, food liability insurance will protect you from claims related to bodily injury, property damage, food poisoning, workplace injuries and more.

General Liability Insurance (GLI)

Monthly Rate: $25-$100

General liability insurance, often known as commercial liability insurance, offers your company financial security if it is held responsible for a client's personal harm or property damage. GLI will provide you with financial compensation following the filing of a claim, subject to the plan limits, however, you can get a second business umbrella policy if you think your limits need to be higher.

Here are some situations when your commercial general liability insurance might make you liable for the damages of another party:

• When a consumer enters your store, they trip over the uneven flooring and get harmed.
• Someone lodges a legal claim against your company, charging your business with misleading advertisements.
• A customer eats your food and gets food poisoning.

Professional Liability Insurance (Errors and Omissions)

Monthly Rate: $25-$100

Professional liability, or errors and omissions (E&O), insurance usually includes coverage for professional carelessness, deception, incorrect counsel, and personal injuries, such as libel or slander. For example, if a food establishment claims to use organic meat but is sued by a patron who alleges this is untrue, E&O insurance would help cover the legal costs.

Workers’ Compensation Insurance

Monthly Rate: $70

In the event that one of your cooks, host, server or other employee was hurt at work, workers' compensation insurance will cover some of their lost wages and medical expenses, regardless of fault. Workers' compensation coverage will pay for any necessary medical treatment, rehabilitation, lost income, disability and death payments.

Commercial Auto Insurance

Monthly Rate: $75-$200

Similar to ordinary auto insurance, commercial auto insurance provides liability and can include physical damage protection for work-related activities, such as a catering company delivering food to a client or a restaurant owner transporting inventory.

Commercial auto insurance is ideal for food trucks, catering businesses or if your restaurant picks up inventory instead of having it delivered to your establishment.

Business Owners Policy (BOP)

Monthly Rate: $261

A business owners policy (BOP) is a popular product that combines liability, property, and business interruption insurance into one convenient package. It's a one-stop insurance solution for many small businesses and certain mid-size businesses for ease and savings. Many eateries, shops, and other food establishments carry BOP insurance. Add-ons to a BOP policy may include flood insurance, auto insurance, and criminal insurance.

Employment Practices Liability Insurance (EPLI)

Monthly Rate: $800-$5,000

Employment practices liability insurance will protect your business from claims made by employees for potential violations of labor laws, such as an employee alleging they were denied promotion opportunities for illegal reasons. We list other reasons below. Insurance providers often sell this coverage as a standalone policy or an add-on to a business owners policy.

Sexual harassment Wrongful termination Negligent evaluation Wrongful discipline Wrongful infliction of emotional distress

Discrimination Breach of employment contract Failure to employ or promote Deprivation of career opportunity Mismanagement of employee benefit plans

Source: Insurance Information Institute.

Liquor Liability Insurance

Monthly Rate: $23-$167

Businesses that sell, serve or distribute alcohol can purchase liquor liability insurance to cover claims related to accidents that occur while a patron is intoxicated, including assault and battery or property damages. While the drunken patron committed the action, the establishment that manages the liquor can be held liable.

Commercial Food Spoilage Insurance

Monthly Rate: $42-$1,667

Commercial food spoilage insurance is a rider that can be added to your business owners policy and can protect perishable merchandise from contamination, breakdown, and power outages.

Unless stored in regulated conditions, perishable stock can quickly rot and even develop mold.

If this happens, commercial food spoilage insurance will help recoup some of your food-related losses, up to your policy’s limits. Consult your local agent if business income coverage can be applicable if a loss of perishable stock forces your company to temporarily close.

Commercial Umbrella Insurance

Monthly Rate: $40

Commercial umbrella insurance increases your total commercial liability limit and only steps in after you exhaust the limits in your other commercial policies. For instance, if your catering business is liable for $1.5 million and you only have $1 million in liability insurance, a commercial umbrella policy would cover the remaining $500,000.

What Does Food Liability Insurance Not Cover?

Food liability insurance will not cover damages to your equipment (e.g., stoves, ovens, walk-in refrigerators), lost revenue if your business temporarily closes or losses from certain types of crime. You will need to purchase these types of coverage via commercial equipment and breakdown insurance, business interruption insurance and crime insurance.

Commercial Property Insurance

Monthly Rate: $18-$250

Commercial property insurance pays to replace or repair your kitchen equipment, inventory, receipt printers and other business equipment to its original condition if your place of business is broken into, robbed or vandalized. You are also covered for damages caused by other types of perils, like kitchen fires — a major risk for restaurants.

Equipment Breakdown Insurance

Monthly Rate: $25–$50

Equipment breakdown insurance will pay to repair or replace commercial equipment (e.g., POS systems, refrigeration units, commercial ovens) that suffer a sudden mechanical or electrical breakdown. Commercial property insurance usually covers losses caused by external forces, like fires and vandalism, while equipment breakdown insurance covers internal forces, like electrical shorts and motor burnouts.

Business Interruption Insurance

Monthly Rate: $40-$130

Business interruption insurance protects against lost revenue if your business has to temporarily close because of a covered peril, such as if somebody breaks in and destroys your inventory, key equipment breaks down or a kitchen fire burns down a portion of the building. Coverage will typically include:

• Revenue that would have been generated if your business did not close.
• Payments for commercial leases, rent, and mortgage loans.
• Taxes
• Payroll
• Relocation expenses
• Employee training on new machinery or equipment following an insured loss.

Commercial Crime Insurance

Monthly Rate: $113-$187

Commercial crime insurance can shield your business from damages brought on by employees or by a third party. Coverage will include protection against theft, fraud, forgery, burglary and other losses of money or other physical assets. For example, if an employee has purposefully taken physical money from a cash register or company lockbox, commercial crime insurance can reimburse you for that loss. Your business will also be protected should a competitor abscond with property from your business.

Is Food Liability Insurance Required?

Food liability requirements will vary by state. If you plan on obtaining a liquor license to sell or distribute alcohol, then the licensing process will usually require that you show proof of liquor liability insurance. Workers’ compensation is necessary if you employ your state’s minimum number of workers or you may face fines and jail time.

Even if your state does not enforce certain types of liability insurance, it’s always a good idea to have it. Buying GLI or a business owners policy will safeguard your business against several types of liability claims.

Who is Food Liability Insurance Best For?

Food liability insurance is best for any establishment that sells or manages foodstuffs, whether it's to or for the general public or other businesses:

• Restaurants
• Food trucks
• Food carts
• Caterers
• Concessionaires
• Private chefs

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Key Takeaways Food liability insurance provides protection to restaurants, food trucks, catering businesses and other food vendors for claims related to bodily injury, property damage or food spoilage. The scope of food liability coverage will vary depending on the insurance policies you purchase. Workers’ compensation is necessary if you employ a certain number of employees. Liquor liability insurance is often a requirement for getting a commercial liquor license. Commercial umbrella insurance will pay for liability expenses when they exceed the limits in your other commercial policies.

Don’t let your restaurant or catering business go under because it didn’t have the right coverage. Whether you need restaurant liability insurance or coverage for your kitchen equipment, SmartFinancial can help match you with the right policy. Enter your zip code below or call 855.214.2291 and we’ll send you your free commercial insurance quotes.