What Type of Insurance Do I Need To Operate a Food Truck?

If you plan on running a food truck, you’ll need standard commercial insurance coverage types such as general liability, commercial auto and workers’ compensation insurance. In addition, you may want to consider more specialized coverages that address the unique risks of operating a food truck including product liability, liquor liability, inland marine and food contamination and spoilage coverage.

Keep reading to learn about other coverage types you may want to include in your food truck insurance policy along with what factors are most likely to influence the cost of coverage.

Key Takeaways Your food truck business may be required by law to maintain workers’ compensation and commercial auto insurance depending on your circumstances. Many small business owners obtain commercial coverage by purchasing a business owners policy (BOP) that includes general liability, commercial property and business interruption coverage. Other potentially useful coverage types for food truck owners include employment practices liability, product liability, professional liability, liquor liability, inland marine, equipment breakdown and contamination and spoilage coverage. Food truck insurance may cost around $72 to $76 per month, with exact prices depending on your business’ characteristics and your policy details.

Who Needs Food Truck Insurance?

You need to buy insurance if you operate any kind of food truck whether you own a catering business, drive an ice cream truck, work in event concessions or simply want to use a truck as an extension of your restaurant.

Keep in mind that not every insurance carrier offers a singular insurance product known as food truck business insurance. Nevertheless, you should be able to create an insurance policy that addresses the needs of your business by purchasing a collection of various commercial insurance coverage types.

What Types of Insurance Should a Food Truck Have?

See below for a rundown of the most important types of commercial insurance for food truck business owners to consider.

General Liability

General liability insurance protects your business from major financial losses by covering medical expenses and property repairs if someone is injured or their property is damaged because of your business operations. For example, it might take effect if you drop a hot funnel cake onto and burn a customer or if you take their phone to scan a coupon barcode then drop the phone and shatter the screen.

Your general liability insurance can also cover attorney fees, judgments and settlements if a bodily injury or property damage claim escalates into a lawsuit. In addition, it can cover legal expenses if your business is accused of defamation or copyright infringement due to content in your marketing materials.

BOP

Many small business owners opt to purchase a business owners policy (BOP), which combines general liability coverage with commercial property and business interruption insurance. Commercial property coverage insures your equipment, inventory and other commercial contents against sudden and unexpected perils. For example, your commercial property insurance could help you replace your truck if it explodes following a gas leak.

Meanwhile, business interruption insurance covers lost income and other expenses that arise if a covered peril prevents your business from operating as normal. In the above example, your business interruption coverage may enable you to continue paying your employees even before you can obtain a new truck and resume selling food.

Keep in mind that food contamination may not be covered by your BOP.

As a result, you may need additional food contamination shutdown insurance to cover lost income and expenses related to complying with your local health code if you must halt your business because your food has gone bad.^[1]

Commercial Auto

Personal car insurance policies exclude coverage for commercial activities, which means you will need commercial auto insurance to make sure you are covered while you drive your food truck. The main purpose of commercial auto insurance is to provide liability coverage that takes care of someone else’s hospital bills or vehicle repairs if you are responsible for a car accident, although you may also be able to purchase coverage that covers repairs to your own truck.

EPLI

Employment practices liability insurance (EPLI) provides coverage in case an employee sues you due to a violation of their employment rights such as wrongful termination, discrimination, sexual harassment or breach of contract. For example, it might cover back pay if you previously failed to pay your employees overtime after an outdoor concert you were serving food at ran late.

Workers’ Compensation

Workers’ compensation insurance covers medical treatments, rehabilitation, lost wages, disability payouts and death benefits if an employee becomes sick, gets injured or dies on the job. For example, it might kick in if one of your cooks cuts their hand while chopping vegetables and needs to take a few weeks off work after getting stitches.

Other Types of Food Liability Insurance

You may also want to buy other types of food liability insurance such as product liability, professional liability and liquor liability insurance. Product liability insurance covers claims related to defective products and may fund your legal defense if a customer alleges that you are responsible for giving them food poisoning.

Also known as errors and omissions (E&O) insurance, professional liability insurance protects you in case you are accused of failing to adequately perform your professional duties. For example, if you sign a contract agreeing to provide food for a local fall festival, your professional liability coverage may step in if you put the wrong date on your calendar and fail to show up.

Finally, liquor liability insurance is recommended if your food truck serves alcohol since it can cover medical expenses, repair bills and legal fees if a drunken individual you gave alcohol to goes on to injure someone or damage their property.

Additional Policies To Consider

Other types of insurance for food trucks that you may want to consider include the following:

• Inland marine insurance: Inland marine insurance covers your commercial property while you are in transit, making it the best way to insure your truck, equipment, inventory and more when you are in between locations.
• Equipment breakdown insurance: Equipment breakdown coverage insures your fryers, grills, refrigerators and other electronic equipment against sudden perils that aren’t covered by commercial property insurance such as short circuits and internal mechanical failures.
• Contamination and spoilage coverage: Contamination and spoilage coverage can help you replace lost inventory, clean contaminated equipment and procure medical tests for your employees if your food goes bad due to extended power outages, improper storage and other contaminants.^[2] Some insurers also offer perishable foods in transit coverage, which specifically covers food that spoils while you are on the go.^[3]
• Cyber liability insurance: Cyber insurance can cover liability claims that arise as a result of a cybercrime like a data breach. For example, if you store customers’ email addresses on a digital database, then your cyber insurance could cover costs associated with notifying customers after their contact information leaks online.
• Commercial crime insurance: Commercial crime insurance can protect your business from financial losses due to criminal actions committed by your employees such as embezzlement, forgery and fraud.
• Pollution liability insurance: Also known as environmental insurance, pollution liability insurance can cover legal expenses and cleanup costs if you are accused of creating an environmental hazard. For example, it could cover a legal settlement if cleaning chemicals you use in your truck end up polluting a local water supply.
• Commercial umbrella insurance: Commercial umbrella insurance can provide millions of dollars worth of excess liability coverage in case a costly claim exhausts the coverage limit of one of your underlying liability policies. Notably, commercial umbrella insurance can extend the coverage limits for more than one of your food truck liability insurance policies at a time.

Is Insurance Required To Operate a Food Truck?

Workers’ compensation and commercial auto coverage may be required by law for many food truck businesses. Specifically, worker’s compensation insurance is generally required for companies with multiple employees in every state except for Texas.^[4] Meanwhile, most states mandate commercial auto insurance with the same minimum coverage requirements as private passenger policies.^[5]

How Much Does Food Truck Insurance Cost?

Factors that can impact the cost of mobile food truck insurance include the type of food you sell, where you work, how far you travel to sell food, how many employees you have and how valuable your truck and equipment are along with your claims history and the details of your policy such as your deductibles, coverage types and coverage limits.

For example, food truck insurance costs around $72 to $76 per month for most of NEXT insurance’s food truck policyholders and includes general liability and workers’ compensation insurance. However, some customers could have to pay more than $174 per month for the same coverage.^[6]

How To Get Food Truck Insurance

To find the best policy for your food truck business, you should shop around by comparing quotes from three to five different commercial insurance companies. Each insurer will request information about your business including your industry, location and yearly revenue. However, it can be a difficult process if you individually reach out to insurance carriers to give them your information.

As a result, you should try going through SmartFinancial to make things easier. Simply fill out a questionnaire about your insurance needs and budget and we’ll connect you with insurance agents who can help you find policies that suit your business, sometimes in only a few minutes. Click here to start the questionnaire and receive commercial insurance quotes for free.