You’ve dreamed of starting your own food truck for years. Now, your dream is finally coming true. You have a business plan, a catchy name picked out, and great tasting options any foodie would die for. You are quickly learning that everything is more expensive than you anticipated, and costs are adding up. Now, you’re faced with yet another cost – food truck insurance.
Let’s face it, nobody likes to spend money. However, food truck insurance is a necessary cost for any mobile food vendor. Even if your truck is going to stay parked in your garage for the next several months while you prepare for your opening day, you still need coverage in case the truck is damaged before it hits the streets. While the cost may seem pricey, you are actually getting a big bang for your buck!
General liability insurance covers both bodily injury and property damage to others. This includes your products (food), your premise (slip and fall), personal injury / advertising injury (libel and slander), and property damage to others. The best part is that it also covers the legal fees to defend such claims, even if it’s determined that you were not at fault! Here is an example of each area of coverage:
Products:
Someone with a food allergy gets sick and blames your business for not disclosing the ingredients properly. Or the best know example, the coffee is too hot!
Premise:
You owe an extra duty of care to guest of your business to keep them safe. If they trip over an uneven surface, or a chair you provide breaks and causes injury you can be found liable.
Personal Injury:
If you unintentionally infringe on a trade mark of another business, that company may sue you for damages.
Property Damage:
If your kitchen causes a fire and the fire was to spread to neighboring property, the policy will cover those damages you are found to be negligent for. It’s important to note general liability does not cover property damages to others while being towed, that coverage comes from the auto policy. It is also subject to a limit of 100K for property that is owed by your landlord.
At Insure My Food Trailer, we represent many different insurance carriers and can shop the best fit for your business for cost and coverage options without any sales pressure.
The Disadvantages for Food Trailers that Don’t Have Workers Comp Insurance
Unlimited liability for negligent injury to employees
Unpredictable accident-related expenses
More difficult to attract and retain qualified employees
Unable to do business with some entities that require statutory workers’ comp
Texas employers who do not carry workers’ compensation insurance coverage are required to report their non-coverage status and work-related injuries and occupational diseases to the Texas Department of Insurance, Division of Workers’ Compensation (TDI-DWC). Employers that fail to meet the below requirements commit an administrative violation and may be subject to administrative penalties:
Must file an annual notice with TDI
display notices of no coverage in the personnel office and throughout the workplace
give a written statement of no coverage to each new employee.
If you do not carry workers comp insurance, your employee retains the right to sue you. In addition, you are not allowed exercise common law defenses of
The assumption of risk of the job
The contributing negligence from the employee
Or coworker’s negligence contributing to the injury.
You are still required, however, to report all known occupational disease and any work-related injuries that result in more than one day of lost time.
Property coverage for your trailer protects against damage or loss to your trailer and the attached equipment or built in equipment.
Why Property Coverage for your trailer?
The most common types of losses covered are
Theft or Vandalism
Collision damage
Wind and Hail
Fire
Lighting
Common mistakes:
The most insurance policies only cover your property at the main location, unless you have a special type of property policy called an inland marine policy. An inland marine policy is designed to cover property that moves.
Not insuring the full value of your trailer. You must insure to value to make sure the insurance company will fully reimburse you if a claim occurs.
Including coverage for items not attached to the trailer. These items should be covered under a separate coverage for contents.
Endorsing your personal auto policy with the trailer. At best these policies do not cover your contents in the trailer and at worst exclude coverage because of the business use of the trailer
General Liability protects your mobile food vending business from lawsuits of bodily injury or property damage from a third party. Note though, this coverage does not cover employees.
Why have General Liability Insurance?
First, having general liability allows you to enter into contracts with event organizers, landlords, or commissary kitchens that require you to have coverage.
General liability insurance provides claims and legal expense protection from the below types of claims:
Food borne illness
Chipping a tooth from biting into something that should not be in the food
Slip and fall. For example, a customer trips over an extension cord you left out or burns themselves on your generator
Advertising injury, like if someone sues you over your marketing
Common mistakes:
Having a premise only policy. This means the policy doesn’t follow you when you move locations.
A policy that charges fees for each certificate they provide you. If you’re moving around, eventually you will need to add additional insureds to your policy. Find an agency that does not charge you for COI’s. Learn more about COI’s and why they’re important.
Policies with deductibles. Since the insurance company pays the legal fees to defend, having no deductible allows you to pass the claim and legal expense onto the insurance company If a claim should occur.
Additional Insureds (aka when a landlord or event informs you that you will need to produce a COI proving they are covered under your policy) are an important part of being a mobile food vendor. You know you need to have additional insureds listed on your policy to sign up with a commissary kitchen or to sign a lease for your food trailer location, but Who, What, Why, and Where!?!
Many think, “Hey, they are free riding off my policy!” But what is actually occurring is that they will be included in coverage for losses you would be responsible for anyway so that they don’t take on all your liability risk. Landlords still have their own insurance as well (or should!).
In the below example, assume we are talking about a landlord additional insured.
Who:
An Additional Insured is a second party with whom you are doing business. As part of their contract requirements, they may ask to be listed as covered on your policy.
Why:
Your food trailer business brings increased risk for the landlord with whom you are contracted. By listing them as an additional insured they are protected along with you on your policy for a claim from your actions. They are only covered for claims arising out of “your work.”
An example would be a suit from a customer eating spoiled food. Since the lawsuit could name the landlord (and they always do), your policy would help protect the landlord.
What:
An additional insured is an endorsement to the existing policy that provides the policy benefits to the landlord for “your work.”
Where:
The landlord will want to be shown proof of being added as an additional insured. This is accomplished by having your agent complete a standard form called an Acord 25. Some agencies will charge extra for this work; we do not. We offer a form for clients to list the information needed to generate the certificate here. If you’re not our client, make sure your agency does not charge for a COI, and processes them 7 days a week. The worst thing that can happen is that you have a last minute opportunity on the weekend, but no one in the insurance office to process the additional insured request!
Joel Paprocki, CIC, CRM, CPCU is founder of Insure My Food. Joel has over 20 years of experience in the insurance industry. He is passionate about helping food entrepreneurs navigate insurance and risk management with confidence. He holds all three top industry designations: Certified Insurance Counselor, Certified Risk Manager, and Chartered Property and Casualty Underwriter. He has served over 5,000 clients in the food industry, including restaurants, food truck, cateriers, If you are looking for a reliable, experienced, and specialized insurance partner, please contact us.
Joel Paprocki, CIC, CRM, CPCU is founder of Insure My Food. Joel has over 20 years of experience in the insurance industry. He is passionate about helping food entrepreneurs navigate insurance and risk management with confidence. He holds all three top industry designations: Certified Insurance Counselor, Certified Risk Manager, and Chartered Property and Casualty Underwriter. He has served over 5,000 clients in the food industry, including restaurants, food truck, cateriers, If you are looking for a reliable, experienced, and specialized insurance partner, please contact us.