Small Business Insurance Policies for Food Services Businesses
Your insurance needs depend in part on your industry (e.g., catering, mobile food truck, night club), the size of your workforce, and the services you offer. But to give you a general idea of the types of coverage you should consider, our expert insurance agents recommend:
Why these policies, you ask? Follow the links for an in-depth explanation of each coverage type or keep reading for an overview of the protection each policy offers.
General Liability Insurance (GL) is your go-to coverage for third-party liability protection. It covers attorneys' fees, court-ordered compensation, and other legal costs when someone sues your food business for…
- Bodily injuries they sustained on your property.
- Damaging or losing their property.
- Offering products or services that harmed them (e.g., your signature dish caused an allergic reaction).
- Replicating their advertising.
- Libel or slander.
Think of GL as your safety net against the unpredictable. You never know when a guest may trip, fall, and break an ankle at your establishment. And who's to say you'll never serve a dish with allergens? Better to arm your business with an insurance policy that can help you survive costly and time-consuming lawsuits.
Commercial Property Insurance protects your business's covered assets. If, for example, your kitchen catches fire and you need to replace your ovens, stoves, and refrigeration units, your policy can compensate your business for the cost of replacing your insured items. Covered events include loss or damage caused by…
- Fires and windstorms.
- Theft and vandalism.
- Power surges and outages.
Your Property Insurance can also cover your commercial real estate, furnishings, signage, and other essential items.
Off-Premise Insurance is a type of Property Insurance that travels with your covered items. If you own a mobile food business or catering business, consider carrying this coverage so your assets aren't vulnerable once they leave your primary premises.
Off-Premise Insurance can cover…
- Others' property in your custody (such as leased or rented equipment).
- Equipment and supplies in transit or in use at a venue.
- Accounts receivable.
- Replacement products and inventory due to broken or damaged equipment.
Typically, Off-Premise coverage compensates you for damage or loss caused by a fire, windstorms, theft, or faulty electrical currents.
Liquor Liability Insurance is a staple for food businesses that sell, serve, or furnish alcohol. Most states have dram shop laws that allow alcohol-selling establishments to be sued for damages caused by their intoxicated patrons. For instance, if you serve a customer drinks all night and they drive drunk and kill a pedestrian, the pedestrian's family can sue your business for its negligent service. Such lawsuits can easily exceed millions of dollars in damages.
Liquor Liability Insurance can pay for your legal defense fees if your business is sued for liquor-related claims and court-ordered compensation if you're liable for wrongdoing.
Covered events may include damages caused by…
- An intoxicated guest who leaves your establishment and causes damage elsewhere (e.g., a drunk-driving accident).
- Bartenders who drink while working.
- A fight that occurs at your business.
- A patron's witnessing of a violent act by an intoxicated person (in this case, the damages would be emotional or psychological).
- Other specific events perpetuated by an intoxicated patron (e.g., sexual assault, stabbings, shootings, etc.).
To learn more about liquor liability, read the post "Liquor Liability for Restaurants" on our food services blog.
Business Owner's Policies (BOPs) bundle your basic insurance coverages together for less. Generally, these plans include…
- General Liability Insurance.
- Property Insurance.
- Business Interruption Insurance.
To qualify for the affordable coverage a BOP offers, your business must be considered "small" and have what your insurance provider deems a "low" risk profile.
Workers' Compensation Insurance steps in when your employees are injured while carrying out their work. It can help your business pay for…
- Your injured employees' medical expenses and foregone wages.
- Support payments and funeral costs if an injury kills an employee.
- Legal costs if your employee sues your food business for the negligence that caused their occupational injury.
Most states require employers to carry Workers' Compensation Insurance. To find out what your Department of Labor mandates, be sure to check out our guide, "Workers' Compensation Laws by State."
Hired and Non-Owned Auto Insurance (HNOA) steps in if your food services business is sued for an auto accident that happens in a rented or personal vehicle. This policy covers liability for…
- Accidents that happen in rented cars while the driver is performing business duties.
- Accidents that happen when an employee runs business errands in their personal vehicle.
This policy only covers liability – any property damage to the vehicles will have to be covered by other policies. Also, it only offers lawsuit protection for your business, not the individual driver of a car.
Umbrella Liability Insurance (aka Excess Liability Insurance) is a kind of "booster" policy. It can extend the limits of your…
- General Liability Insurance.
- Employer's Liability Insurance (part of your Workers' Compensation policy).
- Hired and Non-Owned Auto Insurance.
For a single premium, Umbrella Liability can raise the limits of all three policies by millions of dollars. Your Umbrella premium may be as low as a few hundred dollars a year.