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Food liability insurance: What is it, and do I need it for my business?

Whether you run a taco truck or a Michelin 5-star restaurant, delivering quality eats to your customers is of the utmost importance. The experience your establishment provides may also be why your clientele gives their patronage. So ambiance, mood, and location are just a few of the other factors that can be difference-makers for why people choose to satiate their palates at your restaurant business over others.

In the restaurant industry, reputation is everything, so protecting your public perception is a key element to your success. One of the best ways to keep those positive Yelp and Facebook reviews of your restaurant coming is by having food vendor insurance—or food liability insurance. Here we’ll explore the food insurance landscape so you can make informed decisions as to which types are most applicable to your business.

What is food liability insurance?

Part of the day-to-day operations of running a bakery, coffee shop, restaurant, or other food entity is preparing for the unexpected.

Food liability insurance takes your precautionary prep to a whole new level by providing you with a slew of protections from unforeseen accidents and events.

But there’s a significant distinction between insuring the day-to-day operations of your food-serving establishment and insuring the physical space of your restaurant. The two most popular policies that address each are general liability insurance and commercial property insurance.

  • General Liability Insurance: Suppose a customer slips and falls on a wet floor, or one of your restaurant employees suffers an injury on the job. Perhaps a customer contracts food poisoning as a result of consuming expired meat at your restaurant. General liability insurance protects you from lawsuits resulting from such unfortunate circumstances and can shield your business and reputation from unnecessary harm. The policy can also cover you in the event of unplanned medical expenses and other damages you may be responsible for resulting from your business activities. Another attractive element provided by general liability insurance is accidental advertising injury protection. Suppose you mistakenly use a competitor’s advertising slogan or are accused of libel or slander. Accidental advertising protection has you covered under general liability insurance if you choose to exercise the option.
  • Commercial Property Insurance: This policy is more for protecting your business property in the event of physical damages to your restaurant and protects your business’s physical assets like furniture and equipment. Commercial property insurance also covers you if your business suffers property damage due to arson, vandalism, or another covered event.

For maximum protection, many restaurateurs opt to purchase both general liability insurance and commercial property insurance together, which—when combined—is known as a Business Owner’s Policy or BOP.

How much does food liability insurance cost?

The cost of food liability coverage depends upon several factors. Chief among them is the type of food service business you’re operating. If you own and operate fleets of food trucks and food trailers, your day-to-day risks will be significantly higher than if you manage a group of private chefs. Whether you run your local farmers’ market or flip sausages on food carts outside of nightclubs, the cost of your food insurance policy is mainly driven by the size and scope of the food business you’re running. The larger the enterprise, the more expensive your insurance policy.

It’s also important to consider the type of insurance coverage you’re pricing up. Some policies charge more for including other types of insurance that are not relevant to your food-based small business, so it’s essential to have a thorough understanding of what aspects of your business you want to be insured and why. This way, you’re taking the necessary steps not just to purchase any coverage, but the right coverage.

Another factor impacting the cost of your food liability insurance is the location of your food venture. An established restaurant in a wealthy part of town is subject to different and potentially lower risks than a food vendor flipping burgers at a music festival, where the chance of foodborne illness rises exponentially.

For most small businesses, food liability insurance will cost anywhere from $300 to $1,300 annually, with costs increasing the more coverage you desire. To keep your costs low, only pay for what you need. If you’re a one-person lemonade stand that sources lemons from your backyard, it doesn’t make sense for you to purchase inland marine insurance or commercial property insurance since those policies would cover you beyond your insurance needs.

Other factors influencing the cost of food liability insurance include:

  • Deductibles: As a general rule, the higher the deductible you pay for insurance, the lower your premium will be. Factoring in if you can pay the deductible in a “worst-case scenario” is something you should consider before locking in your policy.
  • Employees: Having a large number of employees will cost more than having one or two. More workers means higher premiums.
  • Value of property: The greater the number of physical assets your company has, the higher your insurance costs will be.
  • Claims history: If you have previous food insurance claims on your record, your current insurance costs may be higher because you may be viewed as a riskier policyholder.
  • Frequency of food-related events

Any company that’s in the business of selling food to the general public will need to purchase food vendor insurance. The spectrum of companies categorized as food sellers ranges from established restaurants to food trucks to chefs to catering and concessions companies.

Restaurants or food trucks engaging in one-off mobile events require food vendor insurance even if they’re only running a pop-up or for one day. It’s imperative to have a thorough understanding of the rules and regulations of the venue your business is operating out of since different venues possess different insurance requirements. Special endorsements or add-ons to insurance policies may be required—such as a Certificate of Insurance—since not all policies cover mobile operations in their basic form.

What other insurance coverages do I need for my restaurant or catering business?

Each restaurant, bakery, coffee shop, or catering business is different, and different insurance policies exist to cover their unique needs. The following are other popular coverage options that restaurateurs use to run their businesses successfully:

  • Commercial Auto Insurance: If you use a vehicle for your food-based business, transporting food or food-related equipment, this policy will protect you from damages arising from a car accident such as bodily injury or other vehicle-related mishaps.
  • Utility and Spoilage Insurance: This policy provides coverage to your restaurant if your utility services malfunction and cause you to incur inventory losses or damages.
  • Cyber Insurance: For restaurants that store customer data or accept credit cards as payment for goods and services, cyber insurance offers protection against any potential data breach where customers’ private information could be at risk of being exposed.
  • Workers’ Compensation Insurance: Worker’s compensation insurance covers restaurant employees’ lost wages and medical expenses should they become injured on the job and is a requirement for most businesses with employees. Workers’ compensation laws vary by state, so be sure to check your state’s workers’ compensation law requirements before purchasing a policy.
  • Host Liquor Liability Insurance: If you’re in the beverage business or your establishment sells alcohol, having host liquor liability insurance will cover you in the event patrons become intoxicated and cause injury or harm to themselves or someone else. This policy also covers you for broken or damaged property caused by intoxicated patrons.
  • Equipment Breakdown Insurance: If you experience mechanical issues with any of the food-related gear in your establishment, equipment breakdown insurance—or boiler and machine insurance—has you covered. These policies protect everything from malfunctioning computers to replacement costs of refrigerators, boilers, pressure systems, and other electrical and non-electrical equipment.
  • Business Income Insurance: Business income insurance helps you pay your expenses and cover your payroll if an unforeseen circumstance—such as a natural disaster—renders your restaurant or food service unworkable.

If your restaurant business could benefit from one or all of the above policies, they can be included in a restaurant endorsement to a Business Owner’s Policy.

How to get food vendor and restaurant insurance with Huckleberry

There are various business insurance products available to you that can help keep your food venture running smoothly. While there are many insurance providers, not all providers or insurance companies have your best interests at heart. Some are more profit-driven and will knowingly juice up your insurance quote, while others lack the credibility and knowledge to deliver quality policies. If you’re looking for a brand name, you can trust and choose Huckleberry for policies that have your back.

Huckleberry provides you with a one-stop shop for all of your food insurance needs. In less time than it takes to cook an egg, you can receive a free quote on all types of insurance pertaining to your food or restaurant endeavor, helping you secure the policies most pertinent to your business, so you can spend more time delivering quality eats with the peace of mind that you’re protected.


Disclaimer

All content on this page is for general informational purposes only and does not apply to any specific case, is not legal, tax or insurance advice and should not be relied upon. If you have any questions about the situation for your small business or the latest information in your state, you should contact an attorney for legal advice, an insurance agent or broker, and/or your state's labor or industry agency, board, commission or department. Please note that the information provided on this page may change at any time as a result of legislative action, court decisions or rules adopted or amended by any state or the federal government.

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