According to the Centers for Disease Control (CDC), the number one frequently reported restaurant injury is food poisoning and about 48 million Americans get sick from food poisoning every year. In the worst case scenario, your restaurant can be slapped with compensation claims. It’s in such moments that insurance steps in.

In this article, we’ll learn what food business insurance is about, the major types, costs and the best companies that offer food business insurance in the United States.

Let’s go!

What is food business insurance?

Food business insurance refers to the various insurance policies that protect food-serving establishments or businesses from unforeseen accidents to minimize prospective losses.

This insurance provides protection for the business as an entity, employees as well as customers.

For instance, if an employee or a customer breaks a window in the restaurant or incurs an injury as a result of a patch of water within the premises, the insurance provides protection for the business. The customer and/or employee will be compensated and the reputation of the business will be protected.

Why is food business insurance important?

Insurance will protect your food business from risks and liabilities that can bring it down through financial losses or reputational damage.

For example, employees and even customers can sue the establishment in the event of an unforeseen accident, and the insurance will offer protection in such circumstances.

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The major types of food business insurance

At  the highest level,  we can summarize food business insurance into two major categories:  i) property commercial insurance and ii) general liability insurance.

Property commercial insurance protects the physical business premises from damage and also offers protection for the business assets.

General liability insurance offers protection against accidents experienced by employees as well as customers. Unforeseen circumstances affecting patrons as well as the employees are covered under this category.

But at a wider scale and for clarity, these are the major types of food business insurance:

  • Business owner’s policy
  • General liability insurance
  • Workers compensation insurance
  • Commercial auto insurance
  • Liquor liability insurance
  • Cyber liability insurance

Let’s explore each of these types briefly:

1. Business owner’s policy

This is widely recognized as the most budget-friendly insurance option for food businesses, especially for the owners of bars and restaurants. It integrates general liability insurance and commercial property insurance into a single, cohesive package.

2. General liability insurance

This is designed to cover the most prevalent risks that food businesses frequently face. These may include injuries to customers or damages to their properties. In most cases, this coverage is an obligatory requirement for commercial lease agreements.

3. Workers compensation insurance

This type of food business insurance safeguards employees by covering medical expenses and wages for work-related injuries and illnesses. In the United States, nearly every state mandates this policy for businesses employing staff members.

Workers compensation insurance essentially protects your workforce, including cooks, bartenders, cleaners, and servers. In bustling kitchen environments, incidents like cuts are particularly common, making this coverage valuable.

In the event of an injury, the policy will cover the injured employee’s medical costs and provide disability benefits should a disability arise.

For sole proprietors, workers’ compensation insurance can also address your work-related injuries that conventional health insurance policies may not cover.

4. Commercial auto insurance

A lawsuit resulting from an accident involving your commercial vehicle, for example, can cost thousands of dollars and this can easily drain your food business. In comparison, the monthly insurance premium for a typical food truck is about $130. This $130 will save you the thousands you will be required to pay upfront should that food truck be involved in an accident.

5. Liquor liability insurance

One day, your food business, say a restaurant or bar, may serve liquor to a customer who goes on to cause damage to property or harm other people. When this happens, the liquor liability insurance will take care of the resulting costs.

Most states require businesses serving alcohol to take this policy. In fact, some states ask for this policy as a condition to be given the liquor license. This is particularly the norm in states with dram shop laws, where businesses are held accountable for the actions of intoxicated patrons who cause damage to property or harm other people.

6. Cyber liability insurance

Cyber attacks are now a reality, and food businesses are not spared. So whenever your business is attacked by cyber criminals, this is the insurance policy that will take care of the damage.

If your business stores customer data, then you really need to consider this policy. It caters for cyber attacks related costs such as extortion demands, data breach investigations, and customer notifications when their data is breached.

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Best companies for food business insurance in the United States

Some of the best insurance companies for food business insurance in the United States include:

  • Travelers
  • Chubb
  • NationWide

In Forbes Advisor’s Ranking of the top 50 insurance companies in terms of size, Travelers, Chubb, and NationWide are ranked in positions 1, 2, and 3 respectively.

Huckleberry is also popular for food business insurance policies.

How much does food business insurance cost?

According to Insureon, the cost of food business insurance is determined by the type of food business that you are running, the property and equipment that your food business owns or leases, the location, number of employees, revenue and ultimately the type of insurance policy.

So the costs will always change based on the above elements. For example, general liability insurance can cost about $40 per month, which adds up to $480 per year.

And as we saw earlier, the premium for a food truck can range around $130 monthly or $1560 per year.

What is needed for a small business insurance for a mobile food vendor

The insurance company will require basic details about your food vending business such as the name of the business, licenses, financial statements and the location. Once all is verified, your policy will be set up.

For example, Thimble kick starts the process by asking for your Zip Code. This basically identifies where the business is based and with it they can quickly establish if they cover that area. For example, zip code 90210 is within California. So when you enter this zip code, Thimble checks and returns a positive, saying yes “We cover California”.

Next, you are required to choose the type of insurance you need. For a mobile food vendor, you can choose business insurance or event insurance. Business insurance will cover the day to day risks in the business, while event insurance will cover the risks associated with a one off event, such as a wedding.

Once you go through all the steps and provide all required information, then the company will process the information and send you a quote plus details for the next steps.

Location is particularly a critical requirement because premium payments among the top insurance companies is determined by the risks that the business will face in the specific locations. The names of the business owners as well as forecast financial statements helps to give a clear picture of the business risks as well as the best insurance policies for your specific business.

Final remarks 

Food business insurance is your dependable ally in protecting your investment when something goes wrong and you are required to cater to the costs. An employee gets a burn, an intoxicated patron harms people across the street? Such incidents can put a huge financial dent in your business or collapse it altogether. But with the right insurance policy for the riskiest parts of your food business, such surprises will never worry you.

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