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The food truck trend keeps on rolling. There are more than 30,000 food truck businesses in the U.S., according to IBISWorld, an industry research firm. But starting a food truck is a daunting task. In the first year, on average, it requires 45 separate government-mandated procedures and more than $28,000 in permits, licenses and ongoing legal compliance, according to Food Truck Nation, a study conducted by the U.S. Department of Commerce.
It might seem like you’re cutting more red tape than red onions, which is why it’s easy to lose sight of other necessities, such as food truck insurance. A good business insurance policy can help divert your rolling restaurant from financial ruin. Whether you’re slinging sliders, smoothies or street tacos, here’s how to get the coverage you need.
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What Is Food Truck Insurance?
Food truck insurance is a small business insurance policy that is customizable to address the specific risks that come with the job. A good food truck insurance policy combines several types of coverage that protect your business from problems such as accidents, lawsuits, lost income and equipment breakdowns.
Who Needs Food Truck Insurance?
Here are the types of businesses that can benefit from food truck insurance:
- Catering trucks
- Concession trucks
- Ice cream trucks
- Lunch trucks
- Mobile food trucks
- Vending trucks
What Does Food Truck Insurance Cover?
A well-balanced food truck insurance policy contains several types of business insurance that cover your business from a range of problems. Those issues can include the cost of claims, damages to your business property and lawsuits.
A good place to start is with a business owners policy (BOP). A BOP bundles three essential coverage types, and it’s usually cheaper than buying each coverage separately.
Here’s what a BOP includes:
Business liability insurance
This is the core of a small business insurance policy. General liability insurance covers bodily injuries and property damage you accidentally cause to others (not including your employees). For example, if you accidentally spill hot coffee and scald a customer, your general liability insurance would cover their medical expenses.
Commercial property insurance
This covers your business’s physical location and your business equipment if they are damaged due to a problem covered by your policy, like a fire or tornado. For example, if a fire wipes out your office, commercial property insurance would pay to replace your rented and leased office equipment, like your computer, office furniture, tools, inventory, supplies, valuable papers and business records.
Business interruption insurance
If you have to temporarily shut down your business due to a problem covered by your policy, such as a fire or theft, business interruption insurance replaces lost income. It covers a variety of problems, like lost earnings, money lost due to damaged merchandise and the cost of moving to a new location temporarily. This coverage is also called “business income insurance.”
Other Food Truck Insurance Types
While a BOP is the main course of your food truck insurance policy, you’ll want to load up on other insurance types to address the assortment of problems that your business can face. It’s a good idea to speak with your agent to buy the right types of business insurance to meet the demands of your food truck.
Here are some common small business insurance types to consider:
Commercial auto insurance
Since your food truck is a restaurant on wheels used for business purposes, you’ll need a commercial auto insurance policy. Your personal car insurance policy won’t cut the mustard.
Here are some common commercial auto insurance coverage types:
- Bodily injury liability. This covers injuries to others accidentally caused by you or your employees.
- Property damage liability. This covers property damage to others accidentally caused by you or your employees.
- Combined single limit (CSL). This combines one overall limit for property damage and bodily injury claims against you rather than having two separate limits.
- Medical payments and personal injury protection (PIP). This covers you and your passengers’ medical bills, no matter who is at fault for the car accident.
- Collision insurance. This covers the cost to replace or repair your vehicle if you or your employees get into a car crash. It can also cover permanently attached appliances and equipment.
- Comprehensive insurance. This covers the cost to replace or repair your vehicle for problems such as falling objects, fire, floods, theft and vandalism. It can also cover permanently attached appliances and equipment.
- Uninsured motorist (UM/UIM) coverage. This covers injuries to you and your passengers if a driver without car insurance or someone who doesn’t have enough car insurance to cover medical expenses crashes into you. In some states, you can purchase uninsured motorist property damage insurance to cover damage to your car from an uninsured driver.
Commercial umbrella insurance
Commercial umbrella insurance adds an extra layer of protection on top of your general liability insurance. For example, if your food truck business gets sued for $800,000 and your general liability limits are $500,000, commercial umbrella insurance would cover the $300,000 shortfall.
Employment practices liability insurance
This covers your food truck business for claims such as discrimination, harassment and wrongful termination. Employment practices liability insurance covers your legal costs, judgments and settlements.
Equipment breakdown insurance
Your food truck likely relies on equipment such as grills, freezers and refrigerators. Equipment breakdown insurance covers the cost to replace or repair your equipment due to unexpected breakdowns. It does not cover normal wear and tear.
Food spoilage and contamination insurance
If your refrigerator or freezer breaks down, this covers your “perishable stock” from problems such as equipment breakdown or failure and prolonged power outages. It also covers your business after a food-borne illness outbreak.
The types of expenses that can be reimbursed with food spoilage and contamination coverage includes:
- Advertising to help your food truck business restore its reputation
- Cleaning of equipment
- Loss of income due to the shutdown
- Medical tests or vaccinations for affected employees
- Replacing contaminated food
Food spoilage and contamination insurance does not cover problems such as an employee who intentionally unplugs, destroys or disables equipment. For example, you won’t be covered if your employee unplugs a fridge and the food spoils.
Hired and non-owned auto insurance
If you and your employees use a personally owned or rented car for work purposes, this covers property damage and injuries caused to others. For example, if your employee drives a rented van to pick up supplies and causes a car accident.
Inland marine insurance
Inland marine insurance covers your business property, like your equipment, products and tools while it is temporarily stored at an off-site location or while in transit over land by cars, trains and trucks.
Liquor liability insurance
If your business sells or serves alcohol, liquor liability insurance covers property damage and bodily injuries caused to others by an intoxicated person after you sell or serve them liquor. It covers expenses such as legal costs, judgments, settlements, medical bills and repair bills.
Liquor liability insurance is also called “dram shop insurance” and is required in most states.
Workers compensation insurance
This covers medical bills, lost wages and disability benefits if your employees get injured or ill while performing job-related tasks. Most states require workers compensation insurance, even if you only employ a single worker.
Examples of Food Truck Insurance Claims
Here’s a look at a few claims scenarios and the food truck insurance coverage type that would apply:
Food truck insurance claim examples
What’s Not Covered by Food Truck Insurance?
There are several types of problems that food truck insurance won’t cover. Here are examples of common exclusions:
- Earthquakes (you need to buy a separate earthquake insurance policy)
- Floods (you need to buy a separate flood insurance policy)
- Government seizures
- Infectious diseases
- Intentional and fraudulent acts
- Radioactive fallouts
Where Can You Get Food Truck Insurance?
A good food truck insurance policy is a mix of essential coverage types that meet the specific risks your company faces. Most insurers sell common types of business insurance that you can select to customize your policy, such as a BOP, commercial auto insurance, equipment breakdown insurance and workers compensation.
Here is a list of some small business insurance companies:
- American Family Insurance
- AmTrust Financial
- Auto-Owners Insurance
- Berkshire Hathaway
- Cincinnati Insurance
- Clear Blue Insurance Co.
- Erie Insurance
- Farmers Insurance
- Frankenmuth Insurance
- The Hanover
- The Hartford
- Liberty Mutual
- State Farm
- Tokio Marine
- Utica First Insurance
- Westfield Insurance
How Much Does Food Truck Insurance Cost?
Most food and beverage business owners pay a median premium of about $135 per month for a business owners policy (BOP), and a median premium of about $165 monthly for commercial auto insurance, according to Insureon. Your food truck insurance costs will depend on other factors, such as:
- Insurance coverage needs. The more coverage types you buy, the more you can expect to pay. For example, if you tack on liquor liability and equipment breakdown insurance to your BOP, you’ll pay more than just a BOP alone. But don’t skimp on important coverage types to save money, otherwise you may be underinsured.
- Your policy limits. Higher coverage amounts mean higher insurance premiums. Speak with an agent who can help you choose the appropriate amount. You don’t want to be underinsured, but at the same time, you don’t want to pay for more insurance than you need.
- Number of employees. The more employees you have, the more you can expect to pay for workers compensation insurance.
- Other cost factors. Your insurer will look at cost factors such as your business assets, business property owned, the size of your payroll, business location and your prior claims history.
Example of the cost of food truck insurance
Here’s an example of how much food truck insurance might cost based on estimates of insurance costs within the food service industry. Your costs will vary depending on what type of coverage you purchase and other pricing factors.
Ways to Save on Food Truck Insurance
Here are some ways to get cheap business insurance:
- Compare business insurance quotes. Not all insurance companies price their business insurance policies the same. You can take advantage by comparing business insurance quotes from multiple companies to find a good price.
- Bundle your policies. A business owners policy (BOP) bundles three important coverage types: general liability insurance, commercial property insurance and business interruption insurance. It’s typically cheaper to purchase them as a bundle rather than separate policies. You can often further your savings by purchasing other coverage types from the same insurer where you purchased your BOP.
- Pay your premium in full. You could qualify for a discount if you pay your annual premium in full rather than monthly.
- Increase your commercial auto insurance deductible. If you choose a higher insurance deductible, you’ll pay less in commercial auto insurance premiums. That’s because your insurer will pay less if you file a car insurance claim.
- Implement a safety program. Your food truck employees likely work around a lot of sharp objects and hot surfaces. You could qualify for workers compensation insurance savings if you implement and document a safety program.
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Food Truck Insurance FAQs
Do you need food truck insurance?
Certain types of small business insurance are required by law, depending on your state. For example, if you have employees, you’ll need workers compensation insurance.
Even if your state doesn’t require you to buy certain types of business insurance, you’ll at least want to consider buying a business owners policy (BOP). A BOP can help protect your food truck business from problems like lawsuits, destroyed business property and lost income.
Do you need food truck insurance for a trailer?
If your food truck is actually a trailer pulled by a truck, you’ll still need several types of small business insurance to cover your business.
A business owners policy (BOP) is a good place to start. It contains key coverage types like business liability insurance, commercial property insurance and business income insurance to cover problems like insurance claims, lawsuits, lost income and destroyed business property. You’ll also need a commercial auto insurance policy to cover the vehicle that you use to tow your trailer. A personal car insurance policy won’t cover accidents related to business use.
Do you need commercial auto insurance for a food truck business?
Yes, you will need commercial auto insurance for your food truck business. Since you drive your food truck for business purposes, your personal car insurance policy won’t cover you. That’s because personal car insurance policies exclude business use.
How is food truck insurance different from restaurant insurance?
Food truck insurance and restaurant insurance policies will both have similar coverage types. For example, both policies are likely to have important coverage types such as general liability insurance, equipment breakdown insurance and business interruption insurance.
But there may be some key differences between food truck insurance and restaurant insurance based on the way your business operates. For example, a food truck business is mobile whereas a restaurant business is in a permanent location, which makes commercial auto insurance a necessity for food trucks.
Another example is if you have any employees. You might operate your food truck solo, meaning you won’t need workers compensation insurance, whereas a restaurant is likely to have more than one worker.