Did you know there are more than 2,200 food trucks in Canada? According to the Bureau of Labour Statistics, there will be a 20% increase by 2022.
Food trucks are an excellent source of income for the owner and his employees. They also help boost the revenue of local businesses, events, and non-profit organizations. However, these food trucks are not immune from risk.
It was difficult for food truck owners to find insurance in the past. Today, the market is much more open. There are many options available. But with these options comes some confusion – what should you look for in food truck insurance?
Keep reading to learn more about food truck insurance.
Who Is Food Truck Insurance For?
Food trucks are non-traditional restaurants. Traditional restaurant insurance won’t always fit their needs.
If you own a food truck business, you need a lot of insurance coverage. You need protection against potential major risks. This includes physical damage to your truck or business interruption due to an event that would shut you down.
Food truck insurance covers more than just food-related risks. It also protects your business and its employees if you run a mobile food truck. A business owner who is thinking about starting a food truck business should consider the following questions:
- What kind of liability coverage do I need?
- Do I need to cover myself (as the owner) against bodily injury?
- How much equipment do I need to insure?
- Do I need to make a general commercial liability?
- How much should I budget for insurance?
Any significant risks that can put you out of business or cost you significantly need insurance. The goal is to offer your business a backup plan in case of significant emergencies.
Food truck insurance also boosts your brand image to clients. Consumers want to work with brands that are customer-oriented.
Defining Food Truck Insurance
A food truck insurance is a policy cover that responds to claims related to the day-to-day operations of the food truck business. It covers accidents, auto insurance, equipment, and other basics (like employees).
Food truck insurance policies are a bit different than those of a traditional restaurant because they are constructed to handle the unique risks faced by food trucks. A few of these risks include:
- A truck accident
- Products within the truck spoiling
- Truck being hijacked or stolen
The risks covered depend on the type of policy bought.
3 Types of Insurance Required by Food Trucks
Without insurance, you could lose everything to an accident or liability claim.
What would your customers think if they found out you didn’t have insurance? To protect yourself in this highly competitive industry is to have the right insurance policy. It’s best to be prepared for the worst-case scenario.
Here are the key types of insurance covers to consider. There are more covers; research your business needs to determine what suits you.
General Liability Insurance
If you are in the food service business, you are one of the most vulnerable businesses to be sued. This is especially true if you run a food truck.
A food truck is your business on wheels. It includes all your equipment and inventory, but it is not a physical location. That leaves you vulnerable to many liability issues that you might not have thought about before.
Having general liability insurance protects the lifeblood of your business.
Liability insurance protects your assets against personal injury or property damage claims. If someone gets injured on your premises, liability insurance covers medical bills and other expenses. It also covers any legal fees you may incur if you are sued.
The type of coverage you need depends on the size of your business.
Professional Liability Insurance
Professional Liability Insurance (PLI) protects individuals against claims filed by people, businesses, or organizations for losses caused by the insured's actions. You have unlimited financial resources to deal with every lawsuit that comes your way. The truth is resources are scarce, and a mere lawsuit can get you bankrupt.
Food truck owners are not legally required to purchase PLI. However, if you have employees, PLI is required by law.
If you don’t have employees, PLI protects your personal assets from being sued.
Contents Insurance
Contents insurance can protect your business if the worst should happen. The cover protects a company against damage, loss, or property theft. This includes property inside or outside of a business's physical location.
Food trucks are expensive to start up and maintain. You need to buy costly equipment like coolers, freezers, the track and others. The cost of food trucks can range in tens of thousands of dollars depending on their size and type.
To protect your investment, you must have contents insurance for your truck. Contents insurance covers the equipment inside your truck. In case of theft or breakdown of a cooker, you don't have to go out of business.
What Does Food Truck Insurance Cover?
You may not know this, but all insurance policies are not equal. Each insurance policy has a specific purpose in mind.
Depending on your priorities, you can choose insurance that matches your needs. Our report offers insight into what your food truck insurance may cover.
Bodily or Personal Injuries (Like Accidental Food Poisoning)
A food truck insurance policy covers the vehicle and the owner if an employee or customer is injured in an accident. The policy ensures that the owner isn’t personally liable for the injuries. This can help protect businesses from massive legal fees when accidents occur.
An umbrella policy can be considered excess insurance. It will only kick in after a specific type of insurance has already paid out. The policy provides additional coverage for damages and injuries caused by a covered person (food truck owner).
Customers
Food truck insurance can protect customers from falling ill due to bacteria. The policy will also cover the client if they get injured, trip, or fall at your food truck business.
If you don’t have food truck insurance, you might not be covered if something happens to one of your customers. Make sure you have the right food truck insurance for your business.
Delivery Persons
Whether your insurance covers delivery persons is dependent on their nature of employment. If the delivery persons are independent contractors, they are not covered. If they are full-time workers, they may be covered.
Also, the type of food insurance determines coverage. To cover your employees, including delivery persons, you worker's compensation insurance. The policy covers the employees if they slip, fall, or have job-related illnesses.
Workers' compensation policy also covers long-term illness and death to close family members. If your food truck business has several employees, consider this policy.
Any Type of Visitor
Food truck insurance only extends cover to customers. Any type of visitor may not get coverage.
Many truck food businesses mainly attract visitors as the primary visitors. It explains why other visitors are accorded lower priority in coverage.
Visitors are rare and their injuries as well. They pose minimal risk to the business.
On and Off-Site Inventory
Contents insurance covers onsite and off-site inventory. If your food truck insurance features contents insurance, your inventory is safe.
Remember to list all properties, those inside and outside of the track. It will protect you from conflict with your partners.
Business Interruption
General liability insurance only covers damages on your truck or assets. However, it does not cover business interruption. You can apply for business interruption to get income compensation in case of closure due to accidents.
You are better off having both general liability insurance and business interruption. It means you get your truck back to business and get income for closed months.
Some food truck accidents can intensely damage your business. It may cripple your finances if you are completely out of work. The business interruption insurance protects you from such.
Crime
If you want coverage for theft and employee dishonesty, consider commercial crime insurance. This policy will protect your business from financial losses caused by theft, robbery or burglary.
For instance, a seasonal employee may steal $1500 from your register. If you can’t trace the employee and the cash, the policy will cover your losses.
A food truck can host refrigerators, ovens, and commercial stoves, depending on your business scale. This may attract robbery as they are high-value equipment. If such equipment is stolen, your business may close temporarily.
Commercial crime insurance will protect your business from such. If your food truck business operates in crime risk areas, consider getting food truck insurance.
What to Look for in a Company That Offers Food Truck Insurance
Before you sign up for any insurance plan, first look at the company behind the plan. Many people just go with the first option they land on. This is not advisable because it can have serious consequences.
Here are some things that you should look out for when choosing an insurance company:
- License
- Reputation
- Clientele base
- Awards and Recognition
- Policies offered by the company
- Customer service
You need a clear idea of what to look for in an insurance company. Firstly, you need to ascertain the company is licensed and operating legally.
You also should also find no complaints against the company. Analyze all other information listed on the file. It will give you hindsight to the insurance company you are working with.
Your insurance is only legally binding if the company is licensed.
Choose a reputable company. Bad companies may cause you problems when getting the best rates. Check online or ask friends who have used the insurance company previously.
Know your risk before you decide on how much coverage you need. You can do this by making an accurate estimate of your truck and equipment value.
There are thousands of insurance companies in Canada. Choosing one from the thousands can be daunting. Take your time to research what a company offers and its potential to deliver.
Typical Costs of Food Truck Insurance
The costs for food truck insurance vary depending on the type of business. The size and value of the truck, and its intended use, also factor in insurance costs.
The average cost of insurance for food trucks in Canada is $5,000. This amount varies from state to state. For instance, the average insurance for a food truck in Toronto is $6,500; in Quebec, it's $2,000.
Food trucks face different types of risks that can cause significant expenses. You might be wondering how much car insurance for a food truck costs. Well, it depends on where your food truck business operates.
In crime risk areas and high-end suburbs, the rates are high.
Insurance companies also offer different rates. Do market research to compare what insurance companies have to offer. Remember low priced insurance covers are not always the best.
A good policy should include business liability, auto liability, and workers' compensation coverage. Examine your policy annually for ample coverage. If the previous coverage did not serve you right, you can always add coverage or change the insurance company.
The price of an insurance cover should not be your only deciding factor. The coverage, company’s reputation, and reliability also matter.
Do your due diligence on insurance companies before buying a policy.
The Takeaway
The trucks may be exposed to various hazards, including fire, theft, compliance issues and much more. In such cases, without a valid insurance policy, the owner will suffer.
If you run a food truck business, you need to invest in food truck insurance. If you are unsure which cover to take, consult an insurance expert.
Insurdinary takes the guesswork out of where to look for for this type of coverage. When it comes to food truck insurance, visit our partner, APOLLO cover. A licensed, trained and highly professional agent is looking forward to working with you.
