Insuring a food truck can be complicated for those business owners. In addition to ensuring that they protect the core of their business from the usual risks, food truck owners also need to consider that their “restaurant” is also a vehicle.
To understand insuring your food truck business, let’s break those many needs down into easily digested bites.
What is Food Truck Insurance?
First off, let’s be clear that food truck insurance is not a policy type in its own. Instead, it’s a multi-pronged approach that covers all aspects of your food truck business.
Several coverages may be necessary to protect your business entirely, including:
Commercial auto insurance
General liability insurance
Equipment breakdown insurance
Workers’ compensation insurance
Business property insurance
Lost business income insurance
So, it’s not a matter of selecting only one coverage option and making it applicable to your food truck. It’s like an a la carte menu—allowing you to fill your plate with everything you need.
Let’s look at an overview of each kind of insurance; you’ll see why they are crucial for protecting your business.
Commercial Auto Insurance
First and foremost, your food truck or trailer is your kitchen—the heart and soul of your business. However, it is still a motor vehicle. So, whether you’re serving up barbecue plates or cupcakes, you need commercial auto insurance.
Your personal auto insurance will not suffice in the event of a motor vehicle accident. Because you are utilizing your food truck for business, this is a must-have.
Instead, you need a Business Auto Policy which allows you to purchase physical damage coverage as this protection is not automatic, you must select it. Generally speaking, this covers your expenses that result from incidents such as a break-in, fire, or theft. On the other hand, liability insurance protects you if you have an at-fault accident that causes property damage or bodily injury.
Laws and limitations dictating commercial auto insurance vary from one state to another, so give your local insurance agent a call to verify whether you have the correct auto insurance in place.
General Liability Insurance
In addition to the commercial auto coverage, you must obtain general liability insurance to protect your business.
This coverage shields you in the event of any accident or incident that arises from your business that is not vehicle-related.
Here’s an example. A customer complains that they burnt their mouth on your delicious specialty coffee. Even if you are not at fault, the legal fees you’ll pay out to defend against this claim will stack up faster than you can imagine.
General liability insurance provides the protection you’ll need.
Equipment Breakdown Insurance
If you outfitted your rig from the ground up, then you know firsthand just how expensive the commercial equipment in your food truck can be to repair—or worse yet—replace.
This insurance helps to protect you when your core kitchen equipment suffers an unexpected breakdown, not resulting from misuse or neglect. These incidents could stem from power surges, short circuits, or other mechanical meltdowns.
Equipment breakdown insurance helps you recoup the cost of repairs; in some cases, it will even include paying emergency calls. Check in with your local agent for details on what’s available in your state.
Workers’ Compensation Insurance
Workers’ Compensation Insurance is necessary for small business owners in 49 states (Texas optional). This coverage pays for the cost of medical treatment, lost wages, and other expenses for an employee who is injured while at work.
Accidents can happen anywhere, and kitchens can be dangerous places. Don’t be left footing the bill for emergency care, prescriptions, follow-up care, or lost wages due to such an accident.
Moreover, Workers’ Comp is mandated by law in 49 out of 50 states. Skimping on this coverage can mean additional consequences.
Business Property Insurance
Should you get in a collision in your food truck, your commercial auto coverage typically pays only for fixed equipment. That protection extends to the vehicle body itself, the mechanical parts, and any equipment attached to the food truck.
However, your auto coverage will not compensate you for lost or damaged miscellaneous items such as utensils, pots, bakeware, or the tablet that runs your POS. Instead, these non-fixed items fall under the scope of Business Property Insurance.
Business Income Insurance
Last but not least, you should consider protecting your income by obtaining Business Income Insurance. With the correct coverages selected, this insurance protects you from lost income if your food truck is inoperable for an extended time due to mechanical failure or an accident. Check in with your local Trusted Choice Agent to ensure that you are covered.
This insurance coverage is usually modestly priced and gives you the peace of mind that you need as a small business owner.
Final Thoughts on Insuring Your Food Truck Business
The food truck business is a thriving and continuously evolving industry. As a business owner, you have the opportunity to build a robust brand without the limitations of a fixed-space restaurant. With that comes the added weight of discerning which insurances you require, precisely.
Fortunately, you’re not alone in this. Call your local insurance agent, the best resource for choosing the best items from this extensive menu to suit your food truck.