The catering business is a fun, fast-paced industry that’s perfectly suited for anyone with a flair for cooking and an entrepreneurial spirit. In fact, there are currently more than 11,000 catering businesses in the U.S. employing over 137,000 people with annual revenue of about $8 billion. But it’s not all weekend weddings and cocktail weenies. There’s also a fair amount of risk involved — some that you might have never even considered.
Luckily, our independent insurance agents are here to help. They’ll walk through your business with you, identifying risks and exposures to help put together the perfect set of business insurance policies to cover you properly. But first, let’s about the kind of coverage you can expect for your catering business.
What Risks Does Catering Insurance Cover?
Small catering companies are often run out of the home, while larger companies may work out of large kitchens, a banquet hall, or a restaurant. The size and location of your privately-owned catering company will affect the risks you face, as will the type of catering you do.
For example, some of the risks caterers need to cover include:
- Liability: Caterers face a number of liability risks, depending upon the food and drink served, and a number of other concerns. If you set up in someone else's banquet hall, backyard, or kitchen, there's always a chance of damaging property you don’t own — which you could be held liable for. When it comes to food, you’ll need to be concerned with food-borne illness from contamination or food that’s not kept at the correct temperature. If your catering services include alcohol, you’ll need to add liquor liability. And if you prepare food off-site and deliver it to the hosting site, you’ll need to consider liability related to driving delivery vehicles. Catering liability insurance can provide a full suite of coverage to protect you from possible lawsuits that may be filed against you.
- Damage to business property: If your catering business is based out of your home, you can add an endorsement for your business equipment and materials to your home insurance policy. However, you may be limited to up to $2,500 in coverage. If the value of your catering business equipment exceeds that, or if your business is located outside your home, you may want to purchase property insurance through your catering insurance policy. The right policy will also provide coverage for loss or damage caused by fire, weather, vandalism, and theft.
- Food spoilage: Caterers often keep a lot of food in their freezers and refrigerators. If an extended power outage or mechanical failure results in the loss of a lot of food, this insurance coverage will provide you with compensation so that you can restock your inventory without taking a big financial hit.
- Equipment breakdown: This coverage is best suited to large catering companies that use industrial-sized kitchen equipment. If a power surge or mechanical failure leaves you unable to do your work, this insurance can assist you with repair costs and the loss of income that can come from it.
What Kinds of Insurance Does Your Catering Business Need?
Regardless of the size of your catering business, you’ll need to have proper insurance coverage. While some insurance policies are mandatory, others are optional but very important for protecting your business finances.
Among the coverage you may need, depending on your specific catering business, are:
- Catering insurance: Catering insurance is a specific form of business insurance. It includes the coverage options necessary to protect your business from common risks in the catering industry. Policies can be tailored specifically for your catering business so that you don’t end up paying for coverage you don’t need.
- General liability insurance: This covers a range of risks that all businesses face. If, for any reason, a patron files a lawsuit against your business for injury or property damage, this coverage can provide financial protection. For example, if you work at your client's home, and someone accidently damages their personal property, you may be held liable and sued for damages. General liability can shield you from these expenses.
- Product liability insurance: This coverage provides protection to companies that sell or manufacture products. Whether this type of insurance is appropriate for your catering business will likely depend upon the nature of the services you provide. Talk with an agent to learn more.
- Liquor liability insurance: If you serve alcohol at weddings and other functions, this important coverage can provide you with a defense and pay damages if you are accused of serving overserving, leading to injury or damage.
- Workers compensation insurance: Burns, falls, and other work-related injuries are fairly common in the catering industry. Workers compensation is required by law for any company that has employees, although the specific requirements vary by state. Workers comp provides medical coverage for employees who are injured or become ill as a result of the work they perform.
- Unemployment insurance: This coverage is included as part of your state taxes. Once you establish and register your catering business with your state’s workforce agency and begin paying taxes, your business will be covered.
- Disability insurance: This coverage is required by law if your catering business is located in California, Hawaii, New Jersey, New York, Rhode Island, or Puerto Rico. Otherwise, it’s optional.
- Medical insurance: Most catering companies have fewer than 50 employees, so they’re not required to provide health insurance. But if you employ more than 50 people, the Affordable Healthcare Act may require you to subsidize their health insurance. A Trusted Choice agent can help you find insurance providers that offer affordable rates through group insurance for small business plans.
- Commercial auto insurance: Your catering business likely uses a delivery van or has a fleet of company owned vehicles. You will need to insure them with a commercial vehicle insurance policy that meets your state’s minimum liability coverage requirements.
- Hired or non-owned vehicle insurance: If your employees use their own vehicles on the job, you can still be held responsible for covering any liability expenses they incur while transporting goods or materials to and from job sites. This insurance will provide that coverage.
Find the Right Catering Insurance for You
For help finding the right catering insurance policy for your unique business, turn to a qualified insurance agent. You have several options when it comes to agents. You can choose to work with a big-brand insurance company, which will employ a "captive agent."
Captive agents work only with a single company and sell the products that that one company provides.
This can make your insurance search a little tedious, as you may have to work with up to 3 captive agents to get a good sampling of the coverage rates for your business before you buy.
Orrrr, you can work with an independent insurance agent, like one of the 250,000 Trusted Choice members.
The Benefits of an Independent Insurance Agent
Independent insurance agents are kind of like the Google of insurance quotes. You tell them what you’re looking for, and they bring in the results. And since they aren’t tied down to one carrier, they’re free to shop around and bring multiple policy options to the table.
And it gets better, you don’t have to review the policy options alone. They’ll walk you through everything you need to know about finding the right coverage, and price, for you. But it doesn’t end with your signature. Along the way, if something bad ever happens, they’ll handle the entire claim process for you and deal with the carrier, so you can focus on your catering empire. How sweet is that?