Food truck insurance is a necessity for business owners in the mobile food industry. Most food truck businesses will need more than one type of insurance coverage, including commercial vehicle insurance and general liability. Food truck insurance costs start at $1,300 per year, but can be as much as $7,000 per year or more.
Insurance costs vary because the insurance needs of each food truck business are unique. But the right coverage will help keep the wheels rolling on your food truck for the long run. The experts at CoverWallet can answer any insurance questions you have, help you identify the coverage you need, and get you free, no obligation quotes in minutes.
4 Types of Food Truck Insurance
Whether for a food truck startup or a restaurant or catering business looking to expand into the mobile food industry, there are several types of insurance coverage that food truck businesses buy. Some types of food truck insurance coverage are required by law while others, though recommended, are not required.
Types of Food Truck Insurance
|Type of Insurance||What It Covers||Required or Recommended?|
|Commercial Vehicle Insurance||Damage and liability claims from vehicle-related accidents||Required|
|Property Insurance||Truck and attached equipment from collision, theft and other losses.||Recommended|
|General Liability||Injury and property damage that are not vehicle-related||Recommended|
|Workers Compensation||Lost wages and medical costs to employees, arising from work-related injury. Legal fees may also be covered.||Required in most states if you have employees.|
Below are the four primary types of food truck insurance:
1. Commercial Vehicle Insurance
Commercial vehicle insurance is required to operate a food truck and the coverage is similar to personal auto insurance. There are some key differences, however, related to limits of coverage, exclusions, and eligibility. These differences are owed to the fact that commercial vehicles are exposed to more risk of damage and liability than personal vehicles.
A commercial vehicle insurance policy may include several types of coverages that can cover different types of risks and liabilities, including:
- Bodily Injury
- Property Damage
- Medical Payments
- Personal Injury Protection
- Uninsured/Underinsured Motorist
- Comprehensive (Damage not caused by collision)
Navigating food trucks through traffic and parking lots can be challenging and accidents, from the minor fender bender to a major wreck, are common. Food truck repairs can also be costly, especially if they take a long time, and these are the kinds of expensive risks you’ll a good commercial vehicle insurance policy will cover.
2. Property Insurance
Property insurance primarily covers the truck and damage caused by the truck in accidents, food truck business owners often need additional property insurance. It’s also a separate and supplemental coverage for the equipment attached to the truck.
Property insurance coverage for your food truck will be needed for equipment attached to the truck, some of which may include:
- Broiler Grill
- Exhaust Hood
The typical food truck can easily require more than $10,000 in equipment. But, in most cases, that equipment will not covered by a commercial vehicle policy. An unexpected bill to replace all of your essential equipment can put the brakes on your business quick. That’s why a good Property Insurance policy, though not required, is recommended.
3. General Liability Insurance
General liability insurance covers those risks not covered by a food truck business’s commercial vehicle policy or property insurance. While not required, it’s highly recommended. It’s so common that most insurers will combine general liability and property insurance under one business owners policy (BOP).
Examples of risk exposures to a food truck business that general liability can cover include:
- Food Poisoning
- Allergy Illness
- Injury from Slips and Falls
- Legal Fees
General liability insurance for your food truck may be the most important coverage you’ll buy. Almost any activity that involves vehicles and human beings poses a risk of injury. Add food preparation and customers into the mix and you have a potential recipe for disaster. 48 million Americans get sick every year due to foodborne illness.
Following the best practices of handling and preparing food isn’t a guarantee that a customer won’t get food poisoning from consuming your product. Even if your supplier sells you food with a dangerous bacteria or virus, such as E. coli, your customer may still blame you and file a lawsuit. In most cases, general liability insurance covers those legal fees.
4. Workers Compensation Insurance
Workers compensation insurance is required in most states for employers with one or more employees. This insurance covers the financial risk arising from employee work-related injuries and illness. Basic workers comp insurance will cover lost wages and medical costs. Some policies will even cover legal fees.
Workers compensation covers a range of risks associated with your employees while driving the vehicle and while preparing and serving food, including:
- Vehicle-related injury
- Slips and falls
- Burns from equipment
- Smoke inhalation
With these four types of insurance in place, you’ll reduce the risk of an unexpected accident or event derailing your food truck business. If you’re serving alcohol, liquor liability insurance will also be needed. If you have questions about exactly how much coverage your operation needs, reach out to the expert at CoverWallet. They’ll answer your questions, help you build the right policy for your food truck, and get you free, no-obligation quotes in minutes.
How Much Food Truck Insurance Costs
Food truck insurance costs can range from $300 to $600 per month but will depend on a number of factors. No two insurance policies are alike and arriving at an accurate estimate of your insurance total cost, without getting at least two or three quotes from different insurance companies, can be quite the moving target.
Food Truck Insurance Costs: Premiums, Limits, & Deductibles
|Insurance Type||Annual Premium||Policy Limit||Policy Deductible|
|Commercial Vehicle||$1274-$3148||Varies, depending upon vehicle and coverage||Varies, depending upon policy needs|
|General Liability||$500-$602||$2 Million||N/A|
(General & Property Coverage)
|Workers Compensation||$1436-$2490||$1 Million||N/A|
*Cost information from Insureon.
Note that the premium ranges are median estimate and the business owner’s policy combines the general liability and property insurance as a package. Some of the factors for determining your food truck insurance cost, such as the coverage limits and deductibles, are controllable by you and can therefore increase or decrease the total cost of insurance.
Knowing which factors the insurance companies use to determine premium amounts, and you consider national averages for food truck insurance costs, you will be armed with the information needed to get the best value for your business.
Here are some of the primary factors typical of a food truck business that insurance companies will use in determining the cost of coverage:
- Type of Business: Food truck businesses carry more risks than the average small business. Since there are several potential perils, such as auto accidents, kitchen fires, burns, slips, falls, and foodborne illness, the total cost of insurance can be pushed higher.
- Location of Business: Although a food truck is a mobile business, you’ll likely have a permit to do business in a particular location. If this location is in or near a high-crime area, for example, your insurance premium may be higher.
- Type and Age of Equipment: Although equipment needed for your food truck can total $10,000 or more, this is not a high cost in relative terms to all small businesses. Also, the repair cost can be minimal and the risk of repair is low with newer equipment.
- Replacement Cost vs Actual Cash Value: Naturally, new equipment costs more than used equipment. Therefore, insurance premiums will be higher if you choose replacement cost coverage rather than the cash value of your equipment.
- Number of Employees: This factor will directly impact your workers compensation premium.
- Coverage Amount: If you choose minimal coverage, premiums will generally be lower. Equal and opposite, higher coverage amounts translate to higher premiums. An insurance agent can help determine proper coverage amounts for the various policies you’ll need for your food truck
- Deductibles: Higher deductibles translate into lower premiums. Just be sure you have sufficient cash available to cover the deductible.
How Much Insurance Coverage You Will Need
After the appropriate types of insurance for your food truck business are chosen, you can begin to estimate the coverage amounts for each. Here are standard coverage amounts or ranges you may need for each basic type of insurance:
|Insurance Type||Standard Coverage Amount|
|Commercial Vehicle: Collision||Actual market value of the food truck|
|Commercial Vehicle: Liability||$100,000 - $1,000,000|
|Property (other than vehicle)||Replacement cost of equipment|
|General Liability||$1,000,000 per occurrence and $2,000,000 aggregate (for the policy term)|
|Workers Compensation||No standard limit, depends on state laws|
Commercial Vehicle Collision Coverage
This coverage pays for expenses, such as repairs, from damages related to a collision with another vehicle or object or from overturning. The coverage amount should cover the replacement cost of the vehicle, although most collision damages are not total losses. If you’re not familiar with the market cost of food trucks, you should expect to pay up to $50,000 for the truck and you’ll need to cover this cost with your collision insurance.
Commercial Vehicle Liability Coverage
The liability portion of your food truck insurance will cover damage resulting from property damage or bodily injury to another person that is caused by you or an employee when operating the insured vehicle. Many commercial insurance providers offer liability coverage under one single combined limit, usually up to $1,000,000, whereas personal auto liability normally has two limits — one for property and one for bodily injury.
Property Insurance Coverage
Basic vehicle coverage won’t cover your food truck equipment. To cover this equipment, you’ll need property insurance coverage. The equipment attached to your food truck can be expensive to replace but also integral to the ongoing operation and success of your food truck business.
For example, a flat top grill, a commercial refrigerator, a deep fryer, or a POS system can each cost $1,000 or more. So, if all of your equipment will cost $10,000 to replace, you’ll need $10,000 in property insurance coverage.
For property insurance coverage, you may also choose to insure the actual cash value of the equipment, which will be less than the replacement cost, depending upon the age and usage of your equipment.
General Liability Coverage
Since a food truck is essentially a restaurant on wheels, the types of insurance that are relatively quick assumptions for the business owner are commercial vehicle insurance and property insurance. But there are additional and significant perils to the food truck business that may not be quite as apparent.
Injuries and property damage to third parties that are not auto- or employee-related are significant risks and will need to be covered by general liability insurance. This insurance will also cover foodborne illness. Perhaps more importantly, general liability can also cover the expensive legal fees associated with lawsuits, whether you are innocent or not.
Workers Compensation Coverage
Every state in the U.S., with exception of Texas, requires workers compensation coverage. However, the requirements, details, and exceptions differ from state to state. For example, some states mandate that a business with five or more employees must have workers compensation coverage while others require workers comp for a business that has just one employee.
As for the precise coverage amount, there is no limit. Instead, the insurance is there to cover the costs of medical care and a portion of lost wages for employees. Workers compensation insurance can also cover death benefits if an employee is killed on the job and it can protect employers from lawsuits arising from workplace injuries.
How to Get a Food Truck Insurance Quote
Getting a quote for food truck insurance is similar to the process involved with other types of insurance. If you use an insurance broker, they’ll make the process easier by helping you choose the best insurance provider and helping you apply.
Here are the primary steps you’ll take to get a food truck insurance quote:
Gather the Information
Before applying for food truck insurance, and to get the most accurate quotes on rates, you’ll need to provide the insurance agent or broker some basic information that will help assess how much of a risk you might be to the insurer. This will also help to determine what coverage you need and how much it will cost.
Here’s the information you’ll need to gather before getting quotes on coverage and rates:
- Business legal name, address and contact information
- Number of employees
- Revenue forecast for next year
- Number of years you’ve been in business
- Other insurance policies and coverage you may already have
- Details of your daily business operations and risks involved
- Year, make, model, VIN, and estimated value of your food truck
- Types and replacement cost of equipment you use
- Types and amount of coverage you’re interested in
Find a Broker & Apply
You can do the research to find an insurance agent that specializes in food truck insurance but it will be easier to use a broker that can find the best insurance company to fit your needs. A broker will add some additional costs to your premiums but they can still prove to be a value by shopping for the best rates and coverage for you.
When looking for a broker, be sure to find one that has experience working with several different insurance companies. The broker’s experience and knowledge of various providers will be helpful in finding you the best coverage types at the best cost. Referrals from other business owners and online resources are good tools for finding a broker.
Where to Get Food Truck Insurance
As with other financial decisions, business owners are wise to get at least three quotes from different insurance companies to compare costs and coverage. There are two primary ways to buy food truck insurance and some useful resources to do your research for the best coverage and rates:
- Insurance Agent: If you contact the insurance company directly, you’ll likely work with an agent that represents that one agency. Be sure to get quotes from at least three agencies.
- Insurance Broker: When you work with a broker, their doing most of the work for you. A broker can help you shop multiple national insurers and guide you toward the best coverage with the most competitive pricing.
- Online Insurance Search Tools: When doing research for the best food truck insurance to suit your needs, an independent consumer information source, such as the NAIC or DMV.ORG, can help find reputable insurance providers to narrow down your choices.
Be sure to do your homework and choose the provider that has the best combination of coverage and cost to suit your needs and not necessarily the lowest premiums. In different words, focus on the value of the insurance more than the cost. Also, insurance agents should be helpful and informational and not too eager to make a sale. Once you’ve purchased food truck insurance, make sure you have easy access to your certificate of liability insurance (proof of your insurance) which can be requested by venues, suppliers, and clients on short notice.
Food truck insurance actually describes a number of types of insurance rolled up to meet the unique needs of food truck businesses. While the coverage is essential to protect against risks, small business owners should shop around to make sure they’re getting a good deal on their policy.
Getting the right insurance for a food truck doesn’t have to be hard. Speak with a reputable insurance agency, like the food truck experts at CoverWallet, and have your specific business reviewed. They’ll make sure you have the coverage you need at a price you can afford. Get a free, no obligation quote in minutes.