Food Truck Insurance: Cost & Coverage
Nancy Fernandez is a Credit Card and Insurance Expert at Fit Small Business, specializing in business credit cards and business insurance.
When considering food truck insurance coverage, you may need several different insurance policies to cover your truck and other business property, employees, and additional liabilities. In general, most food truck businesses do need more than one type of insurance coverage. Basic food truck insurance (commercial auto and general liability) starts at $3,260 annually but increases as you expand your coverage.
Food truck owners usually need several different coverages, and that can get expensive. However, the right coverage helps keep the wheels rolling. CommercialInsurance.net is a referral service that connects you with brokers, agents, and carriers that can protect your business in a few quick steps.
How Much Does Food Truck Insurance Cost?
Food truck costs vary depending on a variety of factors, such as how many trucks you have in your business, your total number of employees, the value of your equipment and supplies, and your coverage choices. The majority of food truck owners should expect to pay a minimum of $2,300 per year for commercial auto and a minimum of $1,260 for a basic business owner’s policy (BOP) that combines general liability and commercial property.
Food Truck Insurance Costs By Policy
Policy | Annual Premium Estimate | Coverage Amount | Deductible |
|---|---|---|---|
Commercial Auto | $2,300 to $4,200 | $1 million | $500 |
General Liability | $960 to $1,900 | $1 million per occurrence $2 million aggregate | $0 |
Business Property | $300 to $550 | $25,000 | $500 |
Workers’ Compensation | $1,600 to $3,000 | N/A | $0 |
BOP | Median estimates at $1,260 | $1 million per occurrence | $1,000 |
Every insurer has its own way of determining how much your food truck insurance costs. Many of the factors they consider are characteristics of your business, such as:
- Business location: Frequenting high-crime areas or only working street fairs, for example, can impact your premium.
- Business property value: Not only do you have to insure your food truck and any permanently attached equipment, but you may also need coverage for the other items inside the truck.
- Employee payroll: Workers’ compensation premiums are based on payroll costs and the types of work that employees perform.
The other factors that come into play are the choices you make about your coverage, such as:
- Coverage amounts: Choosing a lower limit translates to lower premiums. The same goes for opting for fewer policies.
- Deductibles: Higher deductibles usually mean lower premiums because you take on greater financial responsibility if you file a claim.
- Replacement cost versus actual cash value: A property policy with replacement cost coverage costs more because it covers the value of your equipment without taking depreciation into account.
- Adding additional insureds: If you want to get lucrative corporate gigs and festivals, then you may need to add your clients as additional insureds. Many insurers don’t charge for this, but some charge as much as $100 each time you make a request.
Key Food Truck Insurance Policies
Policy | What It Covers |
|---|---|
Commercial Auto | Damage to your business-owned vehicles and your liability in accidents |
Business Property | The value of your business-owned property |
General Liability | Third-party allegations of property damage, physical injury, or reputational harm |
Workers’ Compensation | Injured workers’ medical bills and lost wages |
BOP | Combines general liability and business property coverage |
The following four policies represent the insurance most food truck owners need. However, your situation may require different coverage. Most notably, if you’re just starting your food truck business, then you probably don’t need workers’ compensation. We recommend working with one of the top food truck insurance companies when it’s time to buy. Their representatives can identify your unique risks and point you in the right direction.
Commercial Auto Insurance
Commercial auto insurance is a fundamental policy for any business that uses vehicles, but it’s especially important for food trucks because your vehicle essentially is your business. Most states require liability for any vehicle to pay for the damage they cause. As a food truck owner, however, you may want to add other coverages, such as:
- Collision: Collision coverage pays for repairs if your food truck is damaged in a collision with another car or some other object like a tree or a guardrail.
- Comprehensive: Comprehensive coverage pays for the damage caused by incidents other than a collision, such as hail damage, vandalism, or fire.
- Uninsured/underinsured motorist: If you’re in an accident caused by a driver with insufficient liability insurance, uninsured/underinsured motorist insurance covers losses like repair bills, medical expenses, and lost wages.
Note: Commercial auto insurance only covers your food truck and permanently attached equipment. A good way to imagine this is if you could pick up your truck and hold it upside down. Anything that falls out wouldn’t be covered by your commercial auto policy.
Business Property Insurance
If you were to flip your food truck upside down, then business property insurance would cover all the things that fall out, like pots, pans, utensils, and anything else that isn’t bolted down or otherwise permanently attached. Policies typically have two coverage options:
- Actual cash value coverage (ACV): An ACV policy insures your business property for its replacement cost minus depreciation.
- Replacement cost coverage: Replacement cost coverage insures your property for whatever it takes to make you whole again, up to the policy limits. This is sometimes considered to be the more expensive option because the insurance company pays more if you file a claim.
Pro tip: Business property insurance only covers damage caused by external forces, such as fire or vandalism. Mechanical breakdowns (like a short in your generator) require equipment breakdown coverage. If this is a concern for your food truck, be sure to ask your agent about the additional coverage.
General Liability Insurance
Food trucks have liabilities that extend beyond vehicle accidents, and the most common ones are covered by general liability insurance. General liability policies also cover your legal fees if someone who doesn’t work for you claims your business is the source of:
- Physical injury: A customer slips in cooking oil your employee spilled.
- Property damage: Your propane tank explodes, damaging the building where you’re parked.
- Reputational harm: A graphic artist claims you used their copyrighted design for your logo.
The most common food truck claims are theft, fire, and equipment breakdown. Meanwhile, the least common claims made by food truck owners are food poisoning and foodborne illnesses. Whether they’re common or not, these claims shouldn’t be ignored, especially for foodborne illness claims, as they can cost millions. Food truck owners should have adequate liability insurance for these.
Did You Know?
While your food truck is mobile, the liability portion of your commercial auto insurance covers injuries you cause third parties. Once you’re parked, however, your general liability insurance takes over.
Workers’ Compensation Insurance
Workers’ compensation insurance covers the costs of injuries to employees hurt while working. It pays the costs of:
- Medical expenses
- Prescription medication
- Rehabilitation treatment
- Lost wages
Workers’ compensation can also protect employers from lawsuits over workplace injuries. Every state in the United States except Texas requires workers’ compensation insurance, although coverage requirements vary among states.
BOP
One way to save on your food truck insurance costs is to opt for a BOP. By combining general liability and business property coverage, you can usually get a BOP at a lower rate than if you purchased the policies separately. Plus, most BOPs have the added bonus of including business interruption insurance.
If you’re a food truck owner, it makes sense to consider a BOP, as you not only get the packaged version of both general liability and commercial property in one single policy, but you can also save on annual insurance premiums.
Food Truck Insurance Coverage Example
Let’s say you’re a new food truck owner selling fish tacos in a beach community. Unfortunately, the motor in your refrigeration unit breaks down without you realizing it, and 12 customers get food poisoning before you shut down operations.
Your general liability insurance policy covers your customers’ medical expenses, and your equipment breakdown coverage should pay to repair or replace your refrigerator. If you have a food spoilage endorsement, you’re covered for the fish that’s spoiling in your refrigerator. Of course, the extent to which these losses are covered depends on your coverage limits.
Pro tip: To keep costs down, food truck owners must reduce the likelihood of claims occurring. This can be achieved by hiring good people who are well trained in cooking, cleaning, shutting down, and implementing all safety and security measures.
Bottom Line
The food truck industry has seen significant growth during the past decade, and with that growth has come a higher demand for custom insurance solutions. Today, food truck owners should consider the unique risks of mobile stoves, gas cooking, and a myriad of potential liability issues, ranging from foodborne illness to auto accidents.
Finding the right food truck insurance for your small business doesn’t have to be hard. Speak with the experts at CommercialInsurance.net, and you can get matched with the ideal carrier to insure your food truck. Complete your simple online application in only a few minutes to get a free quote today.
