Food Truck Insurance Cost, Coverage & More

Food truck insurance uses several different insurance policies to cover food trucks, other business property, employees, and other liabilities. Most food truck businesses need more than one type of insurance coverage, including commercial vehicle insurance and general liability. Basic food truck insurance costs start around $2,000 annually but increase significantly for broader coverage.

Food truck insurance costs often vary because the insurance needs of each business are unique. However, the right coverage will help keep the wheels rolling. Insurance321 is an insurance marketplace that connects you with brokers, agents, and carriers to protect your business in a few quick steps.

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Top Food Truck Insurance Providers

Insurance321

Insurance321 is an online broker that partners with top insurance carriers in the country to find the right policy at the right price for clients. This broker uses proprietary software to save clients’ time when shopping for policies, and Insurance321 gives small business owners top-rated options without the hassle of doing it on their own.

Insurance321 is a great option for a food truck owner who isn’t sure what company to choose for his food truck protection and liability coverage. With one quick online application, the food truck owner can go back to running his business while Insurance321 does all the shopping for him. Food truck owners with employees or other business property can also get coverage for these through Insurance321.

Progressive Commercial

Progressive Commercial is a branch of Progressive Insurance that’s focused on the insurance needs of small business owners. Progressive is known nationally as a reliable auto insurance provider, and their experience in vehicle risk and claims gives them an edge in providing the right types of policies for businesses on the road, including food trucks, ice cream trucks, and vending trucks.

Progressive Commercial is a good choice for a food truck business with more than one truck or cart in its fleet. Business owners who choose Progressive can also get coverage for all lines of business insurance, with discounts for combining policies such as a business owner’s policy and commercial auto.

Food Liability Insurance Program

The Food Liability Insurance Program (FLIP) is a specialty broker that caters to those who prepare and serve food. To meet the needs of these small business owners, FLIP has partnered with Great American Insurance Group, which underwrites the policies and offers an A+ Superior rating for financial strength.

FLIP is a great choice for a food business that has operations in multiple areas of food service and delivery. For catering companies, farmers markets vendors, private chefs, and concessions contractors, FLIP is able to underwrite the risk quickly and, in most cases, provide coverage on the same day.

Insure My Food Truck

Insure My Food Truck is a national broker that partners with large carriers to insure the specific risks of food truck businesses. This niche broker seeks to educate as well as insure clients about the real risks of owning a food truck. Insure My Food Truck also has sister companies for food trailers and restaurateurs.

Insure My Food Truck is a great option for a food truck owner who wants a broker who speaks his foodie language. As a small brokerage specializing in food trucks, this provider doesn’t miss a beat when it comes to helping food truck owners understand and protect the real risk of claims that can shut down their business.

Farmers Insurance

Farmers Insurance is a large national insurer with a growing appetite for commercial insurance. While many other carriers take a wait-and-see attitude toward new market risks, Farmers starts implementing new solutions. The carrier is a national leader in property and casualty insurance. Small business owners are able to find multiple solutions extending beyond food truck liability insurance.

Farmers Insurance offers a restaurant business owner’s policy that includes vehicle coverage, making it one of the most comprehensive policies for food truck owners. The Farmers’ specialized food truck business owner’s policy reduces the need to buy multiple policies and wonder if coverage has gaps. Farmers clients also have the convenience of all insurance lines in one convenient local office.

What Food Truck Insurance Is

Food truck insurance covers a broad range of risks, including various liabilities from business operations, employee injuries, and damage to the food truck or business property from vandalism, accident, or theft. The coverage options available within a policy allow a food truck business to tailor insurance to its specific needs.

Not only do food trucks fall into the high-risk category of restaurants and food prep where fires and food-borne illness are concerns, but they are on the road increasing the chance of vehicular accidents. Food trucks are also targets of vandals and thieves seeking joy rides with the trucks, often resulting in business property damage and loss.

Commercial Auto Policy Coverage Options

Personal auto insurance will not cover accidents or losses that happen when the vehicle is used for business. Commercial auto insurance is required for any vehicle used for business purposes. However, some carriers allow certain smaller vehicles to insure through personal auto policies that are less expensive and identify the vehicle as a “business use” vehicle.

Business Property Insurance Coverage

Commercial auto collision or comprehensive coverage won’t cover your food truck equipment that isn’t affixed to the truck. You need business property coverage to cover things like pots, pans, utensils, and the many supplies needed to effectively run your business. There are two options for business property and contents coverage: actual cash value or replacement cost.

The actual cash value of business property is the replacement cost minus depreciation, while replacement cost is whatever it takes to make you whole again. Replacement cost is the more expensive coverage option because it uses current new costs rather than used equipment pricing.

General Liability Insurance Coverage

Food trucks have liabilities that extend beyond vehicle accidents. Injuries and property damage to third parties not resulting from auto accidents or employee-related incidents are significant risks that need to be covered by general liability insurance. This insurance covers foodborne illness or any other injury or property claim arising from general business operations.

Perhaps more importantly, general liability can also cover the expensive legal fees associated with lawsuits. These defense costs add up quickly regardless of whether you win or not. Most small business owners cannot afford legal fees, and could be forced to close their doors without general liability protection.

Workers’ Compensation Coverage

Workers’ compensation covers the costs of injuries to employees hurt when working. This coverage pays the costs of medical expenses, prescription medication, rehabilitation treatment, and wages after the employee gets hurt on the job. Every state in the U.S., with exception of Texas, requires workers’ compensation insurance, though coverage requirements vary among states.

Workers’ compensation insurance can also cover death benefits for employees who are killed on the job, and can protect employers from lawsuits arising from workplace injuries. This coverage can transition into long-term disability payments if an employee’s injuries are significant enough that he is deemed permanently disabled.

Food Truck Insurance Costs

Food truck costs vary depending on how many trucks you have in your business, your total number of employees and payroll, the value of equipment and supplies, and policy coverage choices. Small business owners should expect to pay a minimum of $2,500 per year for commercial auto and a basic business owner’s policy to cover general liability and business property.

Food Truck Insurance Costs & Deductibles

Note that the premium ranges are median estimates and vary by provider, state, business size, and selected coverages. Some of the factors for determining your food truck insurance cost, such as the coverage limits and deductibles, are based on the decisions you make, while others are based on factors beyond your control.

Factors insurance companies use to determine food truck insurance costs include:

• Type of business: Food truck businesses carry more risks than others. Because the risks of individual businesses vary, the total cost of insurance can be higher in some cases.
• 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.
• Value of business property: Although the equipment needed for your food truck can total $10,000 or more, these costs are not always significant for all small businesses. Repair cost can also be minimal and the risk of repair is low with newer equipment.
• Replacement cost versus actual cash value: Insurance premiums will be higher if you choose replacement cost coverage rather than the cash value of your equipment.
• Employee payroll: Workers’ compensation premiums are based on payroll costs and the types of work that employees perform.
• Coverage amount: If you choose minimal coverage, premiums will generally be lower. Higher coverage amounts translate to higher premiums.
• Deductibles: Higher deductibles translate into lower premiums because you take on greater financial risk. Just be sure you have sufficient cash available to cover your deductible, should the need arise.

Food truck owners should work with insurance carriers to tailor food truck insurance policies that provide the best coverage without breaking the bank. Consider increasing deductibles to increase coverage on bigger financial risk areas such as total loss or third-party lawsuits.

Pro Tip: Adding “Additional Insured” to General Liability Insurance

Insurance isn’t just for you the food truck owner. It’s also a necessary requirement to get lucrative corporate catering events and festivals. And to get these gigs, it may cost extra money to raise insurance coverage to meet their requirements and/or to add those venues and clients as “additional insured”.

Some insurers charge $100 or more per additional insured (per event) while other insurers make this temporary change to the policy for free. If you’re going to be focusing your business on catering or festivals, which typically come with extra “additional insured” requirements, it’s a good idea to factor in these hidden costs when comparing insurance policies.

– Tyler Kalin, Senior Manager, Roaming Hunger Marketplace

Commercial Auto Policy Collision Coverage

Collision coverage pays for expenses including repairs from damages resulting from a collision or auto accident. The coverage amount should cover the replacement cost of your food truck and all affixed items in it less your deductible. These coverages aren’t insignificant, as food trucks are often worth $50,000 plus another $10,000 in affixed cooking stations and equipment.

Commercial Auto Policy Comprehensive Coverage

Comprehensive coverage protects you from not-at-fault incidents that might include a tree falling on the truck, theft, vandalism, or fire. Comprehensive food truck coverage only covers the items attached to the vehicle, and is essential for trucks with expensive custom build-outs. Supplies stored in the truck are not covered by comprehensive coverage and need to be covered as business property.

Commercial Auto Policy Liability Coverage

The liability portion of your food truck insurance covers damage resulting from property damage or bodily injury to a third party resulting from an at-fault auto accident with your food truck. Many commercial insurance providers offer liability coverage under one combined limit, usually up to $1 million, whereas personal auto liability normally has two limits, one for each occurrence and one per occurrence.

Food Truck Insurance Coverage Example

A new food truck owner parks near a local beach community in Oceanside to sell his Baja fish tacos. The refrigeration unit has a glitch, causing a rise in temperature within the unit unknown to the food truck owner. Twelve people get food poisoning from bad shrimp before he realizes the issue and shuts the truck down for repairs.

His general liability insurance policy covers the medical expenses of the 12 people who got food poisoning. His equipment breakdown coverage should pay for the cost to repair or replace his refrigerator. The $1,000 of food remaining the refrigerator is covered by the spoilage coverage option, and the lost revenues are covered by business interruption.

Tips on Applying for Food Truck Insurance

Different insurance carriers have different underwriting standards when it comes to food truck insurance. The insurance company will consider the type of food made, the equipment used, and the overall value of the food truck and equipment. Premiums are partially based on annual revenues and years of experience owning a food truck or working in the food service industry.

Gather Important Documents

A food truck insurance application requires details about the truck, drivers, business registration, permits, and revenues. Have truck registration and business permits on hand along with payroll records and employee driving records. List and tally the value of business property and supplies you have. This information will help you to get the most accurate quote.

Shop Rates Among Carriers or Use a Broker

Every insurance carrier has their own appetite for certain risks, which means each company’s rates will vary for different industries. Shop rates among various carriers, making sure each uses the same information provided to previous carriers. A commercial insurance broker helps make this process faster by taking one application from you and doing the shopping on your behalf.

Establish Safety Protocols for Your Food Truck

Insurance companies will want to know your policies and procedures for cooking, parking, and access to the food truck. Food trucks with gas grills are fire and explosion hazards. The added exposure of driving a large vehicle on highways is another concerning exposure. Demonstrate your understanding of these risks by creating a detailed safety plan, safety notices, and employee training programs to become eligible for premium discounts.

Food Truck Insurance Frequently Asked Questions (FAQs)

While this article aims to answer a lot of questions about food truck insurance, you may have questions that aren’t answered above. Below are some of the most frequently asked questions about food truck insurance.

What are the most common claims for food trucks?

The most common food truck claims are theft, fire, and equipment breakdown. Food trucks are a big target for theft due to unsecure locations to store food trucks when not in use. Fire claims are common, as is equipment breakdown leading to spoilage and the inability to sell products.

What are the least common claims for food trucks?

As much as food truck owners are concerned about food poisoning and foodborne illness claims, these are not claims frequently reported to food truck insurers. However, just because it isn’t common, it shouldn’t be ignored. One foodborne illness outbreak could cost millions, so it’s important to make sure you have adequate general liability insurance.

How can a food truck owner keep insurance premiums down?

Food truck owners can do several things to keep costs down, but none more important than keeping claims down. This is best achieved by hiring good people who are well-trained in not just cooking, but also cleaning, shutting down, and implementing all safety and security measures.

Bottom Line

The food truck industry has seen significant growth over 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 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 Insurance321 and you can get matched with the perfect carrier to insure your food truck. Complete your simple online application in just a few minutes to get a free quote today.

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