Food vendor insurance is a policy or a combination of policies that protect businesses from the financial loss of a claim. This can be a liability claim alleging negligence by the food vendor or a loss to business property. The average annual cost for the most common policy, general liability, ranges from $350 to $1,000. Food vendors should also consider other types of coverages: property, auto, and workers’ compensation.
“Food vendor” is a broad term encompassing concession stands, food carts, coffee carts, home bakers, and even food trucks. Helpfully, the Food Liability Insurance Program (FLIP) offers specialized coverage for all of those businesses. The company makes it easy to get insured—you can get a quote and purchase insurance in minutes.
Who Needs Food Vendor Insurance?
Any business selling food in nontraditional locations, such as concession stands, street fairs, public sidewalks, and outdoor venues, should consider food vendor insurance. Typical small businesses that need food vendor liability insurance include the following:
- Food trucks
- Food trailers
- Food carts
- Caterers
- Concessionaires
- Personal and private chefs
- Restaurants at an event
- Cottage bakery
- Farmers’ market vendors
Not only is it a good idea to have insurance for your business, but, in many instances, you’ll also be required to do so—especially if you sell your food at fairs, shows, or events. This is because most events, even one-day events, require food vendor insurance. Each venue has its own requirements and may want to be listed as an additional insured on your certificate of insurance (COI).
Given the need in your industry to adjust your policy with additional insureds, make sure you pick a food vendor insurance company that makes it easy for you to make these changes and quickly show proof of insurance.
Food Vendor Insurance Costs
Insurance isn’t one size fits all. The type of coverage you need depends on your business: its size, the scope of your operations, and the number of your employees will all impact what food vendor insurance you need. For example, if you are a food truck owner with employees, then you should consider food truck insurance and workers’ compensation insurance.
| Policy | Annual Premium | Coverage Amount |
|---|---|---|
| General Liability | $350-$1,000 | $1 million per occurrence and $2 million aggregate |
| Business Owner’s Policy | $900-$3,000 | $1 million per occurrence, $2 million aggregate, and $5,000 in property coverage |
| Business Auto | $1,300-$5,000 | $500,000 combined single limit for bodily injury and property damage |
| Inland Marine | $350-$800 | Dependent on the value of the business property |
In nearly every state, workers’ compensation is a required coverage for businesses with employees. However, the
is calculated using a formula that includes your industry, claims history, and the number of workers. Thus, the price can vary significantly even within the same industry.
Insurance companies use a variety of factors to determine the premium, and the risk exposure your business creates is a big part of its evaluation. It does so by gathering data about your business. Anytime you get a quote, be prepared to answer questions related to your business.
- Claims history: Have you had any previous claims, especially in the last three to five years?
- Operations: What does your business do? Do you grill or fry? Do you regularly use liquefied petroleum gas (LPG)?
- Location: What area does your food cart usually serve?
- Employees: How many full-time and part-time employees are there? Did you perform background checks on them? Have any employees ever been accused of any crimes?
- Value: What physical assets do you need to insure, and what is their value?
- Equipment: What is the value of any installed equipment? A food truck with $15,000 worth of installed equipment will pay less than one with installed equipment worth over $30,000.
- Alcohol: Does your company serve alcohol, or is it a bring-your-own-bottle (BYOB) establishment? Liquor liability can be a costly insurance to purchase.
While this list isn’t exhaustive, it gives you a good idea of the type of information that is important to food vendor insurance companies. Keep in mind that many providers will only offer online quotes for smaller operations with revenue of less than $200,000. If you have a larger business, you will likely receive a higher premium and may need to speak with an agent to get a quote.
When beginning the process of finding insurance, start on the right foot and answer the questions as honestly as you can. Truthful answers can help the provider accurately determine which coverage is best for your business.
There are several ways to save money on insurance. We’ve put together a list of tips on getting affordable yet quality coverage in our guide to finding
.
Food Vendor Insurance Policies & Coverage
General liability insurance and commercial property insurance are the two most common policies a food vendor will need. If the business has more than one employee, workers’ compensation is likely required, too. If you transport your equipment or operate a food truck, then you will need commercial auto insurance. Depending on how the policy is structured, you may need inland marine coverage to provide first-party protection for your cart or equipment.
| Coverage | What It Covers |
|---|---|
| General Liability | Third-party claims for bodily injury, property damage, and advertising injury |
| Commercial Property | Damage to business-owned assets, such as building, equipment, and inventory |
| Commercial Auto | Property damage and bodily injury for accidents that are considered to be your fault |
| Inland Marine | Tools and equipment that you take with you to different locations |
| Workers’ Compensation | Employees medical bills and lost wages after a work-related illness or injury |
General liability insurance is the most common type of policy a food vendor will need to purchase. A general liability policy offers broad protection against claims for which your business is legally liable. The areas of coverage that general liability offers include the following:
- Bodily injury
- Product liability (think: food poisoning)
- Property damage
- Advertising injury and reputational harm
- Damage to rented premises
- Premise liability
General liability can help you if someone trips on a hose attached to your food cart and then falls and is injured, or if your cart becomes unsecured and rolls into another vehicle, causing property damage.
Your food cart, equipment, and trailer cost money. If something happens to one of them, you are not only faced with the cost of repairing or replacing it but also the lost income while the item is not working. This is why you should consider commercial property insurance—it can provide coverage for your equipment.
Policies are usually written on a named-peril basis, meaning what happens to something has to be specified in the policy to be covered. Examples of named perils include the following:
- Fire: If your business suffers fire or smoke damage
- Theft: If someone steals some of your equipment
- Wind: If the wind blows your cart over and damages it
For smaller businesses, most insurance companies offer a business owner’s policy (BOP). This is a combination of liability and property insurance, with some additional coverage like lost business income. Some BOPs for food vendors come with equipment breakdown coverage. If not, then look for this endorsement, which can help repair or replace damaged equipment.
While some providers, like FLIP, do offer an endorsement to extend general liability to the trailer, you’ll likely need more coverage. Food trucks, food trailers, and operations regularly using a vehicle for business purposes will need commercial auto insurance.
Just like with a personal vehicle, you’ll be required to carry liability insurance that will handle property damage and bodily injury for accidents that are determined to be your fault. Depending on the value of your vehicle or if you have a loan, you’ll want to look into the collision and comprehensive first-party coverages.
Inland marine insurance covers equipment that moves around a lot. Unlike commercial property, which limits coverage to a location, inland marine isn’t limited by location. So, if your food cart or concession stand is in a different location regularly, then check your property policy to see if coverage exists and, if not, then get quotes for inland marine insurance.
Nearly every state requires you to carry workers’ compensation insurance if you have at least one employee. This important policy takes care of your employees if they are injured or become ill as a result of work-related activities by paying for medical bills and replacing their lost wages. It can also provide some protection for your business if the injured employee decides to sue.
Not only is workers’ comp required in nearly every state, but workers’ comp claims can also be costly if you don’t have any coverage. According to the National Safety Council, the average cost of a workers’ comp claim for a burn injury is $52,222.
Other Types of Food Vendor Insurance
While these coverages are narrower in their focus, depending on your food vendor insurance, these may be policies you should consider:
Special Event Insurance
If your food vendor business is either participating in an event or involved with hosting one, you’ll want to check on what type of insurance the venue requires. Because your regular policy—especially if you are a brick-and-mortar restaurant—may not have any off-premises coverage. In that case, you’ll need some form of special event insurance, a type of short-term liability policy.
Liquor Liability
Unfortunately, general liability insurance has exclusions for losses related to alcohol. Fortunately, there’s insurance for that. Liquor liability is a specialized type of liability insurance, so if you have a mobile bar business or your cart serves beer with those hotdogs, then you’ll need liquor liability. Some providers will make this coverage available as an endorsement with general liability insurance.
Hired and Non-owned Auto
How are you getting your cart around, and how frequently are you pulling it to locations for business? Depending on the language of your personal auto policy, there may be a liability exclusion if the purpose of use for your vehicle is primarily hauling a food cart around for your business. In that case, an endorsement on general liability, as well as hired and non-owned autos, is a good idea. This extends your general liability coverage to the vehicle being driven.
Best Food Vendor Insurance Companies
- FLIP: Best overall food vendor insurance provider
- Simply Business: Best for comparing quotes for food liability insurance
- ERGO – Next Insurance: Best for food carts
- Progressive Commercial: Best for food trucks
FLIP: Best Overall Food Vendor Insurance Provider
Simply Business: Best for Comparing Quotes for Food Liability Insurance
ERGO – Next Insurance: Best for Food Carts
Progressive Commercial: Best for Food Trucks
Frequently Asked Questions (FAQs)
General liability insurance costs for food vendors can range from $350 to $1,000 annually. Costs vary depending on the size of your business, your cooking operations, and the type of food vendor.
If you have any employees, workers’ compensation will be legally required—unless you are in Texas or South Dakota. Beyond that, liability insurance for food vendors or general liability may be required depending on how your business operates because most venues will require proof of general liability to sell on their premises.
Whether located in a brick-and-mortar building or operating as a mobile enterprise, food businesses require a license to operate. You will want to check with your local government to find out what is required and how to go about getting a license to operate.
You can purchase insurance directly from a provider, like ERGO – Next Insurance, via a broker, like Simply Business, or from an agent. There is no right way—it really depends on what works best for your business.
One of the best ways to bring down the costs of business insurance is to manage your risk exposure. If your business serves alcohol, ensure you implement Training for Intervention Procedures (TIPS) and other relevant training for your servers, which is important for insurance companies. Revisiting hours of operation and demonstrating an intentional plan for checking food temperature and equipment are all important for building a case that your business takes risk seriously.
Bottom Line
Food vendor insurance is a policy, or combination of policies, that protects your business from losses you may face as a result of any liability of a first-party property claim. The core policies are general liability and property.
As a food vendor, you know that every day is different and presents unique challenges that require quality insurance tailored to your business. FLIP is the overall best provider for food vendor insurance and has the policies, coverages, and services you need.
