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Food trucks are becoming a popular option for many cities to serve their residents. However, food truck owners often have no coverage and must take out loans in order to cover the high cost of starting up. This guide will help you understand what insurance is available as well as explore some alternatives that may be better suited for your business.
When it comes to food truck insurance, you may need many policies to protect your vehicle as well as other company property, personnel, and other liabilities. Most food truck enterprises, in general, need many types of insurance coverage. The cost of basic food truck insurance (commercial vehicle and general liability) is $3,260 a year, but it rises as you add coverage.
Food truck operators often need a variety of insurance policies, which may be costly. The correct coverage, on the other hand, keeps the wheels turning. CommercialInsurance.net is a referral service that links you with brokers, agents, and carriers that can help you cover your company in just a few clicks.
How much does it cost to insure a food truck?
The cost of a food truck varies based on a number of variables, including the number of vehicles in your company, the total number of workers, the value of your equipment and supplies, and your coverage options. The majority of food truck operators should budget $2,300 per year for commercial car insurance and $1,260 for a basic business owner’s policy (BOP) that includes general liability and commercial property insurance.
Costs of Food Truck Insurance by Policy
Every insurer has its own method for calculating the cost of food truck insurance. Many of the elements they take into account are aspects of your company, such as:
- Your premium: Working in high-crime locations or solely working at street fairs, for example, might have an influence on your premium.
- Business property value: In addition to insuring your food truck and any permanently connected equipment, you may also need coverage for the contents of the vehicle.
- Employee payroll: Premiums for workers’ compensation are determined by payroll expenses and the kinds of labor performed by employees.
Other considerations include the decisions you make concerning your insurance, such as:
- Coverage limits: Choosing a lesser coverage limit means reduced rates. Choosing fewer policies has the same effect.
- Higher deductibles generally translate to reduced rates since you assume more financial responsibility if you submit a claim.
- Replacement cost vs. actual cash value: A property insurance with replacement cost coverage is more expensive since it covers the full worth of your equipment, ignoring depreciation.
- Adding more insureds: You may need to register your customers as additional insureds if you want to acquire lucrative corporate engagements and festivals. Many insurers do not charge for this, but others do charge as much as $100 for each request.
The Most Important Food Truck Insurance Policies
The four policies listed below are the ones that most food truck operators need. Your scenario, however, may need a different level of protection. Most importantly, if your food truck company is just getting started, you generally won’t require workers’ compensation. When it comes to purchasing a food truck, we suggest dealing with one of the best food truck insurance providers. Their representatives can determine your specific dangers and guide you to the appropriate resources.
Insurance for Commercial Vehicles
Insurance for Commercial Vehicles 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: If your food truck is damaged in a collision with another vehicle or an object such as a tree or a railing, collision coverage pays for the repairs.
- Comprehensive coverage compensates you for damage caused by events other than an accident, such as hail, vandalism, or fire.
- Uninsured/underinsured motorist insurance covers damages like repair costs, medical expenditures, and missed earnings if you’re in an accident caused by a driver who doesn’t have enough liability insurance.
Note: Insurance for Commercial Vehicles 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.
Property Insurance for Businesses
If you were to flip your food truck upside down, then Property Insurance for Businesses 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) protects your commercial property for its replacement cost less depreciation.
- Replacement cost coverage: Replacement cost coverage protects your property up to the policy limits for whatever it takes to make you whole again. Because the insurance company pays more if you submit a claim, this is sometimes seen to be the more costly alternative.
Pro tip: Property Insurance for Businesses 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.
Insurance for General Liability
Food trucks have liabilities that extend beyond vehicle accidents, and the most common ones are covered by Insurance for General Liability. General liability policies also cover your legal fees if someone who doesn’t work for you claims your business is the source of:
- A client slips and falls in frying oil that your staff spilled.
- Your propane tank bursts, causing damage to the structure where you’re parked.
- A graphic designer says you exploited their copyrighted design for your logo, causing you reputational damage.
Theft, fire, and equipment malfunction are the most prevalent food truck claims. Meanwhile, food poisoning and foodborne diseases are the least prevalent claims filed by food truck operators. These claims, whether widespread or not, should not be dismissed, particularly foodborne disease claims, which may cost millions of dollars. Owners of food trucks should have proper liability insurance.
What If I Told You
While your food truck is mobile, the liability portion of your Insurance for Commercial Vehicles covers injuries you cause third parties. Once you’re parked, however, your Insurance for General Liability takes over.
Insurance for Workers’ Compensation
Insurance for Workers’ Compensation covers the costs of injuries to employees hurt while working. It pays the costs of:
- Health-care costs
- Medications on prescription
- Treatment for rehabilitation
- Wages that have been lost
Workers’ compensation can also protect employers from lawsuits over workplace injuries. Every state in the United States except Texas requires Insurance for Workers’ Compensation, although coverage requirements vary among states.
BOP
Opting for a BOP is one method to save money on food truck insurance. You can generally acquire a BOP for less money if you buy general liability and commercial property coverage together than if you buy them individually. Furthermore, most BOPs provide business interruption insurance as a bonus.
If you run a food truck, a BOP makes sense since it not only combines general liability and commercial property coverage into one policy, but it also saves you money on yearly insurance costs.
Example of Food Truck Insurance Coverage
Assume you’re a new food truck entrepreneur in a seaside town offering fish tacos. Unfortunately, your refrigeration unit’s motor fails without your knowledge, and 12 clients get ill before you can shut down operations.
Your Insurance for General Liability policy covers your customers’ Healthcare costs, 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.
Food truck proprietors should decrease the chance of claims in order to keep expenses low. Hiring excellent employees who are properly trained in cooking, cleaning, closing down, and applying all safety and security procedures may help accomplish this.
Conclusion
The food truck business has grown significantly over the last decade, resulting in a growing need for customized insurance solutions. Food truck businesses must now address the particular dangers of mobile stoves, gas cooking, and a variety of possible liability problems, such as foodborne disease and vehicle accidents.
It doesn’t have to be difficult to get the correct food truck insurance for your small company. Speak with the professionals at CommercialInsurance.net to find the right insurer to insure your food truck. Get a free quotation now by completing your easy online application in just a few minutes.
Frequently Asked Questions
What costs are associated with a food truck?
Food trucks are not cheap. They require a lot of upfront capital, like any other business startup costs. These include rent for the space and equipment to run it (like an oven), licenses, payroll taxes, and more.
What are the initial costs of a food truck?
The initial costs for a food truck depend on the type of operation, but most start with an equipment budget as well. It is not uncommon to see investors cover some or all of this cost.
Are trucks expensive to insure?
Because of their size, the cost to insure a truck is more expensive than other vehicles. It’s not just the physical damage they can cause but also property and liability damages that could be incurred if an accident occurred with them on the road.
