Starting a new food truck business can be tricky, but your insurance coverage doesn’t have to be.
Food trucks are delicious and comes in many forms, from mobile catering, concession, vending, gourmet, or ice cream trucks or trailers.
To protect the company and any employees, you will need customized insurance coverage that matches your business needs.
The cost of food truck insurance depends on the policies you choose, the risks associated with the food you sell, the value of your business equipment, and other business factors.
Before getting insurance, make sure you gather all the necessary licenses, authorities, and registration requirements for the types of loads and areas you plan to haul.
Let’s dive into the food truck insurance coverage options.
Basic food truck insurance coverage
There are two main insurance coverages you need as a food truck business. These are general liability insurance or commercial auto (physical damage) coverage.
General Liability protects your food truck business against financial liabilities that result from accidents for which you are legally liable. This can include a customer becoming ill from contaminated food or being burned by hot food.
General liability coverage protects food trucks against customer injuries and customer property damage, along with advertising injuries.
General liability would be similar to your commercial trucking liability at $2,000,000 aggregate.
Commercial auto or physical damage coverage is essential to your policy because it not only protects your vehicle but covers any permanently attached appliances and equipment.
Physical damage coverage offers protection against vehicle theft and damages caused by weather events or vandalism and can pay expenses related to third-party injuries and property damage if the driver of your food truck is held liable in an accident.
Physical Damage coverage offers 24-hour collision coverage for damages to your truck or trailer.
- Collision, Comprehensive or Specified perils
- Aggregate and combined deductibles
- Rental reimbursement
- Gap coverage
- Personal effects for drivers
- Towing coverage
- Electronic Equipment coverage
- Downtime Loss Expense
As a food truck business, your auto liability insurance should be at least $300,000 worth of coverage, but there is no minimum requirement unless you have a larger vehicle, where you will be required by the FMCSA to have a minimum coverage of $750,000 to obtain your MC authority.
Additionally, if you have multiple trucks, you should have at least $750,000-$1 million to protect your company.
Other insurance coverages you might need
There are other important coverages you need if you have multiple employees or to protect your company from important problems that can greatly impact your bottom-line. These are workers’ compensation coverage and mechanical/equipment breakdown insurance.
Workers’ Compensation coverage protects your employees and your business from work-related illnesses or injuries. The coverage is mandated by each state and the workers compensation laws and benefits vary by state.
If you have one or more employees and do not carry workers compensation insurance, you will be liable for these costs, and additionally be subject to fines and fees based upon the state your operation resides in.
Even when it’s not required, it can help cover your business’ high risk of burns, cuts, and other cooking injuries.
Workers’ compensation will cover medical costs and provide part of the wages lost during recovery. Most policies include employer’s liability insurance, which protects food truck owners when an employee blames their injury on unsafe working conditions.
The injured employee must visit a healthcare professional immediately so a doctor can provide medical reports to support any claims. Upon approval by the insurance carrier, the employee will receive compensation payments and can return to work when cleared.
Mechanical/Equipment Breakdown insurance is one of the most common types of food truck insurance claims and covers the cost to repair or replace damaged equipment and can protect lost income because of the breakdown.
While commercial property insurance coverage covers damages caused by a covered external cause, like a fire, equipment breakdown insurance covers damages caused by a covered internal force, such as power surges, electrical shorts, mechanical breakdowns, motor burnout or operator error.
Even if you have an auto policy and a separate general liability policy, you may not have equipment breakdown coverage.