What Should You Know About Insuring Your Food Truck?

Posted on: 6 July 2017

If you've recently begun making plans to launch your own rolling restaurant, you may find yourself periodically running into roadblocks when it comes to establishing a business address, securing insurance for both your food truck and its contents, and sifting through all the necessary permitting requirements to legally operate your business. Because the food truck industry is a relatively new one, many companies that specialize in business operations have not yet evolved to expand their services to those who operate mobile restaurants. 

However, going without insurance for your food truck (or just purchasing a one-size-fits-all policy) could leave your business open to a wide variety of potential claims, from damages sustained in an auto accident while traveling to a festival to reimbursement sought by a customer who has fallen ill after eating one of your creations. Read on to learn more about the available insurance options for today's food trucks, as well as some of the factors you'll want to consider when deciding which insurance option is right for you. 

Insurance Options 

There are several types of insurance available to most food truck operators, and you may elect to purchase any or all applicable policies depending upon your assets at risk, your risk tolerance, and any plans for future business expansion. 

One such policy, required in most states for businesses that employ a threshold number of non-relative employees, is a workers compensation policy. This insurance is designed to cover any medical costs, lost wages, and other expenses that can result from an employee's on-the-job injury. Workers compensation coverage is especially important in the food truck context; with the cramped working conditions, high temperatures, and sharp knives used in most food trucks, minor injuries like cuts and burns are relatively common. 

Another type of insurance is designed to help cover any financial costs you may incur if a crucial piece of restaurant equipment (like your refrigerator, griddle, or deep fryer) is damaged and requires repair or replacement. Because such repairs can put your food truck out of commission for days, weeks, or even months, having an insurance policy that can help pay for repairs and compensate you for the lost income can go a long way toward minimizing the financial impact of unexpected equipment problems. 

Finally, if you're operating your food truck on a public thoroughfare, you'll need general liability coverage (along with any other coverage required by the lienholder if you've used a loan to purchase your truck). Insurance coverage requirements can vary by state, with each state mandating a minimum level of liability coverage per driver. 

While food truck restaurateurs would previously string these three policies together into one somewhat comprehensive one, albeit often choosing three different insurance providers and billing methods in the process, several insurers have stepped up to offer a more holistic policy geared specifically toward food truck operators. This type of policy can provide insurance against equipment damage or mechanical damage to the truck, liability coverage for the owner and/or driver, and workers' compensation coverage for any employees without requiring multiple policies with overlapping (or gaps in) coverage. 

Factors to Consider

Before signing on to a specific insurance policy, you'll want to ask yourself a few questions to get a better idea of the scope of the policy (or policies) you'll need. These questions include:

  • Do you have (or plan on having) employees?
  • How far will you be regularly driving your food truck?
  • Will your routes be heavily-trafficked? 
  • Do you have substantial assets that could be seized in a civil claim? 
  • What minimum commercial auto insurance coverage limits are mandated by your state? 
  • Do you have the cash reserves to pay for necessary equipment repairs?
  • Do you have the cash reserves to handle a week or two of down time when your truck needs repairs?

Depending upon the answers to these questions, you may find you can get by with a bare-bones policy or need a beefed-up one instead.