Understanding Food Truck Insurance Options and Costs
If you’re looking to start your own food truck, one of the most important business steps is investing in insurance.
Without the right insurance or proper coverage, your food truck is at risk of costing you thousands of dollars or putting you out of business entirely.
Here’s insight on how much food truck insurance might cost and which insurance types you may need to purchase to ensure that your mobile business is protected.
Food truck insurance cost
The average cost of food truck insurance is approximately $2,000 to $4,000 a year but could vary depending on the coverage option you choose and your provider.
Here is a food truck insurance average cost breakdown:
- General liability insurance: $300 to $800 premium cost (for $1,000,000 coverage and $0 deductible).
- Commercial auto insurance: $1,500 to $3,000 premium cost (for $250,000 coverage and $500 deductible).
- Contents insurance: $300 to $1,000 premium cost (for $25,000 coverage and $500 deductible).
- Workers compensation insurance: $1,000 to $1,500 premium cost (for $1,000,000 coverage and $0 deductible).
Here are factors that can impact food truck insurance rate:
- Business size.
- State policies.
- Intended neighborhood (crime rates can increase insurance rates).
- Risk factors (cooking equipment are higher risk than refrigeration).
- Value of equipment (the higher the price of the equipment, the higher the rate).
- Replacement cost coverage versus cash value coverage.
- Employee payroll.
- Coverage amount (minimal, average, high).
- Deductible options.
What type of insurance Is needed for a food truck?
When buying a food truck, it is important to consider the types of insurance you’ll need to fully protect your business and vehicle from liabilities, theft and collisions. The following insurance types are necessary for mobile food businesses including food trucks, ice cream trucks, and catering trucks.
1. General liability insurance
Food truck general liability insurance is necessary to protect your mobile business from incidents and accidents involving third parties while your vehicle is stationary but open for business.
General liability coverage:
- Product-related lawsuits such as those involving foodborne illnesses, food poisoning, burns from hot food, cuts from glassware or metal utensils, and contaminated food with debris or allergens.
- Premise-related lawsuits including customer slip and falls on pavement, ice, or sitting water around your food truck, as well as any other injuries to customers or passers-by on your premise.
- Advertising lawsuits, such as personal injury, libel, and slander in marketing campaigns (intentional or unintentional).
- Property damage lawsuits and fines like those involving damage caused to someone else’s building or property by your truck.
- Legal fees and representation in court if you do get sued, regardless of the outcome.
Does not cover:
- Employee-related incidents.
- Auto accidents.
- Incidents while your truck is driving from location to location.
- Most vendors, landlords, and commissary kitchens require food truck owners to have a minimum of a $1,000,000 general liability policy to do business together, and they will often ask to be listed as an additional insured on your policy.
2. Commercial auto insurance
Commercial auto insurance is required for all vehicles used for business purposes to protect from liabilities and damage in transit. The policies included in commercial auto insurance protect your vehicle from physical damage to the unit and items permanently attached to your vehicle by bolts, plumbing, and gas lines.
- Collision coverage (damage to the vehicle and permanently fixed items resulting from a collision with a barrier or other vehicle).
- Liability coverage (Injuries to others while the vehicle is in motion, damage caused to property while in transit).
- Comprehensive coverage (Not-at-fault incidents including theft, fire, vandalism, nature, and weather-related damage).
Does not cover:
- Injuries and damage caused by your vehicle while stationary.
- Personal auto policies are sometimes used for smaller vehicles. Be sure to ask your policy provider and local jurisdiction before selecting a personal policy over a commercial policy.
3. Contents insurance
Contents insurance covers the items that are in your food truck but not permanently fixed to the unit. Contents insurance is often labeled as contents coverage insurance or business property insurance. Food truck owners have the option to choose between an actual cash value policy (which would provide the cost of the product minus depreciation) and replacement cost value (which covers the cost of a new product). Replacement policies will come with a higher premium than actual cash policies.
Contents insurance coverage:
- Damage to items caused in a collision.
- Vandalized items.
- Stolen items.
- Items that are not stored in the truck.
- Items damaged by weather or fire.
It is important to pair commercial auto insurance with contents coverage to ensure that all of your food truck belongings are protected by your insurance.
4. Workers compensation insurance
Workers compensation is needed to protect your employees with wages and medical benefits if they get ill or injured at work.
Workers comp coverage:
- Employee slip and falls on the job.
- Employee job-related illnesses.
- Employee medical care, expenses, medication, and rehabilitation if they were to get hurt on the job.
- Employee long-term or permanent disability payments.
- Death benefits to family members of employees that experience a work-related death.
Does not cover:
- Liabilities involving customers.
- Non-work related injuries or illnesses.
- Workers’ compensation is a legal requirement by OSHA in most states for food trucks and is highly recommended in the remaining states to ensure that your business is fully protected.
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