If you want to make sure your food business is properly insured, it can be challenging to find consistent information on whether you need the same insurance plans as a regular business, coverage more geared to the food industry, or a combination of both. It can be overwhelming to figure out what is best for your situation; with that said, what type of insurance will a food business really need?
These insurance policies are recommended for food businesses:
- General liability
- Professional liability
- Commercial property
- Business owners’ policy
- Workers’ compensation
Some establishments may also require policies specific to their business, such as liquor liability or commercial auto insurance.
If your food business falls under one of these categories, you may still wonder if you will need to purchase additional coverage. Read below for a breakdown of which ones you might need.
General Types of Insurance a Food Business Needs
The U.S. Small Business Administration recommends the following insurance policies to cover most businesses:
General Liability Insurance
This coverage is a sort of blanket protection for your company in case of claims ranging from workplace injury and libel or defamation to copyright issues. This is a standard option recommended for nearly all businesses and is also relevant to companies in the food industry.
Of course, some things it won’t cover are the specific items in the policies mentioned above, like commercial auto insurance or liquor liability.
Professional Liability Insurance
As the name implies, this type of coverage protects the business owner or executives from professional malpractice. This would be useful to safeguard the business owner if they are accused of negligent actions while operating the business.
For example, a doctor could be sued for medical malpractice if they make errors on the job. In the restaurant business, this may apply more toward day-to-day safety operations related to compensation or employee relations.
Commercial Property Insurance
Certainly one of the most necessary for any business that does not function solely in the online space, commercial property insurance protects the building in which business is done. It can protect the business against natural disasters, workplace accidents such as burst pipes or fires, or criminal mischief done to the building such as graffiti or theft.
These accidents may occur in a food-related business because of the nature of the business—cooking on hot surfaces, the structural integrity of the building, or being prone to natural disasters in certain parts of the country.
Business Owners’ Policy
For those interested in finding a true bundle policy at a slightly reduced price, the business owners’ policy is a solid option. If you are interested in this policy, make sure you ask your insurance agent about what exactly it will include, so you can make sure it will serve all of your needs. Many business owners’ policies can include nearly all of the insurance offerings listed above and potentially more.
So what’s the catch? Businesses have to make sure they qualify for this coverage. Eligibility factors include things like business location, size, and revenue. Contact a local insurance agent for more detailed information on whether your business could make use of this offering.
Workers’ compensation is required in almost all U.S. states except for Texas, so this is one of the most important policies you will need to run your food business. This coverage will protect the company or business owner in the event of a workplace incident that results in an employee being injured on the job. It can provide the employee with a wage reimbursement while they are unable to work, as well as medical benefits or compensation.
Although this coverage will help reimburse an employee following a workplace injury, it does not protect the company from negligence, which ties back to why professional liability insurance may be necessary to back the business owner up if something like this were to occur.
These are all plausible events that could take place in a food-related business, so make sure you’ve thought through all the “what if” scenarios that could take place and that you’re covered from them.
Insurance Policies Specific to the Food Industry
Food businesses, in particular, may require additional insurance coverage as well, depending on whether the food business is a restaurant serving alcohol, a catering business or food truck, or a food business operating from home.
Liquor Liability Insurance
In addition to the recommended standard business coverage, restaurants serving alcohol should have liquor liability insurance. Any place that serves alcohol—whether it's a restaurant, bar, or liquor store—can benefit from this coverage in the event that an intoxicated customer causes damage to themselves or the business.
Depending on where your business is located, you may need to look up the laws specific to your state for more details.
Commercial Auto Insurance
What makes catering businesses and food trucks unique is that they’re more mobile. Both types of businesses typically use company cars to get from place to place, serving their clients. Therefore, they are encouraged to have commercial auto insurance.
Within commercial auto insurance, you can be covered for the following:
- Liability and physical damage
- Medical payments
- Uninsured motorists
- Any automobile, including hired cars
You can check specific insurance provider websites for detailed information about auto insurance protection and what’s included.
Home-Based Business Insurance
Home-based business insurance can be useful for those who run their catering business from home, or are personal chefs, for example.
Home-based business coverage will add an extra layer of protection for your professional equipment, technology, and resources that a standard home insurance plan doesn’t usually offer. It also gives legal protection if a client pursues action against the business instead of addressing the home-owning individual themselves.
How to Make Sure Your Food Business Is Fully Insured
If you are questioning whether your business will be sufficiently covered, ask yourself some of the following questions:
- Are my employees protected in the event of bodily harm, and is my business protected if one of these situations happens at my place of work?
- Are the materials, business tools, and physical building protected from natural events, vandalism, or accidents such as a fire?
These questions can help you assess what you have and what you may need moving forward. If you would like professional guidance, look for an insurance company in your area to speak to a consultant about your questions.
Taking the time to review your current insurance plan for your food business is worthwhile in the long run, instead of being unsure in the event of a workplace incident. It can extend the livelihood and stability of your business for years to come.