It’s Time We Had a Little Talk
Let’s discuss insurance, shall we? I know it’s nowhere near as exciting as thinking about your menu, or designing your perfect kitchen, or finding out the best way to connect with your customers, but it’s something that every business owner needs to think about.
Mobile food businesses in particular have unique insurance needs because of these added risks:
- – Property damage you can incur because you drive your food truck or concession trailer on the roadways
- – Loss that’s possible because unlike a brick-and-mortar restaurant, your whole business can be stolen
- – Liability associated with bringing your unit onto other people’s property or operating on city streets
I’ve been through the process of purchasing insurance for a mobile food business, so I know how tedious and confusing it can be. I’ve enlisted the help of Joel Paprocki, whose Austin, Texas, insurance company specializes in mobile food businesses like mine. Together, we’ve compiled a list of questions that mobile food owners need to ask themselves before purchasing an insurance plan.
What is the difference between liability insurance and property coverage, and do I need both?
Liability insurance pays for bodily injury and/or property damage you cause to someone else. An example is insuring your business from someone suing you over a slip-and-fall accident, or someone claiming that your food has made them ill. This type of coverage is important to protect yourself, and is also required by many events, venues, and city governments.
Property coverage will compensate you for loss of your property. An example is insuring your food truck against theft, vandalism, or an accident while driving it to a venue.
How much protection do I need?
For property coverage, it’s pretty straightforward: if your truck is worth $50,000 you need to insure it for $50,000.
Liability coverage is a little less clear. Most events or venues will require you to carry at least $1 million per occurrence (or claim filed against you), so that’s a safe place to start, but your unique circumstances might prompt you to request higher coverage.
How do I avoid gaps in my coverage?
Gaps in coverage occur when your policy only covers you in certain situations. For example, some property coverage might only cover damage that happens while your trailer is unhooked from your vehicle at a venue. This means that if your trailer is stolen from your personal property, or damaged in transit, your policy will not cover it.
Liability coverage might only apply for incidents occurring while you are selling, so if a customer brings food home with them and makes a claim that your food made them ill, you would not be protected.
The best way to avoid gaps in coverage is to use an insurance agent you trust who has experience insuring businesses like yours. It is also important to read your insurance policy, and ask questions to clarify. Don’t worry about being pesky or annoying! It’s your insurance agent’s job to work with you to make sure you are protected. If you are working with an agent who does not answer your questions or is slow to respond, you might want to look elsewhere.
Finally, review any changes with your business with your agent right away, and make it a practice to review your coverage with your agent each time your policy is renewed.
Is it important to use an agency that specializes in food truck insurance?
It is very important to use an agency that specializes in food trucks because food trucks are a different breed. They take a restaurant and put it on wheels, and traditional restaurant or vehicle insurance policies were not designed with this in mind.
Insurance agencies that are not experienced with the unique needs of mobile foodservice may not understand exactly how food trucks operate and what their requirements are, and may offer a pieced-together option that leaves gaps in your coverage and costs more than it needs to.
Keep in mind, though, that even food truck-savvy agents can do a better job given more information. The mobile food sector has grown explosively in the last decade, and although though insurers have come a long way in a short time to keep pace with that growth, they may not be on top of ongoing changes in local food-safety regulations or mobile food operations, equipment, and costs. Make sure your agent gets the benefit of your expertise as a player in the local mobile sphere—and at very least, knows the unique qualities of your particular business.
My trailer, for example, would not be insured the same way as someone’s five-ton propane-carrying truck. Another example: Let’s say you have maintenance agreements in place for your equipment. You may qualify for a discounted premium, since regular servicing can reduce your risk of mechanical failure in the event of a power outage or other emergency. You have nothing to lose by asking an agent about that; just be prepared to explain why you’re asking.
The dialog goes both ways, of course. If your insurer asks whether you need to be covered for worker’s compensation, don’t assume the answer is no. Even family members who work for you need to be covered for on-the-job injuries. In some states, it’s against the law for them not to be.
How do I know that a company is reputable?
The most tried-and-true method is to ask other mobile food entrepreneurs whom you trust. See who they use and ask about their experiences.
It’s also a good idea to check companys’ financial ratings. You should only be dealing with companies rated “A” or better financially. A.M. Best is a good resource for determining this.
You may also want to visit your state’s Department of Insurance website–you can find it here–and look up the company to see its “justified complaint ratios,” indicating the number of justified complaints per policies in force. The higher the number, the more wary you should be of the company.
Photo by Shawn Poynter