Historically, the food truck industry grows about two percent each year. That will surely increase in the next year or two, as many food entrepreneurs look towards food mobility as an alternative to brick and mortar locations.
Depending on the type of food truck you operate, there might be different types of insurance requirements and considerations. For example, a truck that prepares food with commercial equipment might need a different type of coverage than an ice cream truck.
While you may be able to bundle together the different types of coverages you need, in many circumstances, you will have to piece together different policies to ensure that you have the most comprehensive coverage for your business and your own financial protection.
Choosing the right types of insurance that you need for your business can be tricky and not all are necessary for your particular situation.
Here are a few types of insurance that most food truck owners could find beneficial:
Food Truck Insurance
As a food truck owner, the first insurance option is to look into a specific food truck insurance policy.
What is food truck insurance? A food truck insurance policy protects you from any claims that might be made against your business’ day-to-day operations. This could include anything from potential injuries, damages, general liability, or illness, which is particularly important when serving food.
Finding ways to protect your business from unfortunate events is crucial because depending on the claim, you could face major financial loss without adequate coverage. Remember to do your research and ensure that the company you purchase a policy is reputable.
A simple way to test this is to ask if they offer free additional insured services (all of them should say yes).
Here’s a few companies that you can look into:
- FLIP – with policies starting at $299 per year, the Food Liability Insurance Program makes it easy to insure your food truck.
- Insure My Food Truck – another company that’s been in the food truck insurance game for a while, IMFT can get you a fast quote and have you insured in no time.
- Progressive Commercial – Progressive bundles a few types of insurance into custom food truck packages, including commercial auto, general liability, and worker’s comp.
Commercial Auto Insurance
Because the foundation of your business relies on your ability to sell food or drinks from a vehicle, commercial auto insurance is one of the most important types of safeguards to have.
Remember that it can vary state to state, but in most circumstances, you will be required to carry a certain amount of insurance—even if you aren’t cooking or preparing the food in your vehicle.
A commercial auto policy will secure your business vehicle, similar to how car insurance protects your personal vehicle. It is important to differentiate between the two because a personal automobile insurance policy will not cover damages on a vehicle that is used for business purposes.
Similar to auto policies, commercial auto insurance is made up of different components within the policy to protect your vehicle from certain events. Here are some of the components of a typical commercial auto policy:
Collision coverage: Collision coverage will pay for the physical damage done to your vehicle in an accident if you were to hit someone else or if they were to hit you. This type of coverage is usually required if you are financing or leasing the vehicle.
Comprehensive coverage: Comprehensive coverage will pay for damage outside of an accident from things such as theft, fire, natural disasters, or vandalism.
Liability coverage: Liability covers bodily and property damage to others if you are in an accident and are deemed at fault. This component of a commercial auto policy will financially protect you from a lawsuit and also pay for various items such as accrued medical costs for the other party in the accident.
Additional coverage: Most companies will offer additional coverage options and add-ons such as rental car reimbursement, tow truck coverage, underinsured or uninsured motorist coverage, and loan or lease gap coverage.
Commercial Property Insurance
While a commercial auto will protect your vehicle from damage, commercial property insurance will protect the contents within your actual vehicle from damage. This could include your everyday equipment such as commercial stoves, point of sale systems, food, or utensils.
This type of coverage protects your contents from damage or loss caused by unanticipated events such as theft, natural disasters, or fire.
Workers’ Compensation
If you have one or more employees, you will need some kind of workers’ compensation insurance for your food truck. Most states will require this type of coverage as it protects you if one of your workers were to get injured or fall ill while on the job. This can help you pay for your workers’ immediate and ongoing medical bills and lost wages. If you have employer liability coverage as a component of your workers’ compensation policy, you will also be covered from legal fees and settlement costs if the employee decides to sue as a result of their injury or illness.
Life Insurance
Although life insurance may not be legally required for your business, it is important to have as a safeguard in both your professional and personal life. Life insurance provides an income replacement if you were to unexpectedly pass away. If your food truck provides a source of income that your family depends on, it is important to secure a term life insurance policy.
A term life insurance policy is beneficial for small business owners because it costs substantially less each month than a whole life insurance policy. You can customize the length of time you need coverage for depending on the financial status of your business. Additionally, this type of insurance is particularly important if you used family assets to support your food truck business.
Disability Insurance
Disability insurance for business owners can be a bit complicated to secure at times, however, it’s often worth the extra time investment to ensure that both your business finances and personal finances wouldn’t suffer in an unanticipated event.
If you were to become injured and unable to operate your food truck, having some kind of coverage is essential. A long-term disability insurance policy pays you an income replacement each month if you were permanently injured or disabled.
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Perhaps this is your first experience as a business owner altogether or maybe you have owned a business before, but this will be your first food truck. In any case, it is important to understand that financial planning is a necessary part of ensuring your food truck’s future success and how choosing the right type of insurance coverage plays a large part in this equation.
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