When you operate a catering business, there are many liability risks that could arise. For example, caterers could unintentionally cause an injury at an event, damage someone else’s property, or suffer injury themselves. It’s a good idea to purchase a broad range of insurance policies to financially protect you from these risks.

What insurance coverage do I need for my catering business?

There are many types of insurance coverage to consider, but these policies are particularly relevant to catering companies:

General Liability Insurance

General liability insurance is a crucial coverage for catering companies because it protects your business from accidental third-party property damage and bodily injury liability. Since caterers work at a variety of third-party locations, there’s always a chance that someone could be injured or property could be damaged as a result of your activities—and this means that your company could be sued. 

No matter how careful you are, accidents can happen, and general liability insurance can provide funds to defend and address any lawsuits claiming injury or property damage. General liability insurance also includes a personal and advertising injury component, which can cover third-party non-physical injuries and reputational damage from libel, slander, copyright infringement, and more.

Examples: 

• Bodily injury: An event attendee accidentally overturns a container of hot soup onto himself and suffers burns. General liability insurance will cover medical bills and provide funds for legal defense and settlement if the attendee sues. 
• Property damage: While working at a client’s home, one of your caterers stumbles on a step and falls against an expensive sculpture, damaging it. Your insurer would cover the damages.
• Personal and advertising injury: Your catering business launches a new slogan for use in local advertisements. Unfortunately, this slogan turns out to be almost identical to the slogan of another company. They sue you for copyright infringement. Your insurer would pay for legal defense and any settlements.

Product Liability Insurance

Product liability insurance protects your company against claims of bodily injury or property damage caused by your products. This coverage is particularly crucial for catering companies since there is a risk that customers will be affected by food poisoning or food-borne illness from the food you provide. Although you no doubt take food safety seriously, it’s impossible to completely avoid the possibility that customers could become sick. If your company is sued because your food caused illness, product liability insurance will provide funds to cover your legal fees and any resulting settlements.

Product liability insurance is typically covered under the products and completed operations section of a standard commercial general liability policy. Standalone product liability insurance policies are also available for more high-risk businesses.

Example: 

• A shipment of lettuce is contaminated with salmonella. Your catering company serves salads made with the lettuce before recall notices are sent out. Event attendees become ill and sue your company. Your product liability insurance would cover your legal fees and any resulting settlements. 

Commercial Property Insurance

Commercial property insurance protects the value of your business’s physical location, equipment, and other items, providing funds to replace or repair damaged property in the event of a fire, storm, explosion, or other covered peril. This is an important coverage for catering companies as they may own expensive stoves, ovens, refrigerators, and other equipment. In the event of a fire or other disaster at your company’s headquarters or kitchen, commercial property insurance can step in to cover the loss.

Commercial property insurance covers the following:

• Buildings belonging to or leased by your company
• Contents of the building, including equipment, office furniture, and tools
• Property of others while it is under your care, custody, or control

Example: 

• An overloaded power strip causes a fire to break out in your catering company’s kitchen, causing damage to the building and equipment. Your commercial property insurance would pay for you to repair or replace damaged items and make repairs to the building. 

Commercial Auto Insurance

Catering companies generally rely on vehicles to transport food and equipment to events. If your business owns or leases vehicles or if your employees use their own personal vehicles for business purposes, commercial auto insurance is a key coverage that is legally required in most states. If your employees are involved in a car crash, commercial auto insurance can provide coverage for physical damage to vehicles, third-party bodily injury, and property damage. Commercial auto insurance can also provide coverage for damage to your vehicles caused by covered perils, including theft, falling objects, fire, and more.

Example: 

• While driving a company van to an event, one of your caterers becomes distracted and rear-ends another vehicle. Your commercial auto insurance would cover the damages to both vehicles. 

Inland Marine Insurance

Inland marine insurance provides financial protection for your business property that does not remain at a fixed location and is not covered by a standard commercial property insurance policy. This could include equipment, tools, and other items that a company may need to transport from location to location or store at client sites. For a catering company, this coverage could provide protection for equipment and items that you use at events, like portable stoves, ranges, and refrigeration units. Depending on the insurer, inland marine insurance may also cover the value of the food you transport. 

Example: 

• Another car runs a red light and collides with your catering company’s vehicle. The crash shatters dinnerware and damages an array of portable cooking equipment. Your inland marine insurance would cover the losses. 

Liquor Liability Insurance

If your catering service provides alcohol, you could be held liable if a customer drinks too much and causes bodily injury or property damage. An event attendee who receives alcohol from you, becomes intoxicated, and causes a car collision or starts a violent altercation with another person could result in liability for your company.

Many states have “dram shop” laws that hold businesses liable if they serve an intoxicated customer who later causes an accident or injury. Liquor liability insurance will step in to cover any claims that arise as a result of liquor liability. Commercial leases or liquor license laws may require you to have this coverage.

Example:

• Your company provides catering for a wedding, including serving alcohol. After becoming severely intoxicated, one of the attendees leaves in his car. He swerves into another car, severely injuring its occupant. His blood alcohol level was found to be well over the legal limit. Family members of the injured party sue your catering company. Your liquor liability insurance would cover the lawsuit and any resulting settlements. 

Workers’ Compensation Insurance

Workers’ compensation insurance covers employees’ medical expenses and lost income if they suffer an injury or illness because of their work. Workers’ comp also provides financial benefits for an employee’s dependents in the case of a work-related employee death.

This is critical coverage for catering employees, who could suffer cuts and burns during food preparation, injure themselves while lifting heavy items, or slip and fall while working in unfamiliar locations. In almost every state, workers’ compensation insurance is required for employers, and there may be serious fines and penalties for companies that do not secure adequate coverage.

Example: 

• While carrying food trays to set up at an event, your employee trips on a staircase and falls, badly injuring his shoulder. He is unable to work while he is recovering. Workers’ comp would pay for his medical bills, a portion of lost income, and any physical rehabilitation expenses during his recovery period.

Equipment Breakdown Insurance

Caterers rely heavily on equipment such as refrigerators, freezers, ovens, and commercial stoves. If the equipment breaks down, it can have a substantial impact on your ability to operate your business. Although some business owners may believe that commercial property insurance would cover these situations, equipment breakdowns are typically excluded from commercial property coverage. 

Commercial property insurance covers damage to equipment caused by covered perils, like a fire or storm. If a piece of equipment breaks down due to something internal, like a mechanical failure, equipment breakdown insurance can step in, providing funds to repair or replace damaged equipment, cover lost business income while the equipment is out of commission, and replace spoiled food. 

Example: 

• Refrigeration equipment in one of your trucks fails, and you have to throw away a large amount of food for safety reasons. Your equipment breakdown insurance would pay for repairs to the refrigerator and reimburse you for the cost of the lost food. 

Additional Coverages

• Business income coverage will reimburse you for lost income and operating expenses if your business is forced to close temporarily due to a covered peril, such as fire, storm damage, or other property damage.
• A business owner’s policy (BOP) combines general liability, property, business income, and extra expense coverage into a single package. For small or midsize companies, this type of insurance could help you obtain a wide range of coverage. Premiums for a business owner’s policy are typically cheaper than the cost of buying each coverage separately.
• Employment practices liability insurance (EPLI) protects your business against lawsuits by prospective, current, or former employees accusing your business of wrongful treatment such as discrimination, harassment, or other employment-related issues.
• Commercial crime insurance provides funds to reimburse you for losses caused by theft, robbery, fraud, forgery, burglary, and other crimes committed by outside parties or your own employees. Since caterers may accept payments in cash, there’s a possibility of cash being stolen or employees committing a crime; commercial crime insurance protects you from those risks.  

Pricing and Quotes

Pricing for catering insurance will vary based on the type of insurance coverage and the risk profile of your business. Insurers consider factors such as:

• Business size
• Industry
• Location
• Number of employees
• Claims history

Businesses with higher risks will have higher premiums than those deemed lower risk. For example, a catering business with a history of frequent claims will face higher premiums. Premiums also rise as you increase the limits of insurance. Different insurance companies have different models for rating risks, so it is worth comparing pricing across different insurers.

In order to get an accurate estimate on pricing, it’s best to get a quote from a reputable insurance company. Below we’ve highlighted a few of our trusted partners who offer coverage for caterers:

Provider	General Liability	Professional Liability	Business Owner's Policy
Embroker	??	??	??
CoverageSmith	??	??	??
CoverWallet	??	??	??
Hiscox	??	??	??
Thimble	??	??	??

Business Insurance and Coronavirus

COVID-19 has had a major impact on catering companies, as many events have been postponed or canceled, and caterers are unsure when the business environment will return to normal. In the meantime, business owners may be wondering how insurance can provide coverage during the pandemic.

It’s important to understand that you cannot purchase a new policy to cover coronavirus-related losses that have already occurred; insurance policies will not cover losses that have already been discovered. 

In the majority of cases, business interruption insurance policies you have in effect will not cover losses caused by coronavirus. These policies typically only cover losses caused by a direct physical loss or damage, like a fire or theft. Some business interruption policies will include coverage for losses caused by “communicable or infectious diseases,” but this is rare.

How workers’ compensation insurance handles coronavirus cases varies widely depending on the state. If you have employees who contract coronavirus on the job, they may be eligible for workers’ compensation payments in some states. 

If your business continues operating and a client or other third party sues you claiming that they contracted coronavirus from your business, some commercial general liability policies will provide coverage, depending on your individual policy and the laws of your state. 

Consult our FAQ on coronavirus and business insurance for more information.

Final Word

As you plan your insurance coverage, it’s important to be aware of the hazards that your catering company could face, from costly auto accidents to fires and client injuries. If your company must cope with an expensive accident or lawsuit, it could consume a large portion of your resources. Business insurance can help your company deal with unexpected disasters and give you, your employees, and your clients peace of mind, knowing that if a catastrophe occurs, your company will be financially protected.