If you operate a concession stand, food truck, food cart, festival booth, or other food vending business, you are subject to unique hazards. Car accidents, accidental injuries, and property damage are all risks that could have a major effect on your business. Business insurance can provide financial protection that will help your business respond to any unexpected disasters or lawsuits.

What insurance coverage do I need for my food vendor business?

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

Commercial Property Insurance

Commercial property insurance can protect the value of your business property, including buildings and their contents. If your food vending business operates from a permanent location, commercial property insurance can provide coverage for the equipment, appliances, or inventory at your location. If property is damaged by covered perils such as fire, storm, vandalism, explosion, and water damage, property insurance will provide funds to repair or replace business property that is damaged.

Commercial property insurance can also provide coverage for stationary food trucks or trailers that remain parked in one location and don’t move from place to place. In addition, some commercial property policies will allow you to add a “property in transit” or inland marine insurance endorsement to cover business personal property that is transported to various locations. This would provide coverage for tools, supplies, food inventory, and equipment that are not built into your truck or trailer. If you already have a commercial property policy, it may be most convenient to simply add an endorsement to your existing property coverage.

Example:

• You run a food stand at a local carnival. Hot oil catches on fire on your stove, damaging the stove and nearby equipment. Your commercial property insurance would pay for you to repair or replace damaged items.

General Liability Insurance

General liability insurance covers incidents of accidental third-party bodily injury, property damage, personal injury, and advertising injury. Accidents happen, and there’s always a chance that your employees could inadvertently injure a customer or damage their property, leading to a lawsuit. If that happens, general liability insurance can cover legal fees, damages, and medical payments in the case of an injury.

General liability insurance contains coverage for products and completed operations liability, which can protect your business from unintentional third-party injury or damage that your products cause. In the case of food vendors, this can refer to the food you sell to customers. If a customer is injured or becomes ill as a result of eating your food, they may sue. General liability can provide coverage in these cases. 

Example:

• Bodily injury: A customer slips on spilled soda on your concession stand’s premises. She hits her head and suffers a concussion. Your general liability insurance would pay for medical expenses and legal fees if the customer sues.
• Products and completed operations: A customer becomes very ill after eating a hot dog purchased from your business. He sues your business. General liability insurance would cover legal fees and 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. In the event of a work-related death, workers’ comp can provide benefits for the employee’s surviving dependents. 

This is a crucial coverage for food vending employees, who may need to work in physically restrictive or unfamiliar environments and could suffer cuts and burns during food preparation, injure themselves while lifting heavy items, or slip and fall. 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:

• One of your employees severely injures her back while carrying a heavy load of soft drinks. She is unable to work for a time while she is recovering. Workers’ comp would pay for her medical bills, a portion of lost income, and any physical rehabilitation expenses during her recovery period.

Equipment Breakdown Insurance

Food vendors rely on equipment such as refrigerators, freezers, ovens, and commercial stoves. If this equipment fails, you may be unable 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. Equipment breakdown insurance can step in to provide funds to repair or replace damaged equipment, cover lost business income while the equipment was out of commission, and replace spoiled food.

Example:

• Your ice cream stand’s refrigeration equipment fails and a large amount of your ice cream inventory melts. Your insurer would pay for you to repair or replace your refrigerator and reimburse you for lost income.

Inland Marine Insurance

Inland marine insurance is designed to protect the property that you transport to various locations that may not be covered by a standard commercial property policy. This coverage may be necessary for food vending businesses that operate from many locations and regularly transport valuable equipment from place to place. If you operate a food truck or cart or set up operations at festivals and other events, this coverage could be beneficial. 

It is possible to add inland marine coverage to commercial property insurance policies by endorsement, but if your company does not have a permanent location and does not need a traditional commercial property insurance policy, inland marine insurance could be an alternative choice to cover your property. It will cover your business personal property that travels with your business and is not permanently built into a vehicle, including food inventory, equipment, tools, and technology. 

Example:

• You are transporting equipment and supplies to set up a booth at a local farmers market when another car collides with your vehicle. The accident damages your food warming equipment and tablets used for taking orders. Your inland marine insurance policy will reimburse you for the loss.

Commercial Crime Insurance

Since food vendors work at a variety of locations, deal primarily in cash, have many customers, and often rely on seasonal or temporary workers, they could be vulnerable to theft. Commercial crime insurance can protect against financial losses caused by theft, robbery, burglary, fraud, and forgery. This coverage protects against third-party crime as well as employee dishonesty.

Example:

• Your employees become distracted while packing up your booth after a day at a food festival, and a passerby is able to steal a cash box containing $1,500. Your commercial crime insurance would cover your losses.

Commercial Auto Insurance

Many food vendors are mobile operations, such as food trucks or businesses that set up booths at events. If you rely on company vehicles or employees’ personal vehicles to transport your business from location to location, commercial auto insurance is a key coverage that is legally required in most states. This covers third-party bodily injury and property damage if the driver of the vehicle is at fault in an accident, as well as the value of the vehicle itself if it’s damaged by a collision or another peril.

For food trucks, it’s important to note that commercial auto insurance policies cover permanently attached equipment, like stoves and burners, as well as the vehicle itself. To receive coverage, you will need to include the value of the equipment along with the value of the vehicle when you purchase a policy. However, commercial auto insurance does not cover any equipment that is not permanently attached to the vehicle, such as inventory or tablets.  

If you operate your business from a separate trailer that is towed by another vehicle, you may need to add an endorsement to your policy to cover the trailer, as well as purchasing coverage for the towing vehicle. 

Example:

• Your employee is driving a company van to a carnival to set up your food booth when he speeds up to try to make a light and collides with another vehicle, injuring its driver. Your commercial auto insurance would cover the damages to both vehicles and medical costs for the other driver.

Additional Coverages

• Liquor liability insurance is necessary if your establishment serves alcohol. This coverage will protect your food vending business if you are held liable after a customer becomes intoxicated and causes bodily injury or 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 food vendors, 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.
• Business income coverage will reimburse you for lost income and operating expenses if your business is forced to close due to a covered peril, such as fire, storm damage, or other property damage.

Pricing and Quotes

Pricing for food vendor 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 food vendor 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 food vendors:

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 food vendors, as sports arenas, stadiums, and parks have been closed, and public events have been postponed or canceled. It’s unclear when business will return to normal and food vendors will be able to operate as they used to. 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

Whether you run a concession stand, food cart, food truck, or other food vending company, there are many unique risks that your business will face. Common incidents such as automobile collisions, fires, and customer injuries could have a devastating effect on your business. Business insurance can help your company deal with unexpected disasters and give you peace of mind, knowing that if a catastrophe occurs, your company will be financially protected.