Food trucks are a popular food business right now. Food trucks have relatively low costs, are a fun place to work, and can be a lucrative source of income. Of course, like any business, if you own a food truck, you will need food truck insurance. Just like with a restaurant, you need to be protected from liabilities.
Overall, the average cost for food truck insurance is about $200 a month, which comes out to around $2,000 per year. Businesses in high-risk locations may pay more than $4,000 a year for food truck insurance. The cost of food truck insurance is split between general liability insurance, auto insurance, and workers’ compensation insurance.
Food truck insurance can get pretty complicated. So we put together this comprehensive guide on food truck insurance and its costs. We will also talk about the different types of insurance you need for a food truck and how much it costs.
- Types of Food Truck Insurance and Costs
- What Factors Affect Food Truck Insurance Costs?
- Additional Food Truck Insurance Coverage
- Tips for Buying Food Truck Insurance
- Best Food Truck Insurance Providers
- Frequently Asked Questions
Types of Food Truck Insurance and Costs
There is no one thing as “food truck insurance,” but there are several policies that food truck owners should have.
The main policy a food truck owner needs to have is a general liability policy. General liability insurance will cover any physical injuries that people may sustain around your food truck. For example, if a customer slips and falls while eating at your truck, then general liability insurance will cover expenses related to court fees and medical expenses. General liability will also protect you in product-related lawsuits if someone gets sick while eating at your restaurant.
General liability policies are fairly cheap and start as low as $30 a month for basic coverage. Most small businesses pay between $300 to $500 a year for general liability coverage. General liability insurance can be more expensive based on the size of your food truck, business location, state policies surrounding liability insurance, and your coverage options.
The typical general liability policy has a coverage limit of $1 million, though you can find policies with smaller or larger limits. Keep in mind that general liability will not cover all kinds of mishaps on the worksite. For example, a general liability policy usually will not cover employee-related accidents or car accidents.
Commercial Auto Insurance
Given that your operation will be run out of a truck, you will also need commercial auto insurance. Food trucks can be relatively expensive to insure because they not only are part cars but also have functioning kitchens or bars running out of them. So the costs of commercial auto insurance for a food truck can get pretty high.
Commercial auto insurance for a food truck usually costs about $140 a year, or around $1,500 a year. If you have a larger truck that has more cooking components, then your coverage will probably be more expensive. Some vendors may pay upwards of $2,000 a year for auto coverage. Typically, the auto insurance coverage will be the most expensive part of your food truck insurance bill.
Most commercial auto policies will offer comprehensive coverage for damage from fire, vandalism, or nature. They will also cover collision damage and any injuries that occur due to an accident.
Auto coverage will not cover accidents due to equipment misuse or accidents that occur when your vehicle is stationary. Depending on the kind of food truck you have, you may be able to use a personal auto policy instead of a commercial one.
Workers’ compensation insurance is meant to cover you if any employees are injured while on the job. Workers’ comp will pay for each employee’s injury, and policies usually have separate coverage limits for each incident.
Generally speaking, the cost of worker’s comp insurance is based on how many employees you have. The average rate is $1.25 per every $100 in payroll expenses. Food trucks usually only employ 2-3 people, so worker’s comp insurance should cost you anywhere between $20-$40 a month.
Note that the cost of workers comp insurance depends on working conditions. For example, if your truck operates with open deep fryers, then you may have to pay more for worker’s comp because working conditions are riskier.
Inventory insurance is a unique kind of insurance that food truck owners should carry. Contents insurance will cover anything in your food truck that is not a permanent fixture. For example, contents insurance will insure any food items that may be damaged due to equipment failure or car accidents. Food trucks need to pair commercial auto with contents insurance to make sure that everything is covered.
The average cost for content insurance is about $300 a year. Contents insurance may be more expensive if you have items or foodstuffs that are rare and hard to replace.
What Factors Affect Food Truck Insurance Costs?
Like most kinds of commercial insurance, many factors affect how much you will pay for food truck insurance.
- Location. Insurance costs will likely vary by state. Different states have different insurance and coverage requirements as well.
- Driving Record. Your driving record will affect the cost of your general liability policy and commercial auto policy.
- Food. Food preparation policies also matter. If you work with food that has a high risk of foodborne illness or food that is more dangerous to prepare, you will probably have to pay more for insurance.
- Equipment. The kind and quality of equipment you use also affects insurance costs. Dangerous equipment like open deep fryers or older equipment with poor safety features will be more expensive to insure.
- Credit. Your total credit also affects insurance prices. However, simply having a high credit score does not guarantee that you will get the lowest rates.
- Areas of Operation. Working in an area with a high crime rate or that is prone to natural disasters could increase your monthly premiums.
Additional Food Truck Insurance Coverage
The above are the major policies that food truck owners should consider getting. Here are some additional types of optional coverage that would be useful for a food truck.
Liquor Liability Insurance
If your food truck sells liquor or beer, then you should consider liquor liability insurance. Liquor liability insurance extends your liability coverage to alcohol-related incidents. For example, if a patron gets drunk and hurts themself at your food truck, a liquor liability policy could protect you from damages.
The average cost of the typical liquor liability policy is between $200 to $2,00 a year. Liquor liability costs can vary greatly depending on the kind of food truck you have and your total amount of liquor sales.
Inland Marine Insurance
Inland marine insurance is a special kind of policy that covers materials and equipment when it is transported on land. This policy would cover your food truck and its contents as you move from location to location.
According to Insureon, the national median for inland marine insurance is approximately $14 per month or around $170 per year. Since food trucks do not typically travel long distances, you often can get inland marine insurance for a reduced price.
Commercial Property Insurance
If you provide food outside of your truck, then a commercial property policy can protect any equipment. For example, if you have a separate cart you bring to public places, a commercial property policy will cover any damage.
Commercial property starts as low as $20 a month, but the median monthly cost for small businesses is $60 a month. Food trucks usually do not have much commercial property to insure so you will most likely pay a low rate. The typical deductible for a commercial property claim is around $1,000.
Product Liability Insurance
Some general liability policies for food trucks will cover food illnesses caused by your products. If your general liability does not cover food-borne illnesses, then you may need a separate product liability policy.
The typical product liability policy costs about $0.25 per every $100 in sales. So if you average $10,000 in sales per month, you can expect to pay about $25 a month or less than $300 a year.
It’s important to review your policy every year. As your revenue grows, you want to make sure that you increase your coverage limits in tandem. Also, insurance companies can change policy coverage on short notice, so make sure you stay up to date on any change to your policy.
Tips for Buying Food Truck Insurance
Look for Bundles
Food truck owners need several types of insurance. You can often save a lot on insurance if you bundle policies from multiple carriers. You may need additional coverage such as liquor liability coverage or product liability insurance so look for ways to bundle and save on insurance.
Pay in Advance
Insurance companies will often provide a premium discount if you pay yearly instead of monthly for insurance. You can save up to 20% by paying upfront instead of paying by the month.
Go for High Deductibles
You can also save on your monthly premiums by opting for a high deductible policy. This is a riskier way to save money, as you will be responsible for a larger part of the bill if something happens. But in the ideal situation, you pay less for your premiums and never have to use your insurance.
Low Price Is Not Necessarily the Best
A lot of business owners think they can save by choosing a super cheap insurance policy. Cheap insurance policies are ideal, but if they are super cheap, then it’s likely the policy is missing key coverage provisions. Cheap insurance may be nice on a month-to-month basis, but it may not have the coverage you need if something happens.
Best Food Truck Insurance Providers
Here is a list of the best food truck insurance providers, based on our research.
Food Liability Insurance Program
Food Liability Insurance Program (FLIP) is a commercial insurance company that specially caters to restaurants and other owners in the food service industry. FLIP partners with Great American Insurance Group to provide superior policies for caterers, food truck owners, and restaurant owners. FLIP plans start at as low as $299 per year for food trucks with annual sales revenue of less than $50,000 a year. Policies for businesses that earn more than $50,000 in sales per year starting at $399 per year.
Their policies include $1 million in general liability coverage, $2 million for product-related operations, $300,000 in coverage for property damage, and $1 million in coverage for personal and advertising injury. The best part of FLIP is they are very transparent with pricing and they offer broad coverage tailored specifically to food truck owners.
Progressive is one of the largest insurance companies in the world and offers a wide range of commercial and personal insurance products. Food truck owners, have excellent auto insurance coverage starting at $180 a month. Progressive also gives a great discount on auto policies when you bundle them with other policies.
Progressive itself does not offer general liability coverage or workers’ compensation insurance, but they have the Advantage Business Program which lets you bundle policies from other carriers with your Progressive policy.
Insureon offers insurance policies specifically for small businesses and is one of the best insurance carriers for food truck insurance. Insureon has a simple application process that lets you search for quotes and bundle insurance from different providers. Some of the major carriers on Insureon’s network include Travelers, Chubb, and Liberty.
The median cost for Insureon general liability plans is about $560 per year. The average cost for commercial auto insurance is $1,600 per year. Insureon also offers a Business Owner’s Policy (BOP) that bundles common insurance products for food truck owners and other business owners. An Insureon BOP has a median cost of $1,200 a year, so buying a BOP might be in your best financial interest.
Hiscox offers commercial insurance policies for businesses in several different industries. They have flexible general liability policies that start at just $25 a month, with additional equipment coverage starting at as little as $7.50 a month. Hiscox limits start at just $300,000, but they have policies with coverage limits up to $2 million or more. There is no deductible for general liability insurance but equipment coverage has a $500 deductible.
The main downside is that Hiscox does not directly provide commercial auto coverage or workers’ compensation policies. However, you can add additional coverage to your Hiscox policy through their third-party network CyberPolicy.
Insure My Food Truck
Insure My Food Truck is a great insurance company for first-time food truck owners. They offer flexible bundle policies from some of the nation’s largest providers. The company deals exclusively with food trucks so their policies are specially tailored.
The best part of Insure My Food Truck is that they will handle all insurance claims on your behalf. So you can focus on getting things back on track while they take care of coverage. The main downside is that the company does not have instant online quotes, so you’ll have to call and talk to an agent to get prices.
Frequently Asked Questions
Do I need food truck insurance?
In most states, you will at least need a general liability policy to run a food truck. Other states may require you to have a commercial auto policy as well. Even if you are not legally required to buy food truck insurance, it can still be a good idea to protect you from accidents and litigation.
How much does food truck insurance cost?
Most food truck owners pay around $200 a month or about $2,000 a year for their food truck insurance costs. If you live in a high-risk location then you will most likely have to pay more.
What kinds of insurance do food truck owners need?
Generally speaking, food truck owners need to have general liability insurance and commercial auto insurance. Otherwise, food truck owners should consider buying workers’ compensation insurance and contents/equipment insurance. Commercial auto insurance will probably be the most expensive part of your business policy.
Is food truck insurance worth it?
Yes. Even if you are not legally required to have it, you should get some insurance for your food truck business as it can save you a lot of money in the event you are sued. Coverage limits for food truck policies go up to millions of dollars, so you can find a policy to cover any expenses you run into.
Food truck insurance is practically a necessity. You never know when there will be a mishap and you run into large legal or equipment expenses. Even though food truck insurance can be more expensive than other kinds of business insurance, the costs of running a food truck are relatively low.
So, your overhead with insurance included will not be as much as other businesses. Besides, food truck insurance will pay for itself if you face a legal suit.