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Industry Insights

Words of wisdom from our business insurance experts.

Catering Business Insurance: Everything You Need to Know

4 min read
August 18, 2022
Catering Business Insurance: Everything You Need to Know

Surprisingly enough, catering is slowly becoming one of the most significant contributors to the overall economy.

According to recent statistics, most caterers opt for a cheap insurance policy, usually from an online automated insurance website, because they must insure their business and don't want to spend the time on their insurance. However, owners wonder why the insurance won't cover their employee's injuries, property damage, or food born illnesses when accidents happen.

If that puzzled you too, you need to learn more about a catering insurance policy. This article brings forward the insurance policy types for this catering businesses and all the follow-ups. 

Catering Industry Insurance Types

The catering industry is a business on the go, but it still needs the same insurance and coverage as any other industry. Essentially, the catering industry must secure coverage for the basic types of insurance:

  • Property Liability;
  • Workers Compensation Liability;
  • General Liability and Product Liability;
  • Commercial Automobile:
  • Cyber Liability:
  • Employment Practices:
  • Group Health.

Therefore, every insurance policy's coverage plan must include the basic types, or at least every considerate, reliable catering insurance policy must contain them. To be able to choose the optimal insurance policy, you'd have to know what exactly is that your business needs. Educating yourself with the information below is a great start, but working with a specialized advisor is even better. Schedule a call with our catering business insurance advisor today.

The following part comments on the crucial coverage parts of the catering insurance and why each of the options is helpful.

The Optimal Catering Insurance Coverage Plan

To be 100% positive when choosing a coverage plan, you must know what makes the insurance policy a viable option to qualify on the market. There are multiple catering insurance policies, but not all offer a 5-star coverage or cover all relevant liabilities for a catering business. The points below comment on every liability you must consider in your plan and why.

General Liability Insurance

General liability insurance is a no-brainer in every plan. This coverage is also the basic plan or starter pack that protects the business from general or any type of damage liabilities that a catering business may encounter.

Your General Liability encompasses any damage or impairment caused internally by the owner or the staff. If your employees accidentally make a mistake that injures a customer or other third party - the insurance is bound to follow up with reimbursement. Additionally, since the food industry and the catering businesses intertwine, any client may file a lawsuit for caused damages.

Most General Liability policies are also packaged with a Product Liability policy. As a food business, Product Liability is one of the most important lines of coverage as it protects your business if a customer gets sick from the food you are serving.

The bottom line of the general liabilities is basic coverage from possible risks that may occur during the catering business due to third party claims and lawsuits.

Product Liability Insurance

Another integral part of the catering business is products, food products, to be precise. Clients ask for a special catering because they're content with the products they include in their plans. Many individual catering businesses include their products in their catering menu to stand out from the crowd and make a name for themselves on the market.

If that sounds like your business, you must check for Product Liability in the coverage plan offered to you. 

Product Liability covers businesses' signed products or any other products they are serving to customers. In other words, product liability covers any damage caused after using any products you provide. For instance, if you have a defective product on the table that might impact the lives of others, the insurance is bound to cover it.

Liquor Liability Insurance

Where there's food – there are refreshments! 

Attaining a Liquor Liability insurance is paramount for the catering businesses, especially the catering companies that offer their services for weddings, birthday parties, anniversary dinners, business dinners, and all the big social events alike.

Serving alcohol is tricky because you can’t predict the level of alcohol tolerance of cutomers, so it's highly advisable to have coverage for all the concurrent risks and liabilities that can occur. Injuries, intoxication, and so on are only a couple of the consequences that might follow liquor overconsumption. With the Liquor Liability insurance, you won't have to bother about the follow-ups.

Workers’ Compensation Insurance

The workers' compensation insurance is another basic pack for the employees under your wing. Any business must possess workers' compensation insurance to protect their employees from injuries during working hours.

Workers' Compensation is an insurance policy deemed fundamental in catering businesses because injuries happen all along. For instance, one of your employees might unintentionally spill hot coffee over another employee during working hours and cause fatalities. Without the Workers' Compensation policy, the employee will face a load of medical bills to cover on their own.

Therefore, when choosing your catering insurance plan, make sure it does cover the employees, but pay attention to the range of medical coverage. Many insurance policies claim they offer "comprehensive" Workers' Compensation Liability. Still, the coverage list is quite limited, and it won’t do much to shield your employees from work space-related injuries. So, mind asking for the description to see if it is understandable.

Property Insurance

Property Insurance refers to protecting the property where your business is located. 

Catering businesses simply must obtain property insurance because they deal with tons of pieces of equipment, inventory, furniture, and tools that are a vital part of their businesses. If a catering company loses all these tools in one night due to a fire, owners consequently bury their business.

Therefore, property insurance refers to all the possible hazards that can cause damage to the business. 

Insurance companies make Property Liability insurance a customizable one so that catering owners can adjust it according to their preferences and budgets. The insurance will offer many add-ons to include under the Property insurance that will cover all imaginable hazards.

However, property insurance users advise taking the additional coverage in case of a power outage that might affect your frozen products.

Off-Premises Coverage

Catering businesses aren't static - but they're constantly on the move so that the whole street  might be their place of business. 

Both equipment and employees move from one location to another, but without the specific off-premises coverage, they won't be covered in case of an accident. Whether the employee or the catering company utilizes the Workers' Compensation or Property Liability insurance that covers accidents, injuries, or equipment damages - they aren't valid outside the registered location.

For that reason, insurance companies include the off-premise coverage or the Travel Policy to incorporate into the basc insurance plan.

Essentially, this insurance covers all the accidents, damages, or injuries that may happen after the employees and the equipment leave the registered place of work.

These 6 coverage policies are integral parts of real comprehensive coverage plans. Additionally, you may ask if the insurance offers coverage for the following:

Cyber Liability Insurance

If your business accepts online payments or operates on the cloud, you need Cyber Liability Insurance.

Frequently, internet-dependent businesses undergo various breaches - be it of financial or personal information nature. In such instances, the Cyber Liability coverage will take care of all the damage caused.

Damage to Premises Rented

Another valuable coverage to optimize your plan is to include the damage to premises rented, and this advice goes for both small catering businesses and the big ones. 

In case of damage that takes place in a rented property, the insurance won't cover it if the owner missed to include this policy. Therefore, it's highly advisable to spare yourself the additional costs and financial leakages and include the Damage to Premises Rented to your basic insurance plan.

Catering Insurance Costs

The costs of the catering insurance vary from provider to provider, but several factors impact the final price. 

First, the number of employees, then the business risks. In other words, a company with 10 insured employees and a company with 80 insured employees won't be offered the same price for the insurance. Also, the bigger the property and equipment, the bigger the coverage, hence the higher price costs for the insurance plan.

To be more specific, the monthly costs for a basic or starter insurance pack vary around $50, while the premium coverage monthly costs might reach $600. However, there are more affordable prices in between that can protect your business and employees from all hazards. 

Don't settle for the cheapest insurance because it won't cover all the liabilities discussed above. Instead, you can arrange a meeting with your insurance company and ask the broker if some financial relief is possible. 

If you’re granted the relief, you might get a real bargain, and if it's not - the agent will instruct you on how you can get more cost-effective insurance with a premium plan.

Catering Industry Insurance: Who Can Benefit From It?

Regardless of whether you're a small catering business owner or a household name in the catering industry, you need insurance. 

The catering industry belongs to the dynamic occupations. Not only do employees relocate their working corners for a living, but they haul all the necessary equipment for the arrangements along with them.

Accidents during working hours are common - either equipment gets damaged, or the employees get injured; plus, there’s always the possibility for the renting space to get damaged, which can cause some headaches for the owner. 

The outcome of the incidents can be fatal to the business and, more importantly — life-threatening to the employees. For that reason, catering insurance is imperative for both small and big companies.

Tyler Crawford
by Tyler Crawford
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