Caterers occupy a unique position in the foodservice industry and, as a result, have unique insurance requirements.
It’s fast-paced; you’re constantly on the move, reacting to the unexpected in real-time. It is easy to plan the perfect event on paper, but in reality, things can change right in front of your eyes at any time. This is one of those special jobs where no two days are ever the same!
As such, catering insurance policies are specifically tailored to meet these special requirements that caterers may have. Here’s how much these policies cost, on average, coverage options, and everything else you need to know.
- How much does catering insurance cost?
- Factors that affect the price of catering insurance
- How to reduce catering insurance cost
- What is catering insurance?
- Who needs catering insurance?
- Insurance requirements for catering businesses
- Best catering business insurance companies
How much does catering insurance cost?
There are no set costs for catering insurance because catering businesses are in all shapes and forms and different catering businesses may decide to have different coverages. A small to medium-sized catering business can expect to pay around $95 per month, or $1,180 per year for a Business Owners Policy (BOP) insurance with a policy limit of $1 million.
Business Owners Policy (BOP) is the most popular insurance policy for small catering businesses.
This is just the average. Your rate will be different. Be sure to shop around with a few companies or work with a top broker like CoverWallet, Simply Business, or ez.insure to get and compare several quotes in one place to find the cheapest one for your business. You should also get a fast online quote from Thimble. Their online quote is super fast and simple.
Besides Business Owners Policy (BOP), catering businesses may also need to buy other business insurance policies such as general liability insurance, workers comp insurance, commercial auto insurance, product liability, liquor liability, and commercial property insurance. Below are the average costs for these coverages.
General liability insurance cost for catering businesses
General liability insurance is the second most popular business insurance policy. It protects catering businesses from third party’s claims of personal injury and property damage caused by the catering business operations. General liability insurance is a versatile policy that can be customized for businesses in different industries. For catering businesses, they can also add product liability coverage as an endorsement to their general liability insurance policy to save money. It is also more convenient to manage both coverages in one single policy.
For example, suppose a client claims that you damaged their kitchen while preparing food for an event they hired you for. In that case, commercial general liability will cover the legal fees and any damages the client may be entitled to. The average cost of general liability insurance for catering businesses is $55 per month or $660 per year. If you add product liability coverage to the policy, the average cost will increase to $80 per month, or $960 a year.
Commercial auto insurance cost for catering businesses
If your catering business has a van, truck, or another work vehicle, you’ll need commercial auto insurance or commercial truck insurance. If your worker causes an accident while delivering food, commercial auto will cover the cost of the damages to the vehicle, building, or any other property the employee collided with.
Caterers can pay around $80 per month in commercial auto insurance or $950 annually.
Workers comp insurance cost for catering businesses
Even if you have just one worker, you must have workers’ compensation insurance. This coverage can help pay for medical care for employees who are injured or ill on the job and a portion of the employee’s lost wages and litigation costs if they file a lawsuit against you.
Workers’ compensation insurance for a catering company costs about $85 per month or $1,100 per year. The cost of this policy might vary depending on the state and the nature of your business.
Product liability insurance cost for catering businesses
As discussed above you can add product liability coverage as an endorsement to your catering general liability policy. However, you can also have it as a stand-alone policy. Product liability insurance is required for businesses that sell or manufacture products. If your catering company sells packaged items like signature sauces, this type of insurance may be required.
Product liability insurance protects you from lawsuits stemming from the use of your products. One example is an injury caused by a mislabeled or defective product.
The average cost of product liability insurance for catering businesses is $40 per month, or $480 a year.
Liquor liability insurance cost for catering businesses
Liquor liability coverage is required if your business focuses on weddings or celebrations such as bar and bat mitzvahs, anniversary dinners, birthday parties, and graduations. You will need protection against the inherent risks of serving alcohol as part of your business.
Liquor liability insurance protects the server from claims of intoxication-related injuries.
The average cost of liquor liability insurance is $175 per month or $2,050 a year. Learn more at the best liquor liability insurance companies
Commercial property insurance cost for catering businesses
Your assets, such as your building, equipment, and inventory, also require protection. The commercial property insurance policy protects these assets against fire, storm, severe weather (except flood), theft, or vandalism. You can tailor this option to meet your specific requirements. Protection against losses resulting from power outages or freezer/refrigerator breakdown is an example of additional catering coverage.
Catering business usually buy a Business Owners Policy which combines both general liability and commercial property coverages in one bundled policy. If you buy commercial property insurance as a stand-alone policy for your catering business, the average cost is $75 a month, or $900 a year.
Factors that affect the price of catering insurance
Catering insurance costs vary depending on the type of coverage you need and your company’s risk profile. Insurers take into account things like:
Products and services offered
The type of services you offer will go a long way to determine your premium. Caterers that offer alcohol, for instance, will need to have liquor liability insurance in many states. Also, such caterers may have to pay more for general liability insurance.
Business property and equipment
This particularly affects general liability, BOP, and commercial property insurance policies. The general rule is that the more valuable your business property and equipment are, the more money you have to pay to insure them.
Your insurer will likely consider your annual business income when computing quotes for your BOP and general liability insurance. That’s because courts usually use the size of your income in determining how much you will pay for liability suits. So, the more money your business makes, the more you will likely pay for your insurance.
The kind of catering services you render will determine how much you will pay for your premiums. Caterers that offer their services to high-class clients may have to pay more since they will likely pay more for damages if there are issues.
Also, your business operation will determine the number of coverages you will need. For instance, you may need commercial auto liability insurance if you have to move your equipment from place to place.
Some places are more prone to crime and disaster than others. When you run a business in an area with a high crime rate, your insurer believes that you likely will be affected soon enough, so you might pay more. This is usually true for insurance policies like property insurance.
Also, your location and the average distance you travel will increase your auto insurance cost. The more distance you travel for business, the more you have to pay to insure your vehicles.
Types of insurance purchased
Caterers usually need a range of policies to stay protected. However, the more coverage you buy, the more you pay. When buying the policy, the coverage limit and the deductible also affect cost.
Your coverage limit refers to the extent of protection your insurer is willing to give you. It is the maximum amount of money your insurer might pay in the event of a covered peril. Usually, the more the coverage limit, the higher your premium.
Your deductible, however, is your responsibility in covering damages. That is, the amount you will pay from your pocket before your insurer pays their part. Usually, choosing a higher deductible means you will pay less for insurance. However, you will pay more from your pocket if damage occurs.
More employees mean you will likely have issues with your clients. As a result, your insurer will consider the number of employees you have when calculating general liability.
More importantly, worker’s comp insurance is calculated per employee. This is a compulsory policy in most states. Therefore, the more your employees, the more you will likely pay for your caterer’s insurance policy.
History of claims
A catering company with a history of frequent claims will pay higher premiums.
How to reduce catering insurance cost
The following ideas may help reduce the cost of your caterers’ insurance:
Pay your premiums in full
This might be an expensive idea, but it pays in the long run. Insurance companies usually offer their clients discounts when they pay their premiums for the year instead of paying monthly. You may get discounts between 10 or 20% of the total amount by paying in one lump sum.
Compare prices across many insurers
Different insurance companies use different risk-rating models. In most cases, you might find better deals when looking around for better deals. Professionals will tell you to compare prices from at least three different companies before you decide.
You pay more for every risky operation that you do. Therefore, the best way to cut your costs might be to avoid some risks. You may do that using the following:
- Invest in burglar alarm and fire suppression systems in your kitchen.
- Avoid serving underage people alcohol.
- Train your staff on hygiene, safety, and proper serving.
- Only employ drivers with good driving records and long years of experience.
What is catering insurance?
Catering service insurance packages are insurance policies designed to protect companies that offer event and catering services. These policies protect these companies from various risks while also saving you money so you can expand your business. You’ll be covered for financial losses resulting from things like the following:
Damage to another person’s property
For example, one of your workers accidentally damages someone’s countertops with your hot pans at an event space. Repairs would be covered by your insurance package’s general liability coverage.
Injuries caused by accidents
For instance, one of your dishes burns a guest at an event so much that they need medical attention. Your general liability coverage would also help pay for medical expenses and legal fees in this situation.
Injuries at work
Assume one of your servers sprains an ankle by tripping over a guest’s foot. Combining workers’ compensation and business owners’ coverage can cover medical bills and lost wages. If you have employees, workers’ compensation is usually required by law.
Accidents and damage to your company’s vehicles
A driver in front of you brakes abruptly to avoid a collision, and your catering van rear-ends them. Repairs and medical bills will be covered by commercial auto insurance. For business-owned vehicles, this coverage is usually required by law.
If a fire breaks and destroys most of your kitchen, commercial property insurance can help with replacement or repair costs. The policy will cover you whether the building is owned or leased. It usually pays for covered events, such as fire, tornado, burst pipes, or vandalism.
Who needs catering insurance?
If you serve drinks or food at events, you should get a catering insurance policy to protect your business. Catering businesses of all sizes, including wedding caterers, social event caterers, concession caterers, corporate event caterers, and mobile catering businesses, should consider this insurance package.
Insurance requirements for catering businesses
In “dram shop laws” states that hold caterers liable for injuries caused by alcohol consumption, liquor liability insurance may be required under the law. If you do not follow state and federal regulations, it may result in losing your liquor license, which could hurt the business.
Similarly, most states of the US require that you carry workers’ compensation insurance for your workers as long as you have more than one.
Finally, you may need auto liability insurance by law if your business has a vehicle that transports your food. All states have the minimum limit for auto liability insurance that you must meet.
Although general liability insurance and commercial property insurance aren’t required by law in any state, they are essential in protecting your business.
Best catering insurance companies
Many companies offer catering insurance. It can be confusing and time consuming to look for the best catering insurance companies. We have done the research and below are our recommendations of the best catering insurance companies for your consideration:
- CoverWallet: Best for getting multiple catering insurance quotes from a single source
- Simply Business: Best for an easy application process
- Next: Best for caterers that prefer to do business online
- The Hartford: Best for catering businesses that want to get coverage through a BOP
- State Farm: Best for coverage sold through insurance agents
- Thimble: Best for fast catering insurance coverage