Company insurance is intended to safeguard the financial assets of a business owner and is a necessary investment for a catering business.
This article will discuss the primary insurance coverage for catering firms, general liability insurance, as well as additional policies that are appropriate for this industry.
Catering Companies Need General Liability Insurance
Every firm, regardless of sector, has risks that should be insured. General liability insurance is the most frequent and comprehensive form of coverage that company owners purchase.
General liability insurance covers the following risks:
Physical harm
Damage to property
Medical expenses
Legal defence and decision
Personal and commercial harm
While general liability insurance is not legally needed for companies, operating without it is exceedingly dangerous. If your company is sued, you might face costs in the hundreds of thousands of dollars (or more). The only way to avoid this sort of catastrophe from destroying your organisation is to have an adequate general liability insurance coverage in place to assist pay for these losses.
GENERAL LIABILITY INSURANCE MAY COVER COMMON SITUATIONS FOR A CATERING BUSINESS
Example 1: A food seller cuts his hand on a jutting countertop edge while delivering to your kitchen. The vendor sues your organisation since his injury necessitates surgery and many weeks off work. The vendor’s medical costs and missed pay, as well as your legal fees, would be covered by general liability insurance.
Example 2: One of your workers loses control of a handcart and smashes into a wall while working an event at a neighbourhood party area. The building owner sues for damages, claiming a gaping hole in the wall and shattered artwork. The expense of repairing and/or replacing the damaged goods would be covered by general liability insurance.
Example 3: During an event, an employee leaves a drink spill unattended while fetching cleaning equipment. A visitor stumbles on the spilled wine, fractures her arm, and then sues your business and the building owner. General liability insurance would cover your legal bills as well as any settlement amounts.
Example 4: As part of an event contract agreement, your company must present proof of liability insurance in the amount of at least $1 million.
Of course, this is not an entire list of risks covered by a general liability insurance policy, and certain situations may result in a specific peril not being covered. To minimise coverage gaps, it’s always better to speak with your agent about the terms of your policy.
General Liability Insurance Cost
Catering firms in the United States pay an average of $500 – $1,200 per year for $1 million in general liability coverage.
The cost of your coverage will be determined by a number of variables. Among them are your:
Location
Deductible
Employees’ number
Per-occurrence restriction
The overall aggregate limit
You may be able to get general liability insurance at a lower cost if you buy it as part of a business owner’s policy (BOP) rather than as a separate policy. A business interruption policy (BOP) is a more complete option that covers numerous types of coverage, such as business interruption and property insurance.
Other Types of Coverage Required by Catering Businesses
While general liability insurance is the most crucial, there are various different types of coverage to be aware of. Other forms of insurance that all catering firms should have are as follows:
Insurance for Commercial Property
In the case of a fire, burglary, or natural catastrophe, you are liable for any business-related items held in the kitchen from where you operate. After an accident, commercial property insurance would cover the expense of repairing or replacing your facility, costly culinary equipment, and party planning accessories, allowing you to recover swiftly.
Commercial property insurance is often available as part of a company owner’s policy (BOP).
Insurance for Commercial Vehicles
More time spent on the road going to and from event places increases the likelihood of a vehicle accident. In the case of an accident, any car you use mainly for work needs commercial auto insurance to cover the vehicle, driver, and others on the road. Choose a policy that covers not just accident-related vehicle repair expenses and medical care for anybody harmed, but also enough coverage for any particular equipment you have in your cars. Consider getting coverage that is more than the state-mandated minimum to protect your company from the unexpected.
Commercial vehicle insurance may be purchased as part of a business owners policy (BOP) or as a separate policy.
Insurance for Workers’ Compensation
Workers’ compensation insurance is required in most states for both part-time and full-time employees. This coverage covers your workers if they are hurt at work or get sick as a result of a workplace accident. It covers not just an employee’s medical expenditures and missed pay if they need time off to recuperate, but also any disability or death benefits resulting from a work-related accident.
While many states enable company owners to opt out of coverage, avoid this choice if you expect to be involved in the day-to-day operations of your catering firm.
Coverage Options for Some Catering Businesses
In addition to the insurance listed above, your catering company may need other forms of coverage based on particular elements of your operations. Some of them may not apply to you, so be sure to ask your agent whether policies are appropriate for your company.
Insurance for Liquor Liability
Unfortunately, events often occur when alcohol is present. Liquor liability insurance may protect your company against alcohol-related mishaps such as fights, accidents, and falls. It also covers your legal bills if you are involved in any connected cases.
Insurance for Product Liability
At every catered event, your customers want you to offer fresh, high-quality cuisine. Unfortunately, you may sometimes encounter a problem or scenario over which you have no control. Product liability insurance protects your company if a product you sell causes harm or disease.
Because insurers adapt product liability plans to particular organisations and the items they service or sell, speak with an insurance specialist for advice on the best coverage for your organisation.
Umbrella Insurance for Businesses
The catering industry exposes company owners to a wide range of liability hazards. While most claims are covered by your general liability insurance policy, certain incidents or lawsuits may be so severe that they threaten to deplete the limits of your main coverage. Commercial umbrella insurance protects you from having to pay for legal expenses and awarded damages that exceed the limits of your main policy out of pocket.
Additional Security Measures for Your Company
Although investing in company insurance is simple (and necessary), it should not be your first line of defence. Yes, insurance will reimburse your company for cash losses incurred as a result of an occurrence, but it is much preferable to avoid losses altogether.
With this in mind, here are a few steps you can take to better secure your company:
Make use of legally binding contracts and other business agreements. (We provide free templates for several of the most often used legal forms.)
To safeguard your personal assets, form a limited liability company (LLC) or a corporation. (To discover how to incorporate an LLC or company in your state, see our step-by-step tutorials.)
Keep your company licences up to date.
Streamline the internal procedures of your company. This will eliminate unneeded variables from routine activities and establish a secure, consistent environment in which to do business.
If your company is an LLC, you should check into LLC insurance.