Food truck insurance: coverage, requirements and costs

A food truck is a restaurant that also has to pass as a commercial vehicle. It needs commercial auto insurance: what it covers and what it leaves out for the road, general liability with products cover for the food, physical damage coverage for a truck whose kitchen build-out can cost more than the chassis, and workers' compensation for the crew. Food trucks, carts and trailers fall under NAICS 722330, mobile food services. The trade's particular problem is that the kitchen, generator, propane and customers all share a few hundred square feet that moves.

Why food trucks need business insurance

Three things set mobile food apart from a storefront. First, the vehicle: a loaded truck is heavy, often driven by cooks rather than professional drivers, and parked next to crowds. Second, cooking equipment runs on propane or a generator in a confined space, so a fire can destroy the whole business in minutes. Third, you do not control the site. Every event, brewery lot and office park has its own landlord or organizer, each with an insurance requirement that arrives as a contract.

Mobile operators also face the ordinary food claims: a customer gets sick, a burger arrives with an allergen, someone is burned by a fryer, a line forms in a traffic lane and a patron trips. The FDA's Food Code is the model local health departments use to write and enforce rules for mobile units, so inspection and permit rules vary by city and county.

Core coverages

• Commercial auto. Covers liability for crashes and, with physical damage, repairs to the truck. The standard business auto form is ISO CA 00 01, and it pays for what the policy's symbols say it covers; see business auto coverage symbols explained: what each number covers. A personal auto policy usually excludes or limits business use; check the policy wording. See commercial vs personal auto: when you need a business auto policy.
• General liability. Pays third-party bodily injury and property damage and legal defense. Confirm that products-completed operations is included for food you sell; it is how food-borne illness is usually handled. See general liability insurance: what it covers and what it does not.
• Physical damage with a stated value for the build-out. If a custom kitchen is built into the truck, the auto physical damage value should reflect the equipment, not just a stock vehicle. Without that, a total loss may pay for the chassis and little else. Schedule the build-out or insure the equipment under an inland marine form; see inland marine insurance for tools, equipment and goods in transit.
• Business personal property and inland marine. Fryers, griddles, coolers, tents, generators, POS devices and inventory you carry between sites. A storefront property form does not follow the truck.
• Workers' compensation. Required by state law once you have employees; see workers' comp requirements by state: who must carry it. Drivers, cooks and event helpers are all covered employees.
• Spoilage and business income. Food loss from a refrigeration breakdown or a truck breakdown, and income lost while the truck is in the shop after a covered loss; see spoilage coverage for refrigeration breakdown and power outage.

Coverage you may be required to carry

Most of the rules are local. City permits often set minimums. Sacramento's food-vending requirement calls for commercial general liability of at least $1,000,000 per occurrence and the city as additional insured by separate endorsement. Becker, Minnesota's code requires $1,000,000 per occurrence with products and completed operations, a $2,000,000 aggregate where there is one, auto liability, and the city as additional insured where the unit operates on public property. Lewiston, Minnesota's application asks for a certificate showing $1,000,000 general liability, $2,000,000 combined single limit auto liability, and separate food products liability, and it asks for the commissary the unit is affiliated with. These are examples; other cities use different numbers, so call yours.

Events and venues typically require $1 million per occurrence, additional insured status, and sometimes a waiver of subrogation. Festivals may add alcohol, workers' comp and umbrella requirements. See certificates of insurance: what they prove and what they do not.

Health permits and commissary. The permit is a health-department rule, not an insurance rule, but many cities will not issue a vending permit until the commissary agreement and the insurance certificate are both on file.

Common claims and how to prevent them

• Vehicle accidents. Hire drivers with clean motor vehicle records, set a rule for who may drive, and keep a load-securing routine. See Driver selection, MVRs and your commercial auto premium.
• Fire. Propane lines, generators and fryer oil are the usual culprits. Install a fire-suppression system over cooking equipment, keep extinguishers current, inspect hoses and regulators, and never run a generator inside the cabin. Underwriters ask who services the suppression system and when.
• Food-borne illness and allergens. Use certified food-protection managers where required, record cooling and holding temperatures, and post an allergen sheet at the window.
• Burns and cuts. Mats, closed-toe shoes and burn protocol in a tight kitchen.
• Customer falls at the window. Keep cables and hoses off walkways and mark steps.
• Theft and vandalism. Lock the truck, tracker or camera on board, and keep a record of the equipment serial numbers.
• Spoilage. Temperature monitors on every cooler and a plan for the commissary cooler if the truck's fails.

What drives the cost

• Auto: the number and type of vehicles, the stated value of the truck and build-out, where the truck is garaged and driven, driver ages and records, and annual mileage or radius.
• General liability: gross sales is the usual exposure base; some programs use a flat rate by event count. Alcohol service is rated extra.
• Property and equipment: scheduled value of the cooking line and generators, and how the truck is stored overnight.
• Workers' comp: payroll by class code, with seasonal crews raising the audit.
• Underwriting questions: years in business, number of events per year, menu and cooking methods, whether you serve at private parties, whether you serve alcohol, propane use, commissary details, loss runs, and driver licenses.

Specialized coverages to consider

• Liquor liability for events and breweries where you serve beer or cocktails; see liquor liability insurance and dram shop laws.
• Hired and non-owned auto if staff run supply errands in their own cars; see Hired and non-owned auto (HNOA) coverage: what it covers and who needs it.
• Special event policies for single-day gigs; see special event insurance.
• Catering and off-site cover if you cook at a client's property.
• Umbrella liability when a venue asks for $2 million.
• Cyber for mobile POS and online ordering.

How to buy

Many food trucks can quote online; The Hartford and NEXT both publish food truck pages that list liability, auto and equipment cover, and the packages differ in how they treat the vehicle. Larger fleets, multi-truck brands and businesses with a commissary kitchen usually do better with an independent agent. Have ready: the truck's year, make, VIN and stated build-out value, a menu, annual sales, a list of events or regular sites, copies of the permit and commissary agreement, driver licenses, and loss runs. See how to prepare an insurance submission underwriters will read.

Key takeaways

• A food truck needs commercial auto, general liability with products cover, and equipment protection; a personal auto policy will not do.
• Cities and event organizers set insurance minimums by contract or ordinance; $1 million per occurrence is common, but not universal.
• Insure the build-out, not just the chassis.
• Fire prevention for propane and fryers is the first thing underwriters ask about.
• Commissary and health permits are separate from, but often tied to, the insurance certificate.