How Insurance Needs Differ for Traditional Restaurants v. Mobile Food Businesses 

Traditional sit-down restaurants and mobile food businesses have uniquely different needs when it comes to insurance. While there is some overlap in coverage needs, it’s important to understand the differences when it comes to insuring your business. 

We’ve laid out the insurance needs of both traditional sit-down restaurants and mobile food businesses and why it’s not only vital to the success of your business to insure your business but how your insurance needs will be different for each type of business.

Running a restaurant can be validating, exciting, and thrilling all at once. But, it can also be stressful and uncertain, especially when trying to find the perfect risk management solution. Restaurant insurance can provide your business with a safety net when it comes to claims and risk. And when it comes to a traditional sit-down restaurant versus a mobile food business, such as a food truck, catering business, or food cart, the insurance needs of both are vastly different and unique. 

Traditional Sit-Down Restaurant Insurance Needs

Each restaurant has its own unique restaurant insurance needs and it is important to know what coverages are available to you. 

Common insurance needs of a traditional sit-down restaurant include: 

• Fire protection

• Theft

• Commercial auto coverage

• Tools and equipment protection

• Advertising protection

• Dram shop law

These insurance needs can be protected with a plethora of restaurant insurance coverages, including: 

• General Liability Insurance

• Product Liability Insurance

• Equipment Coverage (also known as Inland Marine)

• Damage To Premises Rented

• Cyber Liability 

• Property Insurance

• Fire Coverage

• Liquor Liability Insurance

• Commercial Auto Coverage

• Personal Property Coverage

• Business Expense Coverage

• Workers’ Compensation Coverage

If your restaurant serves alcohol, it is required by many states to include liquor liability on your insurance policy. Liquor liability insurance can protect your business in case a customer becomes intoxicated and causes an accident. This type of incident could lead to a claim for which you’re held liable. 

You should also consider business operations that include deliveries or valet parking and which insurance coverage you would need for those. You would most likely need commercial auto insurance to cover the vehicle and general liability insurance to cover your business. Your coverage will also vary depending on if you own or rent your business space. 

When it comes to your business space, you’ll want to consider the risks involved. Common risks to your business space can include fire, theft, and damages done by customers. Finding an insurance policy that includes your business property should be a priority.

Mobile Food Business Insurance Needs

Mobile food business insurance needs are vastly different than a traditional sit-down restaurant, with some coverages that overlap and some that are unique to the business. There are several types of mobile food businesses, including food trucks, catering, and food carts. 

Let’s take a deeper look at the different types of mobile food businesses and how each of them has unique insurance needs. 

Food Truck Insurance Needs 

If you’re looking to start your own food truck business, let’s look at some scenarios that you could experience as a food truck business owner. 

• You park at a food truck rally and while there your food truck leaks oil all over the ground, staining it. You’re faced with the damage costs. 

• While taking a break, your security cameras catch a thief stealing equipment from your truck, not only leaving you with the cost of replacing the equipment but leaving you trying to recoup the cost of halting business operations. 

• In the middle of an event, your generator breaks down, leaving you without a means to power your food truck. 

• A disgruntled customer sues you for not preparing your food properly after they fall ill with food poisoning from the food they bought from you. 

Some restaurant insurance coverages that can help with the above scenarios include:

• Product Liability

• General Liability

• Tools and Equipment Coverage (Also Known As Inland Marine)

• Damage To Premises Rented Insurance

• Additional Insureds 

Other coverages to consider including in your policy could include:

• Worker’s Compensation

• Commercial Vehicle Insurance

• Cyber Liability

Since each food truck business is different, make sure you find the amounts and limits that work best for your unique business needs. 

Of these coverages, the one that differs the most from restaurant insurance is the damage to premises rented insurance. Food truck owners often operate in several different places. For example, one day it’s at a farmers market, and the next day at a foodie festival. It is vital to extend your coverage to their space in the event that you accidentally cause damage to it. 

Catering Business Insurance Needs

The insurance needs of a catering business include product liability in the event that a customer falls ill with food poisoning and sues you for not preparing the food adequately enough. general liability if a customer trips over a power cord and injures themselves, or damage to premises rented in case of grease stains on the hardwood floor at a venue. 

Caterers –wedding, event, and corporate alike– should include the following on their insurance policy:

• General Liability

• Product Liability

• Tools and Equipment Coverage (Inland Marine Coverage)

• Cyber Liability Insurance 

• Commercial Auto Insurance

• Workers Compensation

• Damage to Premises Rented 

Of these coverages, the one that differs the most from restaurant insurance is the damage to premises rented insurance. Caterers often run their business in several different places with several different owners, it is crucial to extend your coverage to their space in the event that you accidentally cause damage to it. 

Food Cart Insurance Needs

Food cart businesses are the most similar to food truck businesses in the aspect that many of the insurance needs are similar. Product liability is essential insurance to have as a food cart business, as well as damage to premises rented since you operate in several different locations. 

If you own a food cart you should include the following coverages on your insurance policy:

• General Liability

• Product Liability

• Tools and Equipment Coverage (Inland Marine Coverage)

• Cyber Liability Insurance 

• Commercial Auto Insurance

• Workers Compensation

• Damage to Premises Rented  

Of these coverages, the one that differs the most from restaurant insurance is the damage to premises rented insurance. Food cart owners often operate their businesses in several different locations throughout the work week. Locations can include sporting events, concerts, and festivals. When you extend your coverage to the space you are renting, you extend vital insurance in case you cause damage to that rented space.

What Types of Coverage Do You Need? 

Knowing which coverage you should protect your business with can sometimes be a confusing task. We’ve simplified types of coverages available to restaurant and mobile food business owners. 

Product liability insurance is designed to protect your business in the event that a customer gets sick from the food they purchased from you. This can be unlabeled allergens or a foodborne illness. Product liability insurance can help protect you from the cost of these product-related claims. Both sit-down restaurants and mobile food businesses should include this coverage in their policy. 

General Liability Insurance can protect your restaurant or food truck from the cost of third-party bodily injury and property damage claims. These claims can arise from your day-to-day business operations. General liability can also protect your business against claims associated with personal and advertising injury. Common general liability claims include a customer tripping over a power cord and injuring themselves or if you post a picture of your restaurant on social media and just happen to have a customer in the picture. The customer sees this post and sues you for posting without their permission. Sit-down restaurants and mobile food businesses should include this coverage in their policy. 

Equipment Coverage, also known as Inland Marine coverage, can help protect your business from the cost of replacing or repairing damaged or stolen business equipment. Many equipment coverage insurance policies protect your equipment on the go, on the job, and anywhere in between. Traditional sit-down restaurants and mobile food businesses should both include this coverage option on their policy. 

Workers' Compensation Insurance is an essential coverage to include on your policy if you have any employees. It is even required by some states. If you operate your business, both sit-down restaurants, and mobile food businesses, you should include this coverage on your policy. 

Commercial Auto Insurance is important to add to your policy if you have any vehicles you operate for business purposes. This can include deliveries or valet parking, depending on your business operations. This coverage is only needed if you have vehicles that are used for business purposes. This can include a food truck or delivery vehicle. 

Liquor Liability Insurance can protect your business from the cost of claims associated with alcohol. If your business furnishes or serves alcohol, this is a “must-have” coverage. In fact, many states even require you to include liquor liability insurance on your policy. Liquor liability insurance can protect your business from the cost of alcohol-related accidents. These accidents can sometimes cost up to tens of thousands of dollars. Including this coverage can mitigate, or in some cases, even eliminate those out-of-pocket costs. Running your alcohol-related business without this insurance could result in your business license being revoked. If you serve any alcohol, either as a mobile food business or as a sit-down restaurant, you must include this insurance on your policy. 

Damage to Premises Rented coverage can protect your restaurant or food truck from the cost of claims arising from damages done to rented spaces. If you rent your business space, this coverage is essential to your restaurant insurance policy. Many property owners and event organizers often require businesses to have this coverage and list them as an additional insured. Both sit-down restaurants and mobile food businesses should include this coverage in their policy. 

Cyber liability insurance can protect your business from the cost of cyber security breaches. If you store business information online on a tablet, computer, or mobile device, this coverage should be on your policy. Sit-down restaurants and mobile food businesses should include this coverage in their policy. 

Coverage Comparison

Each business not only has its own unique needs but also has differences in coverages. A traditional sit-down restaurant would need liquor liability insurance in order to comply with dram shop law, while a food truck would need additional insureds and higher limits of product liability insurance. Since the whole food truck operates off a generator, it is important to have tools and equipment coverage insurance that can protect it –if or when it goes out. 

Where they differ, mobile food businesses require more rented premises coverage than a traditional restaurant, and mobile food businesses often require commercial auto insurance, especially if they are a food truck. 

These coverages can be tailored specifically to the needs of sit-down restaurants and mobile food businesses through increased limits. 

When it comes to opening a restaurant, you could be franchising and in that case, the franchise may require you to have insurance or have certain insurance requirements. If you are leasing or renting the property you may also be required by the bank or landlord to have insurance. 

It is important to note that insurance is a crucial aspect of your business and could not only save you thousands of dollars down the road but also keep you in business. 

Why Do You Need Insurance for Your Food Business? 

For both traditional sit-down restaurants and mobile food businesses, insurance offers a safety net of coverages that extend to rented premises, customer injury, and liquor liability. It not only saves you money but promotes better professionalism and credibility as a business. Your food business needs insurance because it could be the difference between staying open or shutting down. 

Claims are expensive and without insurance, you could be faced with possibly paying tens of thousands of dollars out-of-pocket in fees and expenses. That could financially devastate your business and result in you shutting your doors. With insurance these claims will still happen, however, your insurance will more than likely be able to mitigate or even eliminate those out-of-pocket costs.