Getting Insurance for Your Food Truck

You can’t run a food truck without insurance. Many states require that you have at least a minimum level of coverage before they allow you to sell anything from your food truck.

Underwriting Basics

Premiums are the amount of money you pay your insurer every month for covering your food truck business. A deductible is an amount of money that you have to pay out of pocket before the insurance kicks in and pays anything itself.

Many factors can affect how much each term will cost you, but you can think of it this way. The higher your premiums and deductible are, the less coverage you’ll get. And vice versa.

Types of Policies

Here are some types of policies that are available:

Claims-Made Policy

First, if you know that your food truck business will be a one-time thing, and you probably won’t ever start it again, then a “claims-made” policy might work for you.

This type of policy typically has a lower premium and deductible. It’s because it only covers claims made while the policy is in effect. Once your policy expires, your coverage ends well (and typically, you can’t renew it).

“Claims-made” policies might also help you because you can buy them at the same time that you start operating your food truck. If you end up deciding to close down your business, there won’t be any issues canceling the policy (and, therefore, no extra costs).

Finally, “claims-made” policies will help you because most of them only require that you have been in business for a certain amount of time before they’ll cover your food truck.

Occurrence Policy

If you want to sell your food truck, even if you end up deciding to quit the business at some point down the line, you probably want to get an “occurrence” policy. These policies cover your food truck regardless of when you caused the damages. So, if someone gets sick from one of your dishes five years after you sold your truck, there will be coverage.

The only downside is that these policies usually have higher premiums and deductibles than claims-made policies, which are more expensive. Another thing to consider with “occurrence” policies is that there are two types: actual and broad.

An actual policy covers you for the incidents that happen, but a broad one will cover you if something happens to your food truck, even if nothing has yet. So, say you have an accident with your truck, and the repairs cost $1500. The insurer might only cover you for a maximum of that amount. With a broad policy, on the other hand, you could get an unlimited amount of coverage.

Transferable Policy

Finally, if you know you want to sell your business at some point down the line because you don’t like it anymore or aren’t making enough money, then you might want to get a “transferable” policy.

With this type of policy, the insurance will cover your business even after you stop running it. This doesn’t mean that all transferable policies are more expensive than other policies, though. Like “claims made” and “actual,” there’s also a difference between broad and actual when it comes to transferable policies.