Catering Insurance Policy Information
Catering Insurance. Caterers prepare food to serve at a customer's location or rented facility for parties, weddings, meetings, receptions, or other events. Food is usually prepared at the caterer's location, then transported to the event. The caterer's own staff generally sets up a buffet line or provides wait service to guests.
Caterers may rent chairs, decorations, dishes, linens, and tables. They may provide alcoholic beverages, served with or without a bartender. They may offer entertainment or music.
Whether you run a small catering operation out of your home kitchen or you run a large organization that caters food for big events, there are a lot of risks associated with owning and operating a catering business. You serve food to the general public which means that you need to make sure that it is 150 percent safe for consumption. You also have to meet the needs of your clients and make sure that the members of your staff are cared for; that's just a small portion of your responsibilities.
You've put a lot of hard work into establishing your catering business and you go above and beyond to make sure that all needs are being met and everything is running smoothly; but mishaps can happen. To protect yourself from the unexpected, it's important that you have the right type of catering insurance in place.
Catering insurance protects your business from lawsuits with rates as low as $27/mo. Get a fast quote and your certificate of insurance now.
Below are some answers to commonly asked catering insurance questions:
- What Is Catering Insurance?
- How Much Does Catering Insurance Cost?
- Why Do Caterers Need Insurance?
- What Type Of Insurance Do Caterers Need?
- What Are Caterers Risks & Exposures?
- What Does Catering Insurance Cover & Pay For?
What Is Catering Insurance?
Catering insurance is a type of insurance specifically designed for businesses that provide catering services. It typically includes coverage for liability, property damage, and loss of income due to unexpected events such as accidents, natural disasters, and equipment failure.
Some policies may also include coverage for food spoilage, employee injury, and third-party liability. This type of insurance is important for catering businesses as it can help protect them from financial losses due to unexpected events, and ensure they are able to continue providing services to their clients.
How Much Does Catering Insurance Cost?
The average price of a standard $1,000,000/$2,000,000 General Liability Insurance policy for small caterers ranges from $27 to $49 per month based on location, alcohol serving, payroll, sales and experience.
Why Do Caterers Need Insurance?
Caterers need insurance for a variety of reasons. One of the main reasons is to protect their business from potential lawsuits. If a customer becomes sick from food served at an event, or if there is an accident on the premises, the caterer could be held liable. Insurance can provide financial protection in these types of situations.
Another reason caterers need insurance is to protect their equipment and supplies. If a caterer's kitchen is damaged by a fire or other disaster, insurance can help cover the cost of repairing or replacing the equipment. Similarly, if a caterer's supplies are lost or damaged during transport, insurance can help cover the cost of replacing them.
Additionally, caterers often work with clients who require proof of insurance before hiring them. Without insurance, a caterer may be unable to secure business from these clients.
Overall, insurance is an important part of protecting a caterer's business and ensuring its success. It provides peace of mind and financial protection in the face of unexpected events and helps caterers focus on what they do best - serving delicious food to their clients.
What Type Of Insurance Do Caterers Need?
The exact type of catering insurance and the amount of coverage a caterer should carry varies. There are several factors that affect your insurance needs, such as the size of your catering business, what type of clients you serve, how many employees are on-staff, and where your business is located.
While the specificities of insurance do vary from caterer to caterer, there are certain coverages that all catering professionals should have in place, including:
- Commercial General Liability - This type of insurance protects you against third-party personal injury and property damage claims. For instance, if a client claims that you damaged their kitchen while using it to prepare food for an event that they hired you for, commercial general liability will cover the legal expenses, as well as any damages that the client may be entitled to.
- Workers Compensation - If you employ a staff, even if it's just one person, you'll need to carry workers' comp insurance. This coverage will help to pay for any medical care that staff members may need if they become injured or ill on the job; it can also cover a portion of the employee's lost wages and litigation, should he or she file a lawsuit against you.
- Commercial Auto - If use a car, van, truck, or any other vehicle for work-related reasons, you'll also need commercial auto insurance. Should an employee cause an accident while making a food delivery, commercial auto will cover the cost of the damages that were made to the vehicle, building, or any other property that the employee crashed into.
- Liquor Liability - Caterers need liquor liability insurance if they serve alcohol at events, and there is a risk that someone could get injured or cause damage while under the influence of alcohol. This type of insurance can provide protection for caterers in the event that they are sued for serving alcohol to someone who then causes harm or damage to others.
These are just some of the insurance options that catering companies should invest in - there are other policies that might be needed based on operations.
What Are Caterers Risks & Exposures
Premises liability exposure at the caterer's own location is minimal as there is little or no public access. The off-premises exposures are at locations generally not familiar to either the caterer or the customer. The caterer should review the area before the event to determine the hazards involved. Servers must be well trained in the handling of hot food.
Seating areas must be reviewed regularly for spills to reduce the exposure to slips and falls. Temperatures of hot beverages must be limited to reduce injuries due to scalding. All employees must be instructed in proper customer handling, including how to deal with disgruntled, intoxicated, or overly enthusiastic customers.
There should be a contract between the caterer and the client to prevent disputes. There must also be a contract between the caterer and the owner of the event facility so that each party's responsibilities are clearly understood.
Products liability exposure is higher than in an on-site eating establishment because of the time delay between food preparation and serving. Illness can result from food poisoning, contamination, and allergic reactions. Maintaining proper temperatures during transport is vital. Monitoring the quality of food received, posting of ingredients, and maintaining proper storage temperature can reduce this exposure. Quality control requires limits on the length of time food may stay in the buffet area.
Liquor liability exposure can be very high in states that hold caterers liable for injuries resulting from alcohol consumption. The type and amount of alcohol served directly impact this exposure. Failure to comply with state and federal regulations can result in the loss of a liquor permit which may adversely impact the business.
Employees who serve alcohol should complete training courses in recognizing intoxication problems and dealing with customers. This can be a particular problem at private parties where there may be an open bar. An agreement must be in place with the contracted party as to how to control this exposure.
Workers compensation exposures come from slips, falls, cuts, puncture wounds, burns, foreign objects in the eye, heavy and awkward lifting, and interactions with customers. Employees should be trained on the carrying of heavy dishes between the kitchen and the serving areas. Food and beverage handling can result in passing bacteria or viruses, resulting in illness. The employees tend to be minimum wage and turnover may be high. Company incentives to encourage long-term employment are positive signs of management control.
Property exposures are from electrical wiring, refrigeration units, cooking equipment, and heating and air conditioning systems. All wiring should be current, up to code, and well maintained. While cooking may be limited to ovens, there may be grills and deep fat fryers. These must have automatic fire extinguishing protection, hoods, and filters. There should be fuel shut offs and adequate hand-held fire extinguishers.
The kitchen must be kept clean and grease free to prevent fire spread. Filters should be changed frequently. Spoilage exposure is high as a small fire or a power outage of even moderate duration can cause all fresh and frozen goods to be condemned as unfit for consumption or sale. Business income and extra expenses can be minimized if there is an alternative location to prepare food if there is a loss.
Equipment breakdown exposures are high as operations are dependent on the availability of cooking and refrigeration equipment.
Crime exposures are from employee dishonesty and loss of money and securities. Criminal background checks should be conducted on any employee handling money. Cash from bars should be regularly stripped and moved to a safe area. All orders, billing, and disbursements must be handled as separate duties. Regular audits must be conducted.
Inland marine exposure includes accounts receivable from billings to customers, a special property floater for food and equipment transported and used off site, and valuable papers and records for customer and supplier information.
Business auto exposure is moderate due to the food being transported from the caterer's premises to the event location. While it is important to transport the food in a timely manner, there must be sufficient time provided for its safe transport. All drivers must have an appropriate license for the vehicle being driven and acceptable MVR. Company vehicles should be used for all deliveries.
These must be maintained with records maintained at a central location. If employees use their own vehicles, the vehicles should be checked for maintenance and upkeep. Because most personal auto policies do not provide coverage when the vehicle is used for commercial purposes, requiring proof of insurance will be of little assistance.
What Does Catering Insurance Cover & Pay For?
Here are some reasons caterers may be sued:
- Foodborne illness: If customers get sick from consuming food provided by a caterer, they may file a lawsuit alleging food poisoning or foodborne illness. This could result in medical expenses, lost wages, and other damages.
- Allergic reactions: If a caterer fails to disclose or properly handle allergens in their food, resulting in a customer having an allergic reaction, they may be sued for damages.
- Property damage: If a caterer causes damage to a venue or other property while providing their services, such as spills, stains, or broken equipment, they may be liable for repair or replacement costs.
- Personal injury: Accidents can happen during catering events, such as slips, trips, and falls. If a customer or guest is injured due to the caterer's negligence, they may file a lawsuit for medical expenses, lost wages, and other damages.
- Breach of contract: If a caterer fails to fulfill their contractual obligations, such as not providing the agreed-upon food, services, or equipment, they may be sued for breach of contract.
How insurance can protect caterers:
General liability insurance: This type of insurance can cover costs associated with third-party bodily injury or property damage claims, such as medical expenses, property repair or replacement costs, and legal defense fees in case of a lawsuit.
Product liability insurance: If a caterer is accused of selling or serving contaminated or unsafe food that causes illness or injury, product liability insurance can provide coverage for legal defense fees, settlements, or judgments.
Allergen liability insurance: This type of insurance can provide coverage for claims related to allergic reactions caused by the caterer's food, including medical expenses, legal defense fees, and damages.
Commercial property insurance: This insurance can protect caterers against property damage to their own equipment, supplies, or other assets, as well as provide coverage for business interruption losses if their operations are disrupted due to covered events, such as a fire or theft.
Professional liability insurance: Also known as errors and omissions (E&O) insurance, this coverage can protect caterers against claims of professional negligence, mistakes, or failure to perform services as promised, such as breach of contract claims.
It's important for caterers to carefully review their insurance policies, understand the coverage limits, deductibles, and exclusions, and work with a qualified insurance professional to ensure they have appropriate insurance coverage that fits their specific needs and risks. In case of a lawsuit, the insurance can help cover the costs associated with legal defense, settlements, or judgments, up to the limits of the policy, which can help protect caterers from significant financial losses.
Commercial Insurance And Business Industry Classification
- SIC CODE: 5812 Eating Places
- NAICS CODE: 722320 Caterers, 722310 Food Service Contractors
- Suggested Workers Compensation Code(s): 9082 Restaurant NOC
Description for 5812: Eating Place
Division G: Retail Trade | Major Group 58: Eating And Drinking Places | Industry Group 581: Eating And Drinking Places
5812 Eating Places: Establishments primarily engaged in the retail sale of prepared food and drinks for on-premise or immediate consumption. Caterers and industrial and institutional food service establishments are also included in this industry.
- Automats (eating places)
- Box lunch stands
- Buffets (eating places)
- Carry-out restaurants
- Coffee shops
- Commissary restaurants
- Concession stands, prepared food (e.g., in airports and sports arenas)
- Contract feeding
- Dairy bars
- Diners (eating places)
- Dining rooms
- Dinner theaters
- Drive-in restaurants
- Fast food restaurants
- Food bars
- Food service, institutional
- Frozen custard stands
- Grills (eating places)
- Hamburger stands
- Hot dog (frankfurter) stands
- Ice cream stands
- Industrial feeding
- Lunch bars
- Lunch counters
- Oyster bars
- Pizza parlors
- Refreshment stands
- Restaurants, carry-out
- Restaurants, fast food
- Sandwich bars or shops
- Snack shops
- Soda fountains
- Soft drink stands
- Submarine sandwich shops
- Tea rooms
- Theaters, dinner
Catering Insurance - The Bottom Line
To make sure that your business is properly protected, speak to an experienced insurance agent to find out exactly what type of catering insurance coverage you need and how much coverage you should carry.
Additional Resources For Food Service Insurance
Learn about restaurants, bars, liquor stores commercial insurance coverages. See how small business food service insurance help protect against accidents, oversights and lawsuits resulting from business operations.
- Bagel Shop
- Coffee Shop
- Concession Stand
- Farmers Market
- Grocery Store
- Ice Cream Shop
- Internet Cafe
- Liquor Liability
- Liquor Store
- Sandwich Shops
- Specialty Food And Restaurants
The food service industry is a vital part of the economy and plays a crucial role in providing food to individuals and businesses. However, it is also a high-risk industry that is prone to numerous potential liabilities and risks. That's why it's important for food service businesses to have insurance in place to protect themselves against financial losses and legal issues.
One of the main reasons the food service industry needs commercial insurance is to protect against liability claims. When running a food service business, there is a risk of someone getting sick or injured due to food poisoning or food allergies. Insurance can provide coverage for these types of claims, helping to cover the costs of legal fees and damages.
Another reason the food service industry needs insurance is to protect against property damage. This can include damage to the business's physical location, such as from a fire or natural disaster, or damage to equipment, such as kitchen appliances. Commercial insurance can help cover the costs of repairs or replacement, ensuring that the business can continue to operate smoothly.
Additionally, commercial insurance can provide coverage for losses due to unexpected events, such as theft or vandalism. This can be especially important for food service businesses, as food products and equipment can be expensive to replace.
The bar and liquor industry is highly susceptible to accidents and injuries. With the presence of alcohol, there is a higher risk of slip and fall accidents, fights, and other mishaps that could result in serious injuries to employees or patrons. Insurance can provide coverage for these types of incidents and help protect the business from financial liability.
In summary, business insurance is essential for the food service industry due to the numerous risks and liabilities that can arise. It can provide financial protection against potential losses and legal issues, helping businesses to operate safely and securely.
Minimum recommended small business insurance coverage: Business Personal Property, Business Income and Extra Expense, Spoilage, Equipment Breakdown, Employee Dishonesty, Money and Securities, Computers, Valuable Papers and Records, General Liability, Employee Benefits, Umbrella, Hired and Nonowned Auto & Workers Compensation.
Other commercial insurance policies to consider: Building, Earthquake, Flood, Leasehold Interest, Real Property Legal Liability, Accounts Receivables, Bailees Customers, Fine Arts, Cyber Liability, Employment-related Practices, Environmental Impairment, Liquor Liability, Business Automobile Liability and Physical Damage, Garagekeepers and Stop Gap Liability.