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 $47/mo. Get a fast quote and your certificate of insurance now.
Why Is Insurance Wo Important for Caterers?
Working as a caterer can be very rewarding, but it can also be extremely demanding. There's a lot that you need to attend to; the food you offer has to be safely prepared and made to the specifications of your clients, you have to provide a safe environment for your employees to work in, you make deliveries, you take orders, you handle money... that's just a small sampling of your responsibilities.
Even though you try your best to make sure that everything runs smoothly, you've got a lot on your plate, which means that mishaps are bound to arise. A vendor could slip and fall while making a food delivery to your facility; a client file a lawsuit against you, claiming that the food you served was responsible for food poisoning; an employee could cut herself while chopping fruits for a platter. These are just some of the issues that can arise, and you're legally responsible for all of them.
The cost of injuries, medical expenses, repairs, and legal fees and everything else that you could be facing if a travesty occurs can be exorbitant. Paying for these costs out of your own pocket could put you in financial ruin. That's why it's so important to have the right type of catering insurance in place; it prevents you from having to pay such expenses yourself, which saves you from economic hardship and the potential loss of your livelihood.
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.
These are just some of the insurance options that catering companies should invest in.
Caterer's 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.
Commercial Insurance And Business Industry Classification
- SIC CODE: 5812 Eating Places
- NAICS CODE: 722320 Caterers, 722310 Food Service Contractors
- Suggested ISO General Liability Code(s): 11039
- Suggested Workers Compensation Code(s): 9082
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.
Small Business Economic Data & Insurance Regulations
Perhaps you have the next great idea for a product or service that you know will appeal to your local area. Maybe you want to contribute to the economic growth of your community. Whatever the reason is, if you're thinking about starting a small business, it's important to understand pertinent information relating to small businesses in the United States; namely economic information and insurance regulations. After all, if you want your small business to succeed, you have to understand the economic trends organizations of a similar size in your area.
Likewise, you want to ensure that your small business is well protected with the right business insurance and that you are in compliance with the rules and regulations that pertain to commercial insurance in your region.
Read up on economic statistics and insurance information that relates to small business owners in the United States.
Small Business Economic Data In The United States
Here's a look at some information that was compiled by the Small Business Association (SBA) regarding the economic data that pertains to small businesses in the United States:
- In 2015, small businesses in the United States employed an estimated 58.9 million American workers, or 47.5 percent of the nation's private workforce.
- Largest shares = fewer than 100 employees. The small businesses that employed 100 people or less had the largest share of employment amount small businesses.
- Employment increased by nearly 2 percent. In 2018, employment amongst small businesses increased by 1.8 percent, which is an increase of 1 percent from the prior year.
- Increase in proprietors. In 2016, the number of small business proprietors increased by 2.3 percent.
- In 2015, small businesses were responsible for creating 1.9 million net jobs. Organizations that employed 20 people or less had the largest gains, as they added an estimated 1.1 million net jobs.
- There were 5.7 million loans that were value less than $100,000 issued by lenders in the United States in 2016. These loans were issued under the Community Reinvestment Act.
- Small business owners that were self-employed at the incorporated businesses that they owned reported a median income of $50,347 in 2016.
- Small business owners that were self-employed at the unincorporated businesses that they owned reported a median income of $23,060 in 2016.
Small Business Insurance Information
In the business world, there are many risks faced by company's every day. The best way that business owners can protect themselves from these perils is by carrying the right insurance coverage.
The The National Association of Insurance Commissioners (NAIC) is the U.S. standard-setting and regulatory support organization. Through the NAIC, state insurance regulators establish standards and best practices, conduct peer review, and coordinate their regulatory oversight.
Commercial insurance is particularly important for small business owners, as they stand to lose a lot more. Should a situation arise - a lawsuit, property damage, theft, etc. - small business owners could end up facing serious financial turmoil.
According to the SBA, having the right insurance plan in place can help you avoid major pitfalls. Your business insurance should offer coverage for all of your assets. It should also include liability and casual coverage. The SBA recommends the following insurance plans for small business owners:
- Commercial Property Insurance: In the case of an unplanned disaster - fire, flood, vandalism, theft, etc. - this type of coverage will help you avoid paying for the damage out of your own pocket. Even if you rent the property, you should still carry commercial property insurance.
- Commercial Liability Insurance: In the event that a legal situation arises - a negligence lawsuit, for example - commercial liability coverage will provide financial protection. It will cover the cost of legal defense fees, court fees, and even moneys that may be awarded.
- Commercial Auto Insurance: If you operate a vehicle for any activities that are related to your business - transporting and/or delivering goods, or meeting with clients - commercial auto insurance is legally required for businesses of all sizes, including small businesses.
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
- Beer Distributor
- Coffee Shop
- Concession Stand
- Farmers Market
- Grocery Store
- Liquor Liability
- Liquor Store
- Liquor Wholesaler
Bars, taverns, restaurants, cafeterias, and other eating and drinking places have significant insurance needs in three separate areas.
The first is property protection for physical damage to equipment, furnishings, building and supplies due to fire and other perils.
The second is premises liability coverage to protect customers due to slips, trips and falls on the premises, as well as for consumption of food products.
The final need is protection for employees due to frequent cuts, burns and other common employee injuries. Establishments that sell or serve liquor or other alcoholic beverages also need liquor liability coverage.
Slips and falls, along with customer illness due to being served tainted food or drink, are the primary liability exposures. The commercial general liability (CGL) is used to provide coverage for these exposures.
It is important to note that liquor liability coverage is excluded under the CGL form if a risk is in the business of serving alcoholic beverages. Many establishments in this category should therefore consider purchasing a separate liquor liability coverage form.
Restaurant kitchen equipment, inventory and dining room fixtures are common exposures for most eating and drinking places. Many of these establishments do not own the buildings they occupy but have long-term leases and have invested money in various improvements and betterments, including cooking equipment, dining room decorations and permanent fixtures.
There are major differences in the food service business and the very different exposures they present. There are many specific types of restaurants to cater to individual needs and tastes. There a several main commercial insurance classifications for food service.
Concessionaires: The most basic "eat on the run" type of restaurant is not classified as a restaurant at all but is referred to as a concessionaire. Class Code 11168: Concessionaires applies and the accompanying note states that all food and beverages must be sold through hawking or peddling. There can be no location to which customers walk up and purchase the food. This classification includes food sold at sporting events, exhibitions, and parks.
Caterers: Are very similar to restaurants with significant differences. The caterer prepares the meals at its own kitchen or commissary and then transports it to the locations where it will be served. Some final preparation may take place at the final location but the majority generally takes place at the caterer's location. The caterer's employees serve the meals and beverages and oversee the consumption of the food.
Restaurants: The way restaurants are categorized and classified uses the percentage of alcoholic beverage sales as the first criteria, followed by other features or operations.
Common to all of these categories is that entertainment-oriented venues such as nightclubs, cabarets, dance halls, discotheques, and comedy clubs must be separately classified and rated. This means that the sales that those entertainment activities generate must be broken out and rated separately from the sale or food and drink.
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.