There aren’t a lot of online resources that help catering companies find the right insurance. Truth be told, that’s because catering is a complex business from an insurance standpoint. Caterers have essentially all the liability that normally comes with foodservice, plus the dangers of transporting that food and equipment, as well as the risks of operating in many venues that your business does not own.
When you add all of these factors together, you realize that caterers require a lot of insurance. Not necessarily a lot of expensive insurance, but a lot of different kinds of insurance to cover each key aspect of the business.
This guide is designed specifically to teach caterers what types of insurance they definitely need, as well as each kind that they may or may not need. Hopefully, this helps you find the coverage that’s right for you, and gets you feeling secure about the protection you have.
Insurance that catering businesses definitely need
Business Owner’s Policy: The easiest place to start is with a business owner’s policy (BOP). A BOP will include general liability coverage, which protects you from most customer lawsuits, as well as property coverage to reimburse you for damaged or ruined equipment. When looking for a BOP, ask around for a policy that is tailored to the catering business. This should include protections from things like fire damage, food spoilage and contamination, and business interruption (lost income). If you can find a BOP that covers all those bases, you’re off to a great start.
You may be able to add some of the other insurance policies we’re going to mention into your BOP as well. It never hurts to ask, and it can mean fewer bills to keep track of.
Professional Liability: The next protection to consider is professional liability (also called errors and omissions insurance, or E&O). This coverage will protect you in case someone sues you over a mistake in your service. For example, if you someone files a lawsuit against you because they got food poisoning from your food, or had an allergic reaction to your food, professional liability will cover you.
Commercial Auto Insurance: Next you will need auto insurance. Specifically, commercial auto insurance and inland marine insurance. Commercial auto works a lot like personal auto insurance, except that it can cover multiple business vehicles, and multiple people who might drive those business vehicles. Inland marine may sound strange, but that is just the name for insurance that protects the valuable contents of your business vehicles. For caterers, that means food, cooking equipment, and so on.
Liquor Liability: Do you serve alcohol at the events you cater? If so, liquor liability is a must-have. Without it, you can be liable for damages caused by drunk patrons. That may seem unfair, but the law is the law. Most states require it if you serve any alcohol whatsoever.
Workers’ Compensation: Finally, a workers’ compensation policy is required by law in nearly every state in the US, and protects both your business and your employees when an employee suffers a work-related injury.
Insurance you may want to consider if you own a catering business
If have more than a few employees that aren’t friends or family, than you should consider having employment practices liability insurance (EPLI). This coverage will protect you from lawsuits by employees over unfair treatment including sexual harassment, discrimination, defamation, and more.
And lastly, if you are running a large operation, your individual liability limits might not be enough. For example, if you regularly cater events with hundreds of people, a little contaminated food could create a dozen or more lawsuits at once. If you could see yourself in that situation, you may want to add an umbrella liability policy to your list of protections. This coverage simply adds on to your existing liability coverage (like general liability and professional liability), so if you hit your limit in any of them, the umbrella coverage will kick in and cover you for the extra.