Food Insurance: The Key Ingredient

What is Food Insurance? 

The food industry is vast and is comprised of several different businesses like hotels, bars, and restaurants. According to Forbes, the National Restaurant Association estimated the restaurant industry will reach $1.2 trillion in sales by 2030. While the food and beverage industries are diverse, they are equally prone to run into risks. This is why it is important to have food insurance in place.

From a customer getting severely sick from food poisoning to an unexpected theft or fire, you can be liable for any of these predicaments as a business owner.

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Types of Risks  

Some of the main types of risks businesses face are:

Customer Injuries 

A waiter rushes to serve wine and, unfortunately, trips and drops a wine glass on a customer. For unpredictable situations like this, business owners can prepare themselves with restaurant insurance.

Food Spoilage and Contamination

News by NBC pointed out how KFC was once sued for cooking chicken in a type of oil that could result in heart disease? It can be difficult to avoid such situations, but you can secure your business with food insurance.

Property Damage 

Imagine that right before wrapping up a birthday event, one of your caterers accidentally drops a heavy pan on the host’s antique table, leaving a mark. If you want to end the event on a positive note, hopefully, you have catering insurance.

infographic food insurance

What Policies Does Food Insurance Include? 

Business Owner’s Policy (BOP) 

Commercial property, commercial general liability, and business income collectively make a Business owners policy.

A BOP covers businesses in the food industry against any accidents. These accidents include food spoilage, theft, vandalism, or weather damage.

Workers Compensation Policy 

From a slip and fall on the worksite to reimbursing lost wages, workers compensation insurance covers all work-related employee injury. In other words, a worker’s compensation policy provides compensation to the employees in case of workplace injury.

Commercial Auto Policy 

Commercial auto insurance covers the cost of property damage, medical bills, and possible lawsuits caused by an accident. This policy is a must for every business that owns a vehicle.

For instance, this policy helps cover:

  • Legal charges: When your food van driver gets sued because of a car accident.
  • Medical expenses: When your food truck delivers contaminated food to your customers leading to foodborne illnesses.
  • Collision: When your food delivery van gets into an accident.
  • Uninsured motorists: When your unlicensed employee uses the food van and meets with an accident on their delivery route.
  • Non-collision damages: When your food van catches on fire.
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Commercial General Liability Insurance (CGLI) 

General Liability Insurance covers workplace third-party property damage, bodily injury, and related lawsuits. This policy is known as business liability insurance. It covers business liabilities as well.

Coverages that CGLI provides for food businesses are:

  • Customer injuries: When your customer sustains an injury on your property, CGLI will pay for medical expenses.
  • Customer property damage: When it comes to food business insurance when a server spills wine over your customer’s phone or a laptop, the policy can pay for the device’s replacement cost.
  • Advertising injuries: When your hotel’s brand logo unknowingly becomes an exact copy of your competitor’s slogan.

Liquor Liability Insurance 

Liquor liability insurance covers the cost of the property damage inflicted by an intoxicated person served with your alcohol. The policy is known as dram shop insurance as it protects businesses that sell or serve alcohol.

This policy provides coverage for the following:

  • Property damage: When a drunk customer hits another person’s car and leaves a dent on it.
  • Accidental injury: When a customer in a drunken state crosses the road and gets hit by a car.
  • Assault and battery: When a drunk customer picks a fight and severely injures another person.
  • On-the-job drinking: When your bartender drinks during work hours and causes property damage to your bar.

Commercial Cyber Liability Policy 

Whether it’s a data breach or network failure, cyber liability insurance covers all the financial losses that result from cybersecurity violations.

Cybercrimes have been increasing, and any business can be a victim of cyber threats. A New York Times article showed that companies were facing over $1 billion in losses because their loyalty programs were targeted by cyberattacks. Cyber liability insurance is a must if you want to protect your restaurants and hotels from being a target of cyberattacks. It is covered under food business insurance. This policy helps to cover:

  • Legal expenses: When a customer files a lawsuit against you for failing to prevent their data from being hacked during their stay at your hotel.
  • Data breaches: For instance, in an article published by BBC, McDonald’s delivery app in India leaked over 2.2 million users’ personal information.

Umbrella and Excess Liability Policy 

Commercial umbrella insurance acts as a roof for other liability policies. It extends the liability coverage over certain primary liability policies, such as commercial auto, commercial property, and CGLI. Commercial umbrella insurance is necessary when the cost of damages exceeds the primary policy’s limit.


Pollution Liability Policy 

Pollution liability insurance covers costs and damage claims related to pollution caused by a business. It also provides coverage for liability claims for bodily injuries, illnesses, or deaths caused due to pollution. It is an important component of food insurance.

Product Liability Policy 

Product liability insurance covers any financial or legal damages caused by selling a product. It applies to all businesses that manufacture or sell products.

For instance, in September 2011, a Muslim patron filed a case against McDonald’s. According to ABC News, the lawsuit claimed that the food chain did not meet Islamic requirements while preparing food, even though its advertising proclaimed that it did. McDonald’s paid out a settlement of $700,000 to members of the Muslim community in the area.

Commercial Property Policy 

Commercial property insurance helps to protect your business’s property and premises. For example, if your food truck hits another person’s car, commercial property will provide coverages for the damage done.

Employment Practices Liability Insurance (EPLI) 

Employment practices liability Insurance is one of the forms of professional liability insurance. This policy deals with cases such as harassment, discrimination, or wrongful termination of employees.

How Much Does Food Insurance Cost? 

The following factors that affect the cost of insurance are:

  1. The size of your business
  2. Level of risk
  3. Value of the equipment
  4. Risk management techniques, such as fire extinguishers, sprinklers, etc.

Has this article been helpful to you? Leave a comment below and share your thoughts with us.

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