Insurance for food truck businesses
What kinds of business insurance do food truck operators need?
What is insurance for food trucks?
This is a term that refers to types of business insurance that can offer peace of mind to Australian mobile businesses (such as coffee vans, food trailers and other mobile food business owners) when the unexpected happens.
Unlike business insurance for traditional restaurants business insurance for food trucks accounts for the added risks of mobility, such as vehicle accidents, food contamination during transport and equipment damage.
Running a food truck in Australia is an exciting business, but it also comes with its fair share of risks. Whether it’s accidental damage, equipment breakdowns or customer injuries, many unforeseen events can disrupt your operations.
What does business insurance for food trucks cover?
A comprehensive insurance policy covers food truck business owners for financial losses eventuating from a wide range of risks. You can choose from several types of insurance cover, including but not limited to:
- Public liability insurance: This covers you if someone gets injured or their property is damaged because of your food truck business.
- Commercial vehicle insurance Covers your food truck for the cost of damages due to accidents, theft or vandalism.
- Product liability insurance: Helps if a customer gets sick or injured after consuming your food.
- Portable equipment insurance: Covers the cost of damaged or lost kitchen equipment, generators or perishable stock.
Mandatory insurances
Depending on the type of food truck business you operate, and where you operate it from, you may be required to have certain insurance policies in order to operate your business in accordance with the law.
- Compulsory Third Party (CTP) insurance. If your food truck business operates out of a vehicle that is required to be registered, you will need to take out Compulsory Third Party (CTP) insurance. Every registered motor vehicle in Australia must have CTP insurance, which covers injuries suffered by the third parties if your truck is involved in an accident.
- Workers compensation insurance. If you employ staff, workers’ compensation insurance is mandatory to cover employee injuries or illnesses sustained on the job.
Recommended insurance for food trucks
A comprehensive business insurance for food trucks policy protects food truck business owners from a wide range of risks, regardless of the type of food they serve.
Public liability insurance
Public liability insurance covers you against claims of injury or property damage brought on by your food truck and is required by most councils, markets, and festivals. Additionally, it provides financial protection against the costs of settling claims, including medical expenses, repair costs, and legal fees if a customer or third party suffers injury due to your business activity.
Example: A customer slips and falls because of leak from your food truck, resulting in an injury claim.
Product liability insurance
Product liability insurance helps cover the business for any harm or damage caused by a defective or unsafe product it manufactures, sells, or distributes. It can safeguard your business’ liability against claims of food poisoning, allergic reactions or foreign objects found in your food.
Example: A customer suffers food poisoning from a contaminated meal you sold and sues your business.
Commercial vehicle insurance
This insurance covers your food truck against theft, fire, vandalism and accidents. It can help cover the cost of repairs or even replacement if your vehicle is damaged or stolen.
Example: If your food truck is in a crash and needs repairs, this insurance can help cover the cost.
Portable equipment insurance
Food trucks rely on expensive mobile equipment to operate. Portable equipment insurance can help cover the costs to replace or repair this equipment if they are stolen, lost or damaged.
Example: If your coffee machine or generator gets stolen overnight, this insurance helps you replace it quickly so you can get back on the road.
Common exclusions in food truck insurance
- Wear and tear: Normal equipment and vehicle deterioration are typically not covered.
- Intentional damage or negligence: Claims due to reckless behaviour or intentional harm may be denied.
- Unapproved modifications: Claims may be rejected if you’ve modified your truck in a way that isn’t covered.
- Failure to meet health standards: Your claim could be affected if food poisoning results from improper food handling.
Why do food trucks need insurance?
There are a number of key risks that food truck business owners may face – these include the potential for costly legal fees, vehicle repairs in the event of an accident or other damage, and potential business shutdowns. If protecting your mobile food truck business from the financial impact if any of these risks were to eventuate is important to you, you might wish to consider business insurance to give you financial peace of mind. Depending on the type of food truck business you operate, you may also find that some types of insurance are mandatory , either required by legislation or by a premises you are operating from – for example, if you take your business to a carnival, the carnival operator may require certain types of insurance to be a vendor.
Always read the policy wording on the Product Disclosure Statement (PDS) and the Target Market Determination (TMD) to ensure you know what is covered in your policy, and that the policy is a right fit for you.
How much does business insurance for food trucks cost?
The cost of your food truck’s business insurance in Australia varies based on several factors, including:
- Type of cover: Policies that only cover one risk, such as a standalone public liability insurance policy, are generally cheaper than comprehensive business insurance policies that include several different categories of insurance.
- Business location: Insurance costs may be higher in cities or high-traffic areas with greater risks.
- Vehicle value and condition: Newer, more expensive food trucks may cost more to insure compared to older models.
- Claims history: Businesses with a history of insurance claims may face higher premiums.
- Annual revenue: Higher revenue businesses may pay more for liability coverage.
How can I lower the cost of my food truck insurance?
While the cost of insurance will vary depending on the specifics of the food truck business and the types of insurance policies you choose to take out, you might want to think about the following options.
- Compare policies: Compare insurance quotes from different insurance companies and check the underwriting of each policy before deciding on the right policy that cover the most within your financial budget for your business.
- Consider your deductible: Increasing your excess can help lower your annual premium – but be aware, you will be required to pay any excess amount up front at the time you make a claim so choose an excess you would be comfortable paying.
- Keep a clean claims record: Some insurers may offer discounts based on your claims history.
- Invest in security: Installing alarms, GPS trackers and fire suppression systems may help reduce insurance costs
Meet our business insurance expert, Adrian Taylor
As a General Insurance expert with over 13 years’ experience in financial services, Adrian Taylor strongly believes in the protection and peace of mind that all types of business insurance provide business owners. Adrian says this type of cover can be the difference between a business staying afloat and going under if trouble arises.