Insurance For Catering: What They Need To Be Covered

If you’re transitioning from insuring restaurants to insuring catering businesses, you could be forgiven for thinking they’re nearly identical. Isn’t it true that they both sell food? Caterers need brokers to know their stuff because they’re often not insurance experts and may mistakenly think that a minor GL policy will be enough for their business.

It will be your responsibility to educate them on the real risks that their businesses face and how different policies protect their financial well-being.

This guide will teach you about the coverages caterers require and the risks they face, with real-world examples you can share with clients to emphasize the point.

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What is the purpose of catering insurance?

Catering business insurance is required whether you own a full-service catering company, provide catering services from your restaurant, or are just starting out as an independent caterer.

Caterers work with a diverse range of clients, from wedding planners and event managers to corporate clients and conference directors — and any of them has the potential to become litigious.

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Catering is critical to the overall success of an event, and your client will expect you to deliver. The food must be delicious, arrive on time, and be free of injuries or property damage.

It’s a tall task. An accident in the kitchen may result in a delicious recipe, but an accident while catering can result in major legal issues and financial strain. Without catering business insurance, you could be held personally liable for those costs, which could jeopardize your catering business’s future.

Accidents and all, a dependable catering liability insurance policy allows you to continue growing your catering business. Catering insurance protects you from accidents and the legal and medical costs that come with them, whether you’re at fault or not.

That’s right. Clients have the right to sue you whether or not you did anything wrong. Fortunately, whether you did something wrong or not, a good catering insurance policy can protect you.

What Are The Three Types Of Caterers?

Every catering business is different, which means each one has different insurance requirements. In general, most catering businesses will fall into one of three categories:

On-premise caterers: host the events they cater at a specific location, usually a hotel, convention center, or restaurant.
Off-premise caterers: These caterers come to their clients. Typically, the food is prepared off-site and then trucked to the location of the event.
Mobile caterers: These caterers travel to their clients’ locations and prepare the food on-site, typically in their own food trucks.

What is covered by Catering Business Insurance?

Catering companies face a variety of risks, ranging from spilled beverages to slips and falls. Catering liability insurance protects your company if these mishaps result in bodily harm or property damage.

Non-employee third-party bodily injury

While refilling guests’ glasses at an event, your caterer spills a pitcher of water, just as another guest is walking by. They trip and fall, breaking their hip.

Damage to third-party property

While backing up the catering van to park it, one of your caterers collides with the venue’s wall. The venue owner is now suing you in order to recoup the costs of repairing the building.

Defense costs

Following the event, a spill is discovered, resulting in a large electric bill. They blame you, even though you know the spill was caused by another vendor. A General Liability policy will assist you in covering the costs of defending yourself against this claim.

Omissions and errors

Liability policies for catering companies include professional liability. With these kinds of claims, your client may sue you for negligence or other errors related to your services. Perhaps your team’s negligence caused damage to your client’s kitchen, preventing them from using it for the following weekend’s event, costing them thousands of dollars.

What Insurance Coverages Caterers Need (Plus Real Examples Of Needing It)

Many inexperienced caterers may be unaware of the types of insurance they require. Worse, they believe that a GL policy will cover every eventuality. That is why it is critical to go over what coverages caterers require and why those coverages will help them in a pinch.

Insurance for General Liability

No matter how small the company, every catering business will require a basic GL policy. This insurance will protect them from the costs of lawsuits as well as being held liable for mistakes made while catering.

This type of insurance is most commonly required when a bad case of food poisoning or an allergic reaction results in a lawsuit. A Portland caterer, for example, was sued for $2.9 million after food poisoning allegedly killed a woman’s husband. A general liability policy would help pay for this caterer’s legal defense and any damages if they were found to be liable for the death.

Insurance for property

Property insurance protects your clients in the event of theft or damage to catering equipment. Theft is common in restaurants and catering businesses, so having adequate property insurance is critical when expensive equipment goes missing in the middle of the night.

For example, a catering company in Arizona had all of their catering equipment stolen while it was being stored in a U-Haul. Property insurance would assist them in covering the costs of replacing that equipment and resuming operations. However, not all property insurance policies cover off-premises equipment, so ensure that off-premises caterers are adequately covered.

Liquor Liability

Alcohol is a significant source of revenue for any caterer, but it also has legal implications. Many caterers may be unaware that serving alcohol exposes them to a slew of new and potentially financially crippling lawsuits. That is why, if they serve alcohol at all, they must have a solid liquor liability policy in place.

These policies will cover legal fees and penalties if an injury or accident occurs as a result of someone being served too much alcohol at an event.

A catering company was named as a defendant in a lawsuit in 2018 alleging that they had knowingly overserved a guest. This guest then drove drunk, resulting in the death of a passenger. Liquor liability would assist that catering company in paying for their defense so that their business is not destroyed as a result of this lawsuit.

Insurance for Employment Practices (EPLI)

EPLI exists to protect caterers from the costs of employee-related lawsuits. Employees who believe their rights have been violated may sue the caterer. EPLI helps cover court costs and any damages awarded by the court if they are found liable.

In New York, two lawsuits were recently filed against caterers by their employees. The first claimed retaliation following a class action settlement, while the second claimed that the caterer withheld tips. Even if you treat your employees like family, there is always the possibility that they will interpret your actions negatively and sue you.

Catering businesses would be vulnerable to these types of lawsuits without this coverage, which isn’t fair to the owners or the employees who rely on them for a living.

Cyber Liability Insurance

Most caterers believe they do not require cyber insurance. However, in most cases, they would be incorrect. Cyber liability insurance is required for any business that has private customer data such as phone numbers, names, or credit cards. If that data was stolen, they could be sued, and without cyber insurance, they would be liable for the costs. Cyber insurance also assists in paying for losses caused by cyber-attacks and minimizing losses following a security breach.

Hackers took control of a catering company’s computer systems in Connecticut and demanded $30,000 from them. Fortunately, this company had already backed up its systems and did not have to pay, but it demonstrates how easily even a catering business can become involved in cybercrime.

Insurance for Commercial Vehicles

Commercial vehicles are required for caterers who must transport food and equipment from their kitchen to the venue. If the caterer’s vehicles are damaged, broken into, cause harm to others, or are involved in a crash, commercial auto insurance will protect them. They also protect owners from the costs of liability suits resulting from a vehicle collision.

In 2017, a catering van was stolen and used by criminals in a crime spree, demonstrating the importance of this insurance. The van was used in two burglaries, one of which occurred at a gas station and involved the van being used as a battering ram. Commercial auto would help cover the obvious damages the van sustained.

What is the cost of Catering Insurance?

The cost of your Catering Insurance Policy is determined by several factors. Things like your zip code, coverage limit, team size, and coverage length all play a role in determining the risk associated with insuring your business.

If you want to get a quote for catering insurance for your client, first register your agency and then create your personal login. Rush quotes are available upon request.

However, you do not have to commit to long, expensive policies when dealing with insurance companies. Through the some Insurance companies app, you can access flexible Catering Insurance and customize your coverage down to the month, day, or hour. Additionally, if you need to add Additional Insureds, you can do so.

Conclusion on catering Insurance

Catering insurance has always been available to meet the specific needs of hospitality businesses that deliver or provide their services directly on the premises of their customers.

As such, it differs from and complements the type of business insurance coverage that traditional restaurants and bars have required.