By Michael Giusti, insuranceQuotes.com
Being the life of the party can be exhilarating, and—as a caterer—you are the unseen life of the party. Unfortunately, you are also on the hook if things go terribly wrong.
Just like any other business, caterers need to protect themselves through insurance. By understanding a few basics about protecting your business, you can stop worrying and start planning the next big event.
A Typical Policy
Most businesses are covered by a bundle of insurance called a business owner’s policy, and caterers are no different. However, there are unique aspects caterers need to consider when it comes to insurance:
1. First off, it pays to shop for your catering policy from a company with some experience. There are some great companies out there that specialize in catering, and they are more than happy to customize your policy for your specific needs.
For example, a good catering policy is non-premises specific—that is, it can move to your client’s location with you. The nature of catering means that you aren’t set up in one place from week to week, so it is essential that your coverage moves with you.
2. Another key is to look for a blanket annual policy. Sure, there are companies that will sell you policies by the event, but unless you really are only catering a small handful of events a year, those small costs add up quickly, and that annual policy makes much more sense.
3. You also need to make sure that your insurer is serious about certificates of insurance. Many clients will demand that you cough up proof of coverage before you land the job, and the best insurers have great systems set up for that. Some have proof of coverage built into apps, while others have web portals that let you quickly get electronic copies to share. And most are also more than happy to include those clients as named insured on your policy through those portals.
Catering insurance comes with a variety of coverage limits, with the low end being around $300,000 per incident, and a $600,000 annual aggregate. But typically clients request a $1 million/$2 million policy, so unless you have a specific need, buying more coverage may not be worthwhile in the end.
One of the great benefits to a catering policy is that the insurance company can help hire an attorney to protect you in case something goes wrong and you are sued. And if you lose, they will also cover your liability for bodily injuries or medical payments (after your deductible, of course). If a venue you are working in is damaged because of you or your staff, that liability portion will have your back as well.
Additional points to keep in mind:
• Make sure to talk to your insurer about all the waiters and contract workers you employ so you can get a properly matched worker’s compensation policy.
• Many states will hold caterers liable if a guest is overserved, so liquor liability becomes important.
• Depending on your situation, coverage for spoilage or equipment breakdown can be essential.
• And don’t forget your trailer or mobile kitchen, which will likely need its own endorsement to stay protected.
There are plenty of restaurants that never dreamed of becoming a caterer before lockdowns forced them to look for other revenue streams.
The good news for them is that many of the coverages needed for caterers are typical for restaurants, with a few exceptions.
One thing that restaurants may not have thought about is auto insurance. If your new catering venture requires vans or trucks, a commercial auto policy is essential.
On the other hand, if your employees handle the delivery, you aren’t off the hook for insurance. In that case, make sure to get a hired and non-owned auto policy, which would protect you if someone from your company causes damage with a vehicle that isn’t owned by your business while they are on the job.
To make sure you aren’t leaving out something, make sure to let your agent know you have moved into the catering world to ensure everything is properly covered.
While no expense is easy to take on, the cost for proper insurance is an investment in keeping your business safe from catastrophe. How much you pay depends on your specific circumstances and what you need covered—the more employees and more coverages you need, the more you will pay.
But paying less may mean you aren’t well covered, so skimp at your own risk—literally.
ABOUT THE AUTHOR
Michael Giusti, M.B.A., is a senior writer at insuranceQuotes.com, which helps consumers shop and compare insurance quotes online. He has worked as a journalist for more than 20 years, including as a reporter at a daily newspaper in Florida, as an editor at a regional business journal, and as a writer for national and international publications. He specializes in business, technology, finance, insurance, automotive and industry-focused writing.