If you’re expanding from insuring restaurants to also insuring catering businesses, you’d be forgiven for thinking that they’re practically the same. They both sell food, right? The truth is that insurance for caterers varies quite a lot from restaurants and requires you to understand the industry and what unique risks they face.
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. Your job will be to educate them about the real risks their businesses face and how different policies protect their financial well-being.
This guide will teach you about the coverages caterers need and the risks that they mitigate, with real-life examples you can share with clients to drive the point home.
What are the Three Types of Caterers?
Every catering business operates a little differently, which means each one will have unique insurance needs. Broadly speaking, most catering companies will be filed in one of three categories:
- On-premise caterers: These caterers host the events they’re catering at a specific location, usually a hotel, convention center, or restaurant.
- Off-premise caterers: These caterers come to their clients. Usually, the food is cooked off-site and then trucked to wherever the event is happening.
- Mobile caterers: These caterers go to their clients and cook the food on-site, usually in their own food trucks.
When you get new clients interested in catering insurance, understanding what kind of catering business they run should be your first step. Once you know how their business runs, outline which kinds of insurance coverage they need. For instance, commercial auto insurance is crucial for mobile and off-premises caterers but likely will not be necessary for on-premise caterers.
What Insurance Coverages Caterers Need (Plus Real Examples of Needing It)
Many inexperienced caterers may not know what kinds of insurance coverage they need. Or, worse yet, believe that a GL policy is good enough to cover every eventuality. That’s why it’s important to go through what coverages caterers actually need and why those coverages will help them in a pinch.
General Liability Insurance
Every catering business will need a basic GL policy, no matter how small the company is. This coverage will protect them from the costs of lawsuits and being held liable for mistakes they make while catering.
This kind of insurance coverage is most commonly needed after a bad case of food poisoning or an allergic reaction leads to a lawsuit. For example, a Portland caterer was sued for $2.9 million after food poisoning allegedly killed a woman’s husband. A GL policy would help pay for this caterer’s legal defense and cover any damages if they’re found liable for the death.
Property insurance coverage protects your clients in case of theft or damage to catering property. Theft is common in restaurants and catering companies, so having good property insurance is imperative when expensive equipment goes missing in the night.
For instance, this Arizona catering company had all of their catering equipment stolen while it was stored in a U-Haul. Property insurance would help them cover the costs of replacing that equipment and getting back on track. However, not all property insurance policies cover off-premises equipment, so make sure off-premises caterers are covered properly.
Alcohol is a big moneymaker for any caterer, but it also comes with legal risks. Many caterers may not realize that serving alcohol opens them to a world of new and potentially financially devastating lawsuits. That’s why, if they serve alcohol at all, they need to have a good liquor liability policy. These policies will cover the legal costs and penalties if an injury or accident happens due to someone being overserved alcohol at an event.
In 2018, a catering company was named as a defendant in a lawsuit claiming they had knowingly overserved a guest. This guest went on to drive drunk, leading to the death of a passenger. Liquor liability would help that catering company pay for their defense so that their business isn’t ruined over this lawsuit.
Employment Practices Liability Insurance (EPLI)
EPLI is there to protect caterers from the cost of lawsuits that come from employees. If employees feel their rights have been violated, they may sue the caterer. EPLI helps cover costs related to the court battle and any damages awarded by the court if they are found liable.
Recently, two lawsuits were leveled against caterers by their employees in New York. The first was alleging retaliation after a class action settlement, and the other claimed that the caterer withheld tips. Even if you treat your employees like family, you can’t discount the chance that employees might interpret your actions negatively and sue. Without this coverage, catering businesses would be vulnerable to these kinds of suits, which isn’t fair to the owners or the employees who rely on them to make a living.
Cyber Liability Insurance
Most caterers would assume that they don’t need cyber insurance. However, in most cases, they’d be wrong. Any businesses with private customer data like phone numbers, names, or credit cards need cyber liability insurance to protect them. If that data were stolen, they could be sued, and without cyber insurance, they’d be on the hook for these costs. Cyber insurance also helps pay for losses caused by cyber-attacks and helps them minimize any losses after a security breach.
In a case from Connecticut, hackers took control of a catering company’s computer systems and demanded $30,000 from them. Luckily, this company had already backed up its systems and didn’t need to pay, but it goes to show how easily even a catering business can get into trouble when it comes to cybercrime.
Commercial Auto Insurance
Commercial vehicles are a must for any caterers that need to move food and equipment from their kitchen to the venue. Commercial auto insurance covers the caterer if those vehicles are damaged, broken into, cause harm to others, or are involved in a crash. They also protect owners from the costs of liability suits arising from a crash with the vehicle.
For an extreme example where this insurance is necessary, in 2017, a catering van was stolen and used by criminals in a crime spree. The van was used in two burglaries, including one at a gas station, where the van was used as a battering ram. Commercial auto would help cover the obvious damages the van sustained.
The Benefits of Distinguished Off-Premise Caterer’s Insurance
Distinguished offers an industry-leading insurance program designed for off-premise catering companies or companies running a combination of restaurant and catering services. Unlike many other insurance companies, we have over 30 years of experience in the hospitality industry and understand what caterers need to be covered in their line of work.
Our coverage is written on an admitted basis with an A+ XV rated carrier and combines GL, Property, Liquor, EPLI, Cyber, and Commercial Auto into one convenient program. Combine that with superior claims services, and you get a winning program that is comprehensive for clients and convenient for brokers.
Want to learn more? Read more on our restaurant package insurance page or talk to one of our insurance experts.
How to Get a Quote ASAP for Your Client
If you’re interested in getting your client a quote for catering insurance, start by registering your agency and then creating your personal login. Once that’s done, download our package application, and submit it to your sales executive. Rush quotes are available upon request.
Insurance for Caterers FAQ
Which catering businesses are eligible for Distinguished policies?
Distinguished primarily insures off-premise caterers, though it may make exceptions for businesses that include both restaurants and catering services. We do not insure caterers that specialize in weddings or banquet halls.
Do you have a minimum premium?
Yes, our minimum premium is $5,000.
Do you accept new ventures?
Yes, we will consider new ventures if they have prior experience.
About Distinguished Programs
Distinguished Programs is a leading national insurance Program Manager providing specialized insurance programs to brokers and agents with expertise in Real Estate, Community Associations, Hotels, and Restaurants. Property and liability products are distributed through a national network of agents and brokers. Serving the same core markets and partnering with the most stable and reputable carriers, Distinguished Programs’ high-limit umbrella programs remain the clear choice in its specialty areas for superior coverage, competitive pricing, and attentive service. Through thoughtful innovation, stemming back to 1995, Distinguished Programs fosters growth and opportunities for its brokers, carriers, and employees.