Catering insurance:

A business owner’s guide

Delectable food, creative drinks, and exceptional service. Caterers deliver it all, and they do it in a wide variety of environments.

It’s a rewarding career – but with reward comes risk. With the right insurance and risk management plan, you can protect your business, employees, and customers.

In this guide, we’ll cover:

• Who needs catering insurance?
• Why do caterers need insurance?
• What kind of insurance do caterers need?
• How much does catering insurance cost?
• Do caterers need alcohol surety bonds?
• Managing risk in catering
• Choosing a risk partner that understands your catering business

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Who needs catering insurance?

Catering insurance provides essential protection for any catering business, from small in-home caterers to large-scale catering operations. This includes:

• Catering companies providing food and beverage services at events
• Food trucks serving meals at various locations
• Event planners using catering services
• Personal chefs providing services at clients’ homes or private events
• Restaurants offering catering services

Why do caterers need insurance?

Caterers need insurance to protect them from financial, legal, and reputational risks.

Businesses face a variety of risks in the catering industry. One of the biggest: liability for the food you serve.

Your food brings your clients joy, but it can also carry the risk of foodborne illnesses, allergic reactions, or food contamination issues. If a guest gets sick, you could be held liable.

Other risks in the catering industry include:

• Property damage and theft
• Employee injuries
• Vehicle accidents

Insurance coverage can help you safeguard your assets and mitigate potential liabilities.

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What kind of insurance do caterers need?

There are many types of insurance that could benefit your business. That’s why it’s important to follow a consultative approach to understand the full scope of your exposures. Then, your agent can help identify insurance solutions to mitigate your risk.

The policies we typically recommend for catering businesses are:

• General liability insurance
• Workers’ compensation insurance
• Commercial auto with HNOA endorsement
• Business interruption insurance
• Commercial property insurance
• Equipment breakdown coverage
• Inland marine insurance
• Liquor liability insurance
• Product liability insurance

Let’s explore each policy and when your business might need it.

Required insurance for caterers

Legal insurance requirements are determined by your state’s Department of Insurance, health regulatory agency, and lease contracts. Thus, the coverage required for your business depends on which state(s) you operate in and your contractual obligations.

Your insurance agent can help you identify the specific requirements for your business.

General liability insurance

General liability insurance covers claims that your business caused third-party injury or property damage. It helps protect your company from financial losses due to lawsuits or other legal claims stemming from your operations such as a trip and fall, illness, or even personal injury.

When we recommend general liability

Some states require certain types of businesses to carry general liability coverage. Even if not required, GL provides fundamental protection for your business. We recommend it for every business that interacts with the public or customers.

Workers’ compensation insurance

In most states, businesses with a certain number of employees must carry workers’ compensation. Workers’ comp covers medical bills and lost wages for employees who are injured or become ill on the job.

When we recommend workers’ comp

This no-fault insurance policy protects you and your employees from the financial impact of workplace injuries. Each state has different workers’ comp requirements, but we recommend it for most businesses with employees.

Commercial auto with HNOA endorsement

Commercial auto insurance covers vehicles used for business purposes. In most states, it’s required for commercial and personal vehicles. In case of an accident, it helps cover the cost of:

• Repairs to your vehicle
• Medical costs
• Damage to property
• Legal expenses if someone sues you

If your employees use their own vehicles for business or deliveries, their personal auto policies might not cover accidents on the job – or may not sufficiently cover your business. A hired and non-owned auto (HNOA) endorsement covers your business for liability-related claims stemming from the use of vehicles not owned by your business.

When we recommend commercial auto and HNOA

We recommend commercial auto for businesses that use vehicles for business purposes, such as deliveries. If employees are using personal vehicles for business, we also recommend the HNOA endorsement.

Essential catering insurance policies

These policies are likely not required, but we consider them essential coverage for caterers.

Business interruption insurance

Business interruption coverage, also called business income insurance, protects businesses against financial losses due to unexpected interruptions to their operations. It typically covers:

• Lost profit
• Payroll
• Rent or mortgage payments
• Utilities
• Ongoing business expenses

Examples of covered interruptions include natural disasters, power outages, and unforeseen equipment failures.

When we recommend business interruption insurance

We recommend business interruption coverage for any business owner who wants to mitigate the risk of disruptions caused by unexpected events.

Commercial property insurance

Commercial property insurance protects your building and physical property from events like:

• Fire
• Theft
• Vandalism
• Hail, windstorms, lightning
• Natural disasters

It covers financial losses from property damage, lost income, and other expenses while recovering.

When we recommend commercial property

We recommend commercial property coverage for most businesses that own or rent property, including buildings, equipment, inventory, and supplies.

Equipment breakdown coverage

Equipment breakdown is an endorsement that can be added to your commercial property policy. It covers unexpected mechanical or electrical failures of your essential equipment. It covers:

• Repair or replacement costs for damaged equipment
• Losses from business interruption due to breakdown
• Spoilage or contamination due to equipment breakdown

When we recommend equipment breakdown coverage

We recommend an equipment breakdown endorsement for any business that relies on expensive and highly-specialized equipment.

Inland marine insurance

Inland marine helps cover the replacement costs if your products or equipment are lost, damaged, or stolen during transport.

When we recommend inland marine

We recommend inland marine for any hospitality business that regularly transports equipment and supplies.

Liquor liability insurance

Liquor liability insurance protects you from legal claims and financial losses arising from alcohol-related incidents. This essential coverage is required by many states and commercial leases.

It typically covers:

• Legal defense costs
• Settlements
• Judgments

When we recommend liquor liability

In most states, a liquor license and liquor liability insurance are legally required if you serve alcohol to be consumed on the premises. 

Even if your business’s primary purpose is not serving alcohol, if you serve it at special events, you should consider liquor liability coverage.

Product liability insurance

Product liability insurance covers claims that your product caused injury or property damage. It’s a common policy for businesses that manufacture or sell products. It covers costs related to a product liability claim, such as:

• Legal defense
• Settlements
• Judgments

When we recommend product liability

We recommend product liability coverage to any business that manufactures, distributes, or sells physical products – like food.

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How much does catering insurance cost?

Insurance companies calculate your premiums using several factors:

• Business size and revenue
• Location
• Claims history
• Coverage limits

Because insurance costs can vary, it’s important to work with a risk manager to find the best solution for your business. Businesses with complex risk profiles will find the most value from partnering with an independent agent that will help them proactively manage risk for long-term success. Learn more about the benefits of integrated risk management.

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Managing risk in catering: 4 common risks

1. Food product liability

Foodborne illnesses, allergic reactions, or contamination issues can harm your customers and lead to legal claims.

To mitigate these risks:

• Train staff on strict food safety protocols, including proper storage, handling, and preparation
• Keep detailed records of ingredient sourcing, food temperatures, and cleaning procedures
• Protect yourself with product liability insurance

2. Property damage and theft

An incident can damage expensive property and equipment — whether it’s yours or someone else’s.

To prevent financial losses from property damage:

• Implement security systems like cameras, alarms, and secure locks to deter theft and unauthorized access
• Secure catering vehicles and equipment during events by training staff members to monitor and control access
• Carry sufficient general liability, commercial property, crime insurance, and inland marine insurance

3. Employee injuries

A serious employee injury can cost a business hundreds of thousands of dollars, impact operations, and lower employee morale.

To mitigate the risk associated with workplace injuries:

• Create clear safety policies and protocols and require use of proper safety equipment
• Conduct regular safety training, inspections, and machine maintenance
• Get adequate workers’ compensation coverage

4. Vehicle accidents

Motor vehicle accidents are the leading cause of work-related deaths in the U.S. If your employees drive a vehicle for work, they face significant risk every time they get behind the wheel. An MVA can cause serious injuries, property damage, and liability for third parties.

To reduce your MVA-related risk:

• Provide safe driver training to every employee
• Monitor driver behavior with telematics technology
• Carry adequate commercial auto insurance and HNOA if needed

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Choosing a risk partner that understands your catering business

To protect the business you’ve worked hard to build, insurance alone is not enough. It’s crucial to identify the most critical threats and make strategic decisions that will allow you to grow your business without disruption.

When it comes to risk, caterers face unique challenges. We’re right there with you – we work in the food and beverage industry too. We just happen to be on the risk management side.

When you partner with POWERS, we’re more than your insurance agency. We’re a true business partner invested in your success. Our philosophy combines: