25 Points You Need to Know About Catering Liability Insurance

Running a catering business comes with its fair share of uncertainties and unexpected challenges. Whether it’s a foodborne illness, property damage at an event, an injury, a last-minute cancellation, or even a lawsuit, it’s difficult to predict when something might go wrong. 

That’s why having the right liability insurance is so crucial. It’s designed to safeguard your business, your team, and your clients when things don’t go as planned. 

You might be wondering how to choose appropriate catering insurance—especially when it comes to costs, coverage options, exclusions, and required documentation. In this article, we explore the key elements and offer practical advice on how to select the right coverage for your food and beverage business.

What is Catering Liability Insurance? 

Catering liability insurance (CLI) is a specialized policy designed to protect catering professionals from legal and financial risks associated with their services. Imagine yourself organizing a wedding. One of the guests gets sick after eating undercooked chicken served at the event. If that guest decides to take legal action to cover their medical bills and other damages, this kind of insurance covers costs such as legal fees, medical payments, and compensation. 

Catering insurance for events is essential for safeguarding against mishaps such as food safety issues and everyday accidents. On the other hand, general liability coverage (GLC) offers financial protection against many risks, such as bodily injury to individuals or property damage that may arise in events hosting third parties; however, it does not specifically cover concerns related to catering services or catering van damages during transportation.  

Why Every Caterer Needs Liability Insurance 

As a catering business owner, you know that things don’t always go according to plan. Here are some common risk examples where the right coverage makes all the difference and protects your business against big risks: 

• Personal Injury: If one of your employees slips while setting up, they may file a worker’s compensation insurance claim or even sue. The policy may cover medical expenses, legal fees, and lost wages.
• Event Cancellation: Imagine your client cancels just hours before the event, leaving you with unused supplies and lost income. Catering insurance coverage helps recover those costs.
• Liquor Liability: If a guest drinks too much and causes an accident, your business may be held liable. Liquor insurance covers legal costs and damages.

6 Key Coverage Areas of Catering Liability Insurance 

We’ve already gone over some real-world examples where catering insurance can save the day. Now, let’s explore the six main areas where this coverage really helps:   

1. Foodborne Illness

If a guest gets sick from something you’ve served, this coverage helps pay medical expenses, legal costs, and any compensation claims that come up. It's a wise choice for any catering business, ensuring you're protected in case of a food-related incident. 

2. Property Damage

Accidents do happen. Whether it’s damage to the venue, your catering equipment, or other property during an event, property damage insurance ensures that you're not left footing the bill for repairs or replacements. 

3. Personal Injury

Injuries can happen unexpectedly, whether it’s a customer or an employee. Personal injury liability protects you if someone gets hurt during the event. This coverage is activated for medical costs and legal fees, offering you peace of mind knowing you’re protected. 

4. Event Cancellation Liability

Sometimes, events get canceled at the last minute. This coverage helps you recover costs for supplies and lost income, easing the financial burden. 

5. Liquor Liability

If your catering service provides alcohol at events, this insurance is crucial as it covers you if a customer over-serves themselves and causes harm or damage. 

6. Equipment and Staff Liability

This coverage protects you if an accident occurs due to your equipment or staff, covering legal fees and workers' compensation. 

How to Choose the Right Catering Liability Insurance 

Choosing the appropriate insurance may seem like a big task, but it’s essential to protect your business. Here are seven crucial factors to keep in mind:  

1. Understand Your Business Needs: Start by taking a close look at your catering business. What are the specific risks you face? Do you operate a catering van or provide alcohol at events? Recognizing your business's unique requirements will guide you in finding the right insurance.
2. Ensure Comprehensive Coverage: Make sure your catering insurance policy covers all key liabilities, including foodborne illness, property damage, and more.
3. Know the Limits and Deductibles: Be sure to check the policy’s limits (the maximum your insurer will pay) and deductibles (the amount you’ll need to cover before insurance kicks in). It’s essential to choose a balance that makes sense for your business size and risks.
4. Review Exclusions: Take the time to review exclusions. Some policies may not cover specific types of damage, injuries, or circumstances. Knowing what isn’t included can help you avoid unexpected issues later on.
5. Look for Extra Coverage Options: Some insurers offer add-ons like expensive equipment breakdown or cyber liability insurance, which may be helpful if your business handles sensitive customer data or relies heavily on catering equipment. It’s worth asking about these options.
6. Get Multiple Quotes: It’s always a good idea to compare quotes from various insurance companies. You want to ensure you get comprehensive coverage that meets your needs while remaining within your budget. Another thing is to consider the reputation of the insurer and customer support.  
7. Update Your Insurance Policy: Review your insurance as your business grows or changes to ensure you remain fully covered for every contingency.

3 More Types of Insurance 

It’s important to understand that there are three separate types of business insurance: 

1. Catering insurance addresses the unique risks specific to catering services, such as food poisoning or liquor liability.
2. General liability insurance protects your business from everyday risks, like third-party bodily injury, property damage, personal and advertising injury, and more.
3. Business personal property insurance covers your physical assets, including equipment, inventory, and furniture, similarly to catering business property coverage.

Together, these policies provide comprehensive protection by covering general, catering-specific, and property-related liabilities.

5 Cost Factors for Catering Liability Insurance 

The cost of catering insurance  varies based on several elements, including:  

1. Business Size, Type, and Location

Larger catering operations and high-profile events often face higher premiums due to greater risks. The region where you operate also affects your catering insurance costs—areas with higher accident rates or stricter regulations may increase premiums. 

2. Coverage Limits and Add-Ons

The more coverage you need, the higher the cost. Additional coverages like liquor liability will add to your premiums. 

3. Claims History

If you’ve had past claims, insurers may see your business as a higher risk and raise your premiums. 

4. Employee Count

The more employees you have, particularly those handling food or alcohol, the higher your premiums may be due to the increased risk of incidents. 

5. Deductibles

A higher deductible can lower your premiums, but it means you’ll pay more out-of-pocket if a claim arises. 

Steps to Apply for Catering Liability Insurance 

Securing business insurance does not be complicated. Follow these steps to find the right coverage for your catering company: 

1. Know Your Needs

Before applying, define what your business really needs. What kind of events do you cater to? Do you serve alcohol? How would a business owner's policy work? That way, when you apply, you’ll be clear and prepared for the insurer’s questions. 

2. Do Your Research

Look for companies that specialize in catering business insurance and have a solid reputation. Ask questions and gather multiple quotes to compare coverage, pricing, insurance packages, and what’s included. It’s important to find a balance between affordability and protection. 

3. Review Your Options

Examine the specifics of each policy, paying attention to coverage limits, exclusions, and any additional features available. 

4. Finalize the Paperwork

After selecting your policy, it’s time to make things official with the insurance company. To complete the application, you need to submit several documents, including: 

• Business Information
• Claims History
• Financial Documents
• License and Permits

Managing Risks to Reduce Insurance Costs 

Prevention is key in any business, and catering is no different. By focusing on proactive risk management, you can not only decrease your insurance premiums but also avoid potentially extra-cost situations. Use these tips: 

• Keep Food Safety Standards: Adhering to strict food safety protocols minimizes the risk of food poisoning, which can result in complaints. 
• Invest in Security: This may include hiring security personnel or using surveillance systems to prevent accidents and theft. 
• Train Your Staff: Offer regular training on safety protocols, customer service, and alcohol management to  prevent accidents and injuries during events. 
• Implement Safety Measures at Events: Ensure your event setups are safe by securing cords, using non-slip mats, and providing adequate lighting. 
• Keep Equipment: Regularly inspect and maintain your catering equipment.  
• Use Clear Contracts: Solid contracts with clients can prevent disputes that might lead to lawsuits. 
• Review Insurance Coverage Regularly: As your business grows or evolves, your risks may change. 

Frequently Asked Questions About Catering Liability Insurance 

How much does catering insurance cost? 

The catering insurance cost varies depending on your business size, location, coverage limits, and claims history. For smaller businesses or those with a low-risk profile, the annual premium might start around $500-$800. However, for larger companies or those operating in industries with higher risks, the cost can be higher. 

What is the general liability class code for catering? 

The general liability class code for catering is typically 11039, which applies to businesses involved in catering and related services. 

What does $1 million in business liability cover? 

$1 million in business liability coverage typically protects your business from legal claims, medical expenses, and damages related to accidents, customer injuries, or property damage during events. 

Is small business insurance expensive? 

Small business insurance can be affordable, depending on the coverage you need. Many small businesses find policies starting around $500 annually. 

Taking the Next Step 

If you're thinking about upgrading your catering business insurance, reflect on everything we've discussed before taking action. Know exactly what you need, including documentation and licenses, how to select the best coverage, what costs are involved, and more. Don’t hesitate to ask questions and compare options to ensure you're getting the best deal for your business. 

Looking to take your business to the next level? Book a demo with Paytronix to explore our catering software. Also, do you want to attract more customers and keep them longer? Get your copy of the 2024 Loyalty Guide now!