Catering Insurance

The catering industry has seen a huge resurgence since pandemic restrictions started to ease. Since the uptick in weddings, conferences, banquet hall events, and many other types of celebrations that call for an in-person gathering, catering teams of all sizes are happily welcoming an influx of clients. 

During the preparation for any event, there is so much to plan for (and, for catering staff, so many meals to coordinate). However, it’s important to plan for the unexpected as well. Out of the hundreds (or even thousands) of people you serve, one small liability claim from a guest can cost tens of thousands of dollars, totally disrupting your business’s financial security. Before taking on any catering event, it’s imperative to have adequate insurance coverage.

Catering insurance is a combination of several policies designed to protect catering companies. Catering insurance covers risks specific to serving food and drink at an event or facility.

Catering insurance offers comprehensive coverage for the general and specific risks that catering businesses may face. You can expect catering insurance to include the following coverages:

• Commercial General Liability (CGL) Insurance: CGL insurance protects you from many general, day-to-day risks faced when running a business. If a third party is injured or their property is damaged due to your business’s actions, you can be held liable, and CGL may offer protection. For example, if an employee hands a customer a hot plate and burns their hand, you could be liable for their injury. In this case, a CGL policy could cover the cost of their medical bills.

• • Product Liability Insurance: As part of a CGL policy, you can also be covered for product-related risks. This coverage protects you against claims of property damage or bodily injury caused by your products, such as the food or drinks you serve. For instance, say a customer has an allergic reaction to a dessert you serve and alleges there must have been cross-contamination. Product liability insurance would cover their medical costs and your legal defence fees. Be advised that product liability insurance may not cover claims related to alcohol that you serve at an event. If you serve alcohol, you may need liquor liability insurance also.

• Contents Insurance: Contents insurance protects business assets from insured risks resulting in damage or destruction. Examples of insured risks include fire, theft, and vandalism. For example, say you’re catering at a wedding, and a fire breaks out in the banquet hall due to an electrical fault. Contents insurance could cover damage to your catering property that was damaged (and any spoiled food) due to the fire.

• Business Interruption Insurance: This coverage provides financial reimbursement for lost income after an insured event. For example, say the fire in the previous example caused damage to a significant portion of your catering equipment, meaning you were unable to work at subsequent events due to a lack of equipment. Business interruption insurance could cover the cost estimated in lost revenue. Please be advised that business interruption coverage doesn’t provide coverage for income that’s lost due to a pandemic, infectious disease, or government-mandated closures.

• Equipment Breakdown Insurance: Equipment breakdown insurance provides coverage to repair or replace professional equipment that’s broken down or damaged due to mechanical failure or an electrical issue. You can also be covered for lost revenue and food spoilage that’s directly related to the claim. Suppose you’re catering at an event, and your warming oven breaks down, meaning hot food cannot be served. Equipment breakdown insurance can cover the costs to repair the oven, and cover the estimated lost income and food spoilage costs.

• Legal Expense Insurance: Legal expense insurance covers the costs of hiring a lawyer where coverage isn’t provided under another policy (e.g. property protection, tax protection, or employee bodily injury). Legal expense insurance provides your business with legal advice from a professional lawyer and the financial coverage to retain legal services when needed.

If you serve food or drink at events, you should protect your business with a catering insurance policy. This insurance package is recommended for catering businesses of varying sizes and can be tailored to suit your needs, including:

• Social event caterers
• Wedding caterers 
• Corporate event caterers
• Concession caterers
• Mobile catering businesses

Catering businesses come in all shapes and sizes, so there’s no fixed cost. For a starting point, a small- to medium-sized catering business can anticipate a starting cost of approximately $800 per year for commercial general liability insurance with a policy limit of $2M. 

To calculate a quote, an insurance company will take into consideration the components that make your business unique.

Here are some of the main factors you can expect to be asked about when making a quote:  

• Years of experience
• Types of services
• Locations served 
• Annual and projected gross revenue
• Number of employees