The Risks of Running a Catering Business
With liability insurance, you’ll be prepared for the unexpected.
What business risks do you face as a caterer? As you know, the world of catering involves a lot of balls in the air, with no second chances. Everything is a moving target—coordinating, planning keeping your eye on the big picture, plus all the details you must deal with to ensure that every catering event goes as planned.
Like most caterers, you put your heart and soul into your catering business. So how do you help protect it if something goes wrong? The answer is having liability insurance. You could be the most talented caterer in the world, but there will always be things that are beyond your control. Therefore, it is critical for a catering business to have liability insurance.
Are you prepared for the unexpected?
Try to anticipate what could go wrong and have a back-up plan. Also remember that if your client is not satisfied, they could sue you. This is why it’s so important to carry general liability coverage, which can protect you against claims regarding your services, but also things like damages while setting up for the event. Having general liability insurance also helps covers you for transportation of food and supplies.
Every catering business has stories of successful events. On the flip side, every catering business owner will also be able to tell you about times when things didn’t go as planned. These are great learning stories. You may have some stories of your own!
Let us start with the idea that you should expect the unexpected. People are human, and humans make mistakes. We also tend to be optimistic, and to believe that nothing will go wrong. Experienced caterers know this is not the case—but this doesn’t mean they can predict everything. So, let’s look at some things caterers should plan for.
Any caterer who cares about his or her business has poured serious money into special ovens, commercial kitchen equipment and vehicles, too. Even if you have been careful about fire safety, a fire could still break out at a business next to your space that spreads to your business. Everything you have worked for, up in smoke.
The new hire behind the wheel of your catering truck is late and driving too fast. He rear-ends a car in front of him that hit the brakes without warning. This is just one reason smart caterers carry Commercial Auto insurance.
You are busy on the job at a University Alumni event, when you realize you are running low on food. Your employee can bring more food in their personal vehicle and liability coverage can extend to their car, if you have the right endorsement on your Commercial Auto policy.
Your catering event was a big success. Or so you thought. The guests raved about the food, especially the mussels. Two days after the event, you get a call. It is not from a guest. It’s from a lawyer. Apparently, a number of guests became violently ill after the event. One of the guests had to be hospitalized. The cause was traced to bacteria in mussels that had been left in the sun on a sweltering day.
Planning logistics carefully can help ensure a successful catering event. You must decide where the food will be prepared, and how it will be transported. Each of these tasks come with additional risks that could jeopardize your business if you do not have proper catering insurance.
You got the best catering gig ever. The client had deep pockets and money was no object, and the client loved your ideas. The day came, and all was going well—until your refrigeration broke down. Food that was supposed to be hot was cold. Food that had looked delicious started to lose its appeal. A hot sun turned the hors d’oeuvres into a hotbed of bacteria.
The moral of the story: You can be the most talented chef in the world, offer the most amazing food and create the perfect atmosphere for any occasion; But let’s face it: the rest is out of your control. Trucks break down or do not show up, vital equipment (like refrigerators) stop working, power outages occur at the worst moment. Even the best plans can go off the rails. Even if your events are flawless, you still need to have a dependable insurance company that is familiar with catering issues and claims. That said, catering businesses must rely on Commercial insurance to help protect against the issues below:
- Business Property Damage – Whether you run your catering business out of your home or a large facility, protecting your property from loss or damage caused by fire, weather, vandalism, and theft is critical. Although you can add an endorsement to your home insurance policy for business equipment, it could be limited. Speak to an insurance advisor to be sure all aspects of your business are covered.
- Equipment Breakdown – If your catering business uses industrial-sized kitchen equipment, you will need coverage to help protect against power surges, mechanical failures, and other damages that result in your inability to provide service. Loss of business income insurance can help assist you when these types of damages prevent production.
- Food Contamination – If the food you are serving is not kept at the correct temperature, is cooked incorrectly, or is from a source that’s contaminated, you could be held liable for food borne illnesses contracted by guests. Catering liability insurance can help protect you from such instances where you may be exposed to lawsuits.
- Food Spoilage: Caterers typically must maintain a high volume of food for each event. When power is out for an extended period, mechanical failures occur, or refrigerators and freezers break down, food could be spoiled. Fortunately, coverage is available to help compensate for these instances so that you can restock without having to take on too great of a financial loss.
- Food & Supplies Transportation –Since you will likely use delivery vans or multiple company-owned vehicles for delivery, you will need Commercial Auto insurance to help protect the property and your drivers. If your employees use their own vehicle incidentally, their personal auto insurance may not cover any work losses, so you should provide a Non Owned Vehicle Endorsement to cover excess liability expenses that occur while your employee uses their vehicle on the job. Note that you can choose to have different levels of coverage. If you subcontract with different employees, limited General Liability is available as an endorsement.
Make sure you carry the right coverage for your catering events. Even the best caterers can face unexpected situations. It’s not only about the financial liability you would face—it’s also your reputation that’s at stake.
Get an instant quote for your catering business now at infinityauto.com/business-insurance.
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