Apropos of nothing, I got an e-mail this week that included an infographic about food trucks and the potential liability issues that come with owning one. (You can see the graphic after the jump.) The illustration was put together by Western World Insurance Group, which handles so-called “excess and surplus lines” policies.
It means Western World insures things that the big companies won’t.
Though Western World doesn’t currently insure any food trucks, the company thought it might be a public service — or a nice PR move — to show people all the risks that food truck owners try to cover with their insurance. It would appear that trucks need every form of insurance short of a dog-bite policy.
It got me wondering about the coverage that trucks do have to carry — and how difficult policies may be to obtain. I called Kristi Whitfield, co-owner of Curbside Cupcakes, who told me how much the insurance industry has adapted in the three years since modern food trucks appeared on the D.C. scene.
“When we first started,” Whitfield says about her truck that launched in November 2009, “it was difficult finding any company to insure us.”
Back then, Whitfield says she had to approach her current insurance carrier, State Farm, about covering her unique business, which is part commercial vehicle and part restaurant.
The insurance giant was at something of a loss, she recalls. The request “was such a square peg in a round hole,” Whitfield says. State Farm did cobble together a package of policies that seemed to do the job, but Whitfield was always concerned that she “was not really properly covered.”
Whitfield has since changed carriers to Erie Insurance, which is the go-to company for a number of trucks in the Washington market. She now has a package of policies that includes coverage for the truck, workers’ comp and business liability, Whitfield says. She pays about $1,000 a month for it, but expects the costs to drop as the food truck movement continues to grow.
Like Whitfield, Josh Saltzman — co-founder of the PORC barbecue truck and its recent brick-and-mortar offshoot, the Kangaroo Boxing Club — had a hard time securing insurance until he learned about Erie. The PORC truck, he says, carries $3 million in liability insurance, which costs the owners a lot. He won’t divulge the monthly premium, but says it’s about “70 percent for what I pay for [insurance for] a restaurant that serves booze.”
(Another perspective on premium costs: The BBQ Bus pays about $2,000 a month, notes co-owner Che Ruddell-Tabisola, who is also the executive director of the D.C. Food Truck Association. The BBQ Bus’s coverage includes a rainy-day policy, Ruddell-Tabisola says, which gives the owners “a little bit of money to help us” when weather-related damage may cause the truck to remain sidelined for a few days.)
PORC’s Saltzman offered another insurance story to give me an idea of how difficult the food truck business can be on owners. After Saltzman and his partners bought their truck in Chicago, they had to drive it to Washington. But to do so, they needed vehicle insurance. They approached a major carrier, which quoted the guys an unusually high annual premium because the company knew the owners would drop the policy once they arrived in Washington to start building out the vehicle and registering it with the city. Saltzman uses the word “gouge” to describe the terms of the policy.
Fortunately for food truck owners, the insurance business is catching up to them, notes Thomas Perch, senior vice president of product management and development at Western World. He’s the one who put together the graphic above.
“[A]s food trucks have become more prevalent, insurers are beginning to respond to the industry’s unique needs,” he wrote in an e-mail to All We Can Eat. “Policies that package most coverages in one (workers compensation being the exception) are becoming available. An independent licensed insurance agent should be able to locate the proper coverage.”
And what coverages do food trucks need? Perch says they need “commercial automobile liability and physical damage, general liability, business property (sometimes referred to as inland marine), equipment breakdown and workers compensation.”
“It is particularly important for food truck vendors to obtain their auto and general liability coverages from the same insurance company to guarantee liability claims are handled with minimal controversy,” he adds.
Food for thought for future mobile vendors.