It is partly due to the recent popularity of televised cooking shows, says South Western Insurance Group Limited’s senior underwriter Melanie Pon, that “the food truck industry is exploding right now.” But with every hot dog cart, chip wagon, and mobile food vendor out there comes a certain amount of liability. And as creative and exciting as Pon considers many of these ventures to be, not every market out there is willing or able to help them.
“The people in this industry are literally selling food from the side of the road,” explains Pon, “both with and without restaurant experience. Many of these operations are also first-time ventures, and receipts are typically low. I would say that 19 out of 20 are under $1500 in terms of an annual premium, so they are generally viewed as small policy situations. And when you combine all of that with the fact that these businesses are usually seasonal, you have a bit of a risky element that a lot of markets do not care to take on.”
But low value or not, Pon points out, these insureds still require appropriate coverage. And that is why South Western Insurance Group Limited’s Food Vendor program has been meeting their needs for well over a decade. “Our food truck coverage is kind of a specialized line. We cover the unit, the contents, and the liability – and that is really the main thing. With a full Commercial General Liability policy in place, we are covering pretty much anything that can go wrong when you eat somebody’s product.”
Just the same, Pon adds, food vendor clients engaged in deep-frying activity should have a fire suppression system in place. “We can insure them without this, but the rate will be higher.”
Brokers should also be aware that, while the company covers a range of operation sizes – from hot dog carts with $10,000 in receipts, all the way up to food trucks earning a couple of hundred thousand dollars a year – whether they’re permanent or seasonal, policy premiums for these businesses are 100% earned. “Operations may vary in terms of how long they’re open for business each year,” Pon explains, “but the risks are the same regardless. As a result, our policies are all annual, with no return of premium for early cancellations.”
For obvious reasons, March, April, and May tend to be the busiest months where new food vendor applications are concerned. “Spring is when people are getting their trucks together for the season,” says Pon, “so it is also when they start looking for insurance. We typically receive two or three quote requests a day at this time of year – and we are pretty successful in placing them.”
From burritos to crepes, food trucks are popping up everywhere, which is why Pon is particularly pleased to note that South Western Insurance Group Limited revamped their food vendor rates as recently as last year to ensure that the company remains competitive. “We have also made a point of keeping our fees fairly low. And with this product, we give our brokers an option on both fees and commission levels.”