How much does food service insurance cost?

Food and beverage businesses spend an average of $44 per month, or $525 per year, on general liability insurance.

Restaurants, bars, coffee shops, and other food/beverage professionals may need this coverage in order to sign a commercial lease, get licensed, or work with certain clients.

General liability insurance covers legal costs when a third party (someone outside your company) files a lawsuit over property damage or a bodily injury. It also pays for advertising injuries, such as libel, slander, and copyright infringement.

Having a storefront where you serve food and beverages to customers opens your business to many liabilities, such as customer injury. For example, a customer could slip on a wet floor at a fast food restaurant and break their wrist. If they file a lawsuit, a general liability policy would help pay for your legal costs, such as attorney's fees.

This is the average general liability insurance product for food and beverage companies that buy from TechInsurance:

Premium: $44 per month
Policy limits: $1 million per occurrence; $2 million aggregate

Product liability insurance is usually included in a commercial general liability policy. This coverage provides protection against food poisoning or allergic reactions that customers may claim they've experienced after consuming your food or beverage products.

The cost of general liability insurance depends on several factors, including the policy limits and deductible you choose. Insurance providers will also consider your type of food business, the size of your business, and any additional insured endorsements you may have.

Fortunately, LLCs and other food service companies don't have to pay a lot for insurance. Among food and beverage businesses that buy with TechInsurance, 57% pay less than $50 per month for general liability coverage. Another 23% pay between $50 and $100 per month.

Factors such as your business income, policy limits, and location affect your insurance costs. By choosing lower coverage limits or a higher deductible, you can reduce your premium to an amount that fits your food business's budget.

Most food and beverage professionals (94%) choose $1 million per-occurrence and $2 million aggregate limits for general liability insurance.

The risks of your specific type of food service business, such as fast food restaurants or bakeries, are a major factor when determining your insurance costs.

That might include:

• Whether you have sit-down dining
• The amount of foot traffic
• Interactions with customer property
• The claims history of others in your profession

To some extent, you can predict how much you'll pay for insurance by looking at costs for similar businesses. On average, food vendors pay a lower rate of $33 per month for general liability insurance, while bars pay a higher rate of $218 per month.

Below you can see how much different food and beverage small business owners pay for general liability coverage:

Small, low-risk food and beverage businesses may be eligible for a business owner’s policy (BOP), which costs an average of $148 per month or $1,770 annually.

A business owner's policy bundles general liability coverage with commercial property insurance at a lower rate than buying these policies separately. It protects against the most common liability and property lawsuits, and helps your food business recover from a fire, burglary, or other property loss.

This is the average business owner's policy for food service and beverage businesses that buy from TechInsurance:

Premium: $148 per month
Policy limits: $1 million per occurrence; $2 million aggregate
Deductible: $1,000

You can add business interruption insurance to a BOP to protect against the costs of a temporary shutdown tied to a covered property claim, such as a fire. You can also add food contamination and spoilage coverage to a BOP to cover losses related to food spoilage.

For example, if you experience a power outage and perishable goods in your refrigerator go bad, this policy would provide reimbursement for spoiled perishable items, such as milk.

The cost of a business owner's policy mostly depends on the value of your business property. Other factors such as your business's size and industry risks can also affect your premium.

A business owner's policy helps you save money on small business insurance by bundling your general liability and property coverage together at a discounted rate.

Among TechInsurance customers, 35% of food and beverage companies pay less than $100 per month for a BOP. And another 28% pay between $100 and $200 per month for coverage.

Additional factors that influence your business owner's policy costs include the number of employees you have and your claims history.

On average, food and beverage business owners pay $106 per month for workers' compensation insurance, or $1,272 annually.

State laws determine when you need workers' comp. In most states, you need it as soon as you hire your first employee. Only Texas and South Dakota do not have requirements for workers' comp, but it's still recommended.

Workers' compensation coverage pays for medical expenses and provides disability benefits if you or an employee suffers an injury on the job, or develops an occupational disease.

For instance, if a restaurant worker burns themselves while preparing a dish, this policy would pay for their medical appointments, treatments, and any other medical costs. It also supplies part of the income they miss out on while they're recovering and unable to work.

Most workers' compensation policies include employer's liability insurance. This type of insurance helps pay for legal defense costs related to workplace injuries.

Though sole proprietors and independent contractors aren't often required to carry workers' comp, it's still a good idea to buy this coverage. If you're injured on the job, your health insurance plan will likely deny the claim, leaving you with hefty out-of-pocket medical bills and significant financial loss.

The chance of an on-the-job injury is the biggest factor in determining workers' compensation insurance premiums. Food and beverage professions that have a higher risk of injury should expect to pay more.

As you can see, almost half (48%) of food and beverage companies pay less than $100 per month for a workers' compensation policy. And 77% pay $200 or less per month for coverage.

Insurance companies will take into account the number of employees you have, their occupational risks, and your claims history when calculating the cost of workers' comp.

Food and beverage professionals spend an average of $170 per month, or $2,041 per year, on commercial auto insurance.

Most states require this coverage for vehicles owned by a business, such as food trucks, catering vans, or delivery cars. If you get into an accident, it can help pay for medical expenses, property repairs, and legal fees. It also covers vehicle theft and vandalism, in case your business vehicle is stolen or damaged.

Keep in mind that sole proprietors and independent contractors who drive their own vehicle for work will need extra coverage as well. Your personal auto policy won't cover work-related accidents, so you'll want to consider buying hired and non-owned auto insurance (HNOA).

HNOA provides liability coverage for personal, leased, and rented vehicles driven for work purposes.

Insurance companies consider many factors when determining the cost of a commercial auto policy. That includes your employees' driving records, policy limits and deductibles, the number of vehicles you own and their value, and the coverage options you choose.

On average, restaurant businesses and bars should expect to pay $58 per month, or about $700 annually, for liquor liability insurance.

This coverage is much more than just added protection for your small business. If you sell or serve alcohol, it is required in most states.

A liquor liability insurance policy covers legal costs, settlements, and medical bills if alcohol is sold to an intoxicated customer who then harms someone else or damages property. This includes assault and battery.

The average liquor liability coverage for food and beverage companies that buy from TechInsurance is:

Premium: $58 per month
Policy limits: $1 million per occurrence; $2 million aggregate

Several factors determine your liquor liability insurance costs, including the policy limits you select, your liquor sales, business location, and the type of food and beverage business you own.

Small businesses spend an average of $145 per month, or $1,740 annually, on cyber insurance. Also known as cyber liability insurance or cybersecurity insurance, this policy helps pay for the cost of complying with your state's data breach laws.

A cyber insurance policy covers expenses related to a data breach or cyberattack, including legal fees and customer notification costs. It is especially crucial for food and beverage companies that store personal customer information, such as credit card numbers or phone numbers.

The cost of cyber insurance primarily depends on the amount of sensitive information handled by your food or beverage business.

Small business owners pay an average premium of $61 per month, or $735 annually, for professional liability insurance. This policy is also referred to as errors and omissions insurance, or E&O insurance.

This policy helps pay for legal costs related to accusations of professional negligence. For example, a food vendor catering a wedding could face a lawsuit if a customer is not satisfied with the quality of the food prepared on their wedding day. 

The cost of professional liability insurance depends on factors such as the policy limits you choose, your specific type of food service business, and your claims history.