Should You Get Insurance for a Home-Based Food Service Business?

Many people are rethinking their careers and focusing on launching a home-based business. If you are a creative cook who comes up with unique recipes, you might consider pursuing a home-based food service business. Here’s a look at the types of insurance you’ll need for this venture.

Do I need to purchase insurance coverage for my home-based business?

While it’s typical for home-based entrepreneurs to cut corners and avoid insurance, it’s crucial to have the right protection when selling to the public or other businesses. Operating a business leaves you open to a wide array of potential lawsuits, which is why you need insurance even as a start-up business. Your small business insurance coverage will pay for court and attorney fees.

If you sell food directly from your home, there’s a risk of visitors getting injured on your property. They might faint from a disagreeable chemical odor and get hurt when they fall. Medical bills can be substantial, which is why it’s wise to be prepared with the financial safety net of insurance. If you deliver food to a venue, you definitely need at least commercial auto insurance.

Remember that any type of business insurance can be complex based on the risks involved. Various types of insurance extensions to a standard plan are usually necessary to be fully covered.

What are some major risks of operating a hospitality business?

A hospitality business such as a hotel, motel, or bed and breakfast inn involves risks related to the safety of your guests. Lodging facilities that serve food must ensure the food is safe and doesn’t lead to illness. If someone gets sick and sues your company, it can hurt your reputation. Other risks include physical damage to your property, theft, and vandalism, which are all covered by insurance.

What type of insurance plan do I require for my home-based hospitality business?

  • General Liability – This basic coverage pays for property damage and bodily injuries affecting third parties. It covers various types of lawsuits, including defamation.

  • Food Contamination/Poisoning – Since food poisoning is a risk for any business serving food, it’s essential to carry this coverage if you ever face a lawsuit from someone who becomes ill after eating food at your establishment.

  • Commercial Auto – As a food delivery service, you’ll need to ensure your company vehicles. Even if you and your employees use personal vehicles, you’ll need commercial auto insurance to be covered during commercial deliveries.

  • Workers Compensation – This plan is required in almost all states for businesses with a certain amount of employees. It pays workers who are injured on the job and even provides a percentage of lost wages.

  • Cyber Insurance – Due to the rise of cybercrime, no one can assume they are safe in cyberspace. If you run a business network that includes a database with confidential information, you should consider cyber insurance. It pays for hardware and software damage due to an online security breach.

How can you stay on top of venue insurance needs as a caterer?

The catering business often relies on partnerships with other businesses. For example, they may work with a hotel that regularly holds events such as weddings and corporate meetings. Usually, the agreement between a hotel and a caterer specifies requirements for general liability. In some cases, the venue might cover incidents, but the caterer’s coverage pays for claims and lawsuits in other cases.

At RMS Insurance Brokerage, LLC, our expertly crafted policies are written specifically for the home-based foodservice industry. We offer customized solutions to meet any operation’s specific needs. For more information, contact our experts today!

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