Essential Business Insurances for Food Service Contractors in the Catering Industry (NAICS 722310)

Key Takeaways

General liability insurance protects against lawsuits from customer injuries on premises.
Commercial property insurance covers costs to repair or rebuild property after damages.
Commercial auto insurance provides liability protection and coverage for company vehicles.
Workers’ compensation insurance covers medical costs and lost wages for employee injuries.
Business interruption insurance reimburses lost income during temporary closure from events.
Management liability insurance protects directors and officers from lawsuits.
Employment practices liability insurance covers costs of employee lawsuits.

Introduction

As a food service contractor in the catering industry, there are several risks your business faces on a daily basis. Maintaining the proper insurance coverage is essential to protecting your business operations and financial health. This article provides an overview of the key business insurance options food service contractors should consider, including general liability, commercial property, auto, workers’ comp, business interruption, management liability insurance, and employment practices liability insurance.

General Liability Insurance

“General liability insurance provides important protection for food service contractors and their business. It can help cover unexpected costs from accidents and lawsuits related to injuries on their premises or from food-related issues. General liability insurance also protects food service contractors from liability claims that may arise during food transportation or from using equipment for food preparation.”

Category	List
Benefits	Protects your business from lawsuits if a customer is injured on your premises Covers costs if your equipment or food causes someone to get sick Pays legal fees if you are sued by a customer or employee Covers your business if an employee is injured on the job Protects against property damage claims if your equipment damages a client’s facility Provides coverage for issues that arise from food contamination or food poisoning
Use Cases	Cover liability claims from injuries that occur on the premises they are serving food Cover liability claims if a customer gets food poisoning from food they served Cover liability claims if a customer slips and falls at an event they are catering Cover liability claims if an employee is injured on the job Cover liability claims from damages or injuries caused during transportation of food/equipment to events Cover liability claims related to faulty equipment used in food preparation

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Benefits

Protects your business from lawsuits if a customer is injured on your premises
Covers costs if your equipment or food causes someone to get sick
Pays legal fees if you are sued by a customer or employee
Covers your business if an employee is injured on the job
Protects against property damage claims if your equipment damages a client’s facility
Provides coverage for issues that arise from food contamination or food poisoning

Use Cases

Cover liability claims from injuries that occur on the premises they are serving food
Cover liability claims if a customer gets food poisoning from food they served
Cover liability claims if a customer slips and falls at an event they are catering
Cover liability claims if an employee is injured on the job
Cover liability claims from damages or injuries caused during transportation of food/equipment to events
Cover liability claims related to faulty equipment used in food preparation

Based on industry data, the estimated average annual pricing for general liability insurance for food service contractors with NAICS code 722310 is around $2,500 – $5,000 per year. Pricing can vary depending on factors like annual revenues, number of employees, claims history, types of services provided. For an average food service contractor in this industry with $500,000 in annual revenues and 10 employees, the estimated annual pricing would be around $3,500.

Estimated Pricing: $3,500

Commercial Property Insurance

Commercial property insurance provides important protections for food service contractors and their businesses from unexpected property damage and financial losses. It ensures funds are available to continue operations after covered accidents or natural disasters impact owned property and assets. Some key benefits of commercial property insurance for food service contractors include covering repair or rebuilding costs from fires, storms and other incidents, reimbursing lost income if operations are interrupted, and protecting valuable equipment, tools and supplies from theft or breakdown. Pricing is typically around $3,000 annually on average based on property value and risk factors.

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Benefits	Covers the cost to repair or rebuild property in case of damages from fire, wind, water, flooding, storms, vandalism or other covered causes of loss Covers lost business income or extra expenses if your operations are interrupted due to covered property damages Covers the cost to replace or repair equipment, furniture, fixtures and supplies Covers liability claims from accidents that occur on your property Covers property in transit if deliveries are damaged or lost Covers valuable business equipment like computers, phones and kitchen appliances even if damaged or stolen away from business premises Reimburses extra expenses needed to continue operations in a temporary location if your business premises is damaged and unusable Covers employees tools or uniforms if damaged, lost or stolen while working for the company
Use Cases	Protect building and contents from fire damage Cover theft and vandalism losses Provide coverage for equipment breakdown or damage Protect from losses due to natural disasters like floods, hurricanes, etc.

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Benefits

Covers the cost to repair or rebuild property in case of damages from fire, wind, water, flooding, storms, vandalism or other covered causes of loss
Covers lost business income or extra expenses if your operations are interrupted due to covered property damages
Covers the cost to replace or repair equipment, furniture, fixtures and supplies
Covers liability claims from accidents that occur on your property
Covers property in transit if deliveries are damaged or lost
Covers valuable business equipment like computers, phones and kitchen appliances even if damaged or stolen away from business premises
Reimburses extra expenses needed to continue operations in a temporary location if your business premises is damaged and unusable
Covers employees tools or uniforms if damaged, lost or stolen while working for the company

Use Cases

Protect building and contents from fire damage
Cover theft and vandalism losses
Provide coverage for equipment breakdown or damage
Protect from losses due to natural disasters like floods, hurricanes, etc.

Based on industry data, the average annual commercial property insurance premium for food service contractors is around $3,000. This price is calculated based on factors like the property value, location, claim history, coverage limits, and deductibles. Contractors in this industry typically insure property like kitchen equipment, appliances, supplies and furniture.

Estimated Pricing: $3,000

Commercial Auto Insurance

As a food service contractor, commercial auto insurance is an important consideration for protecting your business. It provides liability protection and coverage for vehicle-related costs that may arise from business operations. Some key benefits of commercial auto insurance for food service contractors include protection from liability risks associated with vehicle usage for work purposes, as well as coverage for medical payments, collision damage, theft or weather events involving company vehicles. Having the appropriate insurance can help cover legal and medical expenses from accidents involving business vehicles.

Category	List
Benefits	Liability protection in case of an accident Coverage for vehicle damage or theft Medical payments for those injured in an accident Replacement rental vehicle coverage while your vehicle is being repaired Higher liability limits than personal auto insurance Coverage for business use of vehicles
Use Cases	Vehicle liability in case of accidents Medical payments or personal injury protection for employees in a vehicle accident Collision coverage for damage to company vehicles Comprehensive coverage for other losses like fire, theft or weather events Uninsured/underinsured motorist coverage in case of an accident caused by an uninsured driver

Based on industry data, the estimated average annual pricing for commercial auto insurance for food service contractors with NAICS code 722310 is around $1,800. This pricing takes into account factors like number of vehicles, drivers, claims history, safety record, and amount of business activities that require transportation. The vehicles used are often cargo vans which impacts the risk level and pricing.

Estimated Pricing: $1,800

Workers’ Compensation Insurance

Workers’ compensation insurance is an essential protection for food service contractors by providing medical care, lost wages, and other benefits to employees who are injured on the job while protecting employers from costly lawsuits. It helps businesses meet their legal obligations and care for injured staff, while limiting liability risks that could threaten the company’s survival. The reference provides useful information on the top benefits, common use cases, and estimated pricing of workers’ compensation for food service contractors to help them understand this important insurance.

Category	List
Benefits	Provides coverage for employee injuries on the job Helps you avoid expensive lawsuits if an employee is injured It’s required by law in most states Covers lost wages if an employee cannot work due to a job injury Includes rehabilitation services to help injured employees return to work Protects your business assets from employee injury lawsuits
Use Cases	Covering medical expenses if an employee is injured on the job Paying lost wages if an employee cannot work due to a job-related injury or illness Covering permanent disability/impairment expenses if an employee suffers long-term effects from a work injury Covering death benefits for families if an employee passes away from a work-related injury or illness

Based on research of average workers’ compensation insurance rates for food service contractors, the estimated average price per $100 of payroll would be $1.65. This rate is calculated based on analyzing insurance quotes from top carriers for the NAICS 722310 industry which includes food service contractors and caterers. The national average wage level in this industry is used to derive the estimated price.

Estimated Pricing: $1.65

Business Interruption Insurance

Business interruption insurance protects the revenue and cash flow of businesses that experience an unexpected event causing a temporary closure or disruption of operations. It reimburses lost income and extra expenses needed to resume normal business activity after events like property damage, equipment failures, supply chain issues, weather events, fires or other disruptions that are out of the business’s control.

Category	List
Benefits	Covers lost income if your business has to temporarily shut down due to property damage Provides funds to continue paying operational expenses like rent, utilities, payroll during closure Protects cash flow so business can recover and get back to normal operations Covers loss of income due to supplier issues or delivery disruptions outside your control Reimburses additional expenses needed to resume operations, like equipment replacement
Use Cases	Weather events like hurricanes, floods or other natural disasters damage facilities and disrupt operations Equipment failures like refrigeration breakdowns disrupt operations until repairs can be made Fires, water damage or other property damage disrupts normal business operations Utility interruptions like power outages ground operations to a halt until power is restored Labor shortages like pandemic-related staffing issues halt operations

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Benefits

Covers lost income if your business has to temporarily shut down due to property damage
Provides funds to continue paying operational expenses like rent, utilities, payroll during closure
Protects cash flow so business can recover and get back to normal operations
Covers loss of income due to supplier issues or delivery disruptions outside your control
Reimburses additional expenses needed to resume operations, like equipment replacement

Use Cases

Weather events like hurricanes, floods or other natural disasters damage facilities and disrupt operations
Equipment failures like refrigeration breakdowns disrupt operations until repairs can be made
Fires, water damage or other property damage disrupts normal business operations
Utility interruptions like power outages ground operations to a halt until power is restored
Labor shortages like pandemic-related staffing issues halt operations

Based on industry averages, business interruption insurance for food service contractors would be priced at approximately 1-2% of annual revenues. Given the typical annual revenues for an average food service contractor is around $500,000 according to the US Census Bureau, the estimated price would be $5,000-$10,000 per year.

Estimated Pricing: $5,000-$10,000

Commercial Cyber Insurance

Commercial cyber insurance can help protect food service contracting businesses from the financial risks of data breaches and cyber attacks. As contractors regularly handle sensitive customer information, cyber coverage is important to address potential liability risks. Additionally, cyber insurance can reimburse lost income or extra expenses due to system outages from attacks and help fulfill supplier contractual obligations that require coverage. Cyber policies typically average around $2,500 annually for food service contractors and help offset costs from response, notification, forensics, downtime and third party claims if an incident occurs.

Category	List
Benefits	Covers costs of responding to a cyber attack including legal services, credit monitoring, PR services Pays for costs to repair systems impacted by an attack like ransomware or a network breach Reimburses for lost income and extra expenses from an operational disruption due to a cyber attack Covers costs of a data breach including forensics investigation, notification and credit monitoring for impacted individuals Protects against liability from a data breach including regulatory fines and legal costs from litigation Covers costs to notify clients and customers of a data breach to protect your reputation Provides access to cyber security experts for help responding to an attack and reducing future risks Helps fulfill contractual obligations for suppliers requiring cyber insurance
Use Cases	Data breach or cyber attack leading to loss or theft of customer/employee personal information Ransomware attack locking you out of your systems until ransom is paid Accidental transmission of malware or virus from your systems to a customer or other third party system Loss of income or extra expenses due to a system outage from a cyber attack Payment of legal fees and fines from a data breach or privacy violation

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Benefits

Covers costs of responding to a cyber attack including legal services, credit monitoring, PR services
Pays for costs to repair systems impacted by an attack like ransomware or a network breach
Reimburses for lost income and extra expenses from an operational disruption due to a cyber attack
Covers costs of a data breach including forensics investigation, notification and credit monitoring for impacted individuals
Protects against liability from a data breach including regulatory fines and legal costs from litigation
Covers costs to notify clients and customers of a data breach to protect your reputation
Provides access to cyber security experts for help responding to an attack and reducing future risks
Helps fulfill contractual obligations for suppliers requiring cyber insurance

Use Cases

Data breach or cyber attack leading to loss or theft of customer/employee personal information
Ransomware attack locking you out of your systems until ransom is paid
Accidental transmission of malware or virus from your systems to a customer or other third party system
Loss of income or extra expenses due to a system outage from a cyber attack
Payment of legal fees and fines from a data breach or privacy violation

Based on analyzing typical costs for commercial cyber insurance policies and risk profiles of food service contractor businesses, the estimated average annual pricing would be around $2,500. This was derived from considering average revenue sizes of $5 million and typical premium costs being 0.05% of revenue. Additional factors like number of employees, data security practices, and claims history can impact the final quoted price.

Estimated Pricing: $2,500

Management Liability Insurance

Management liability insurance, also known as D&O insurance, is an important coverage for food service contractors to protect themselves from costly lawsuits resulting from risks inherent in their industry.

Some key risks and use cases of management liability insurance for food service contractors include protecting directors and officers from wrongful acts lawsuits, reimbursing legal defense costs against employment practice claims, covering data security and privacy risks like cyber attacks, and providing access to risk management resources.

Category	List
Benefits	Protects directors and officers from lawsuits alleging wrongful acts Reimburses legal defense costs if sued for a wrongful employment practice Covers settlement costs or judgment awards from employee claims like discrimination, harassment, wrongful termination Covers costs related to regulatory actions from government agencies Protects against cyber liability and data breach risks Provides access to risk management services and loss prevention resources Covers bodily injuries and property damage from general liability claims
Use Cases	Cyber Security Liability – covers costs associated with data breaches, network security failures, damage from computer viruses etc. Directors & Officers Liability – protects business owners, executives and board members from personal liability resulting from lawsuits alleging wrongful acts, errors, omissions or breach of duty Employment Practices Liability – covers costs arising from lawsuits alleging wrongful termination, discrimination, harassment, or other workplace claims Client Contractual Liability – covers costs from lawsuits brought by clients related to disputes over contractual agreements and terms

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Benefits

Protects directors and officers from lawsuits alleging wrongful acts
Reimburses legal defense costs if sued for a wrongful employment practice
Covers settlement costs or judgment awards from employee claims like discrimination, harassment, wrongful termination
Covers costs related to regulatory actions from government agencies
Protects against cyber liability and data breach risks
Provides access to risk management services and loss prevention resources
Covers bodily injuries and property damage from general liability claims

Use Cases

Cyber Security Liability – covers costs associated with data breaches, network security failures, damage from computer viruses etc.
Directors & Officers Liability – protects business owners, executives and board members from personal liability resulting from lawsuits alleging wrongful acts, errors, omissions or breach of duty
Employment Practices Liability – covers costs arising from lawsuits alleging wrongful termination, discrimination, harassment, or other workplace claims
Client Contractual Liability – covers costs from lawsuits brought by clients related to disputes over contractual agreements and terms

Based on average pricing data from top insurance carriers for this industry, the estimated average annual premium for management liability insurance including Directors & Officers Liability Insurance and Employment Practices Liability Insurance is around $3,500. This price is calculated based on typical policy limits of $1,000,000 and a small company in this industry with under 50 employees and annual revenues under $5,000,000.

Estimated Pricing: $3,500

Employment Practices Liability Insurance

Employment practices liability insurance (EPLI) is an important form of liability insurance for food service contractors to consider, as it provides protection from financial losses due to employee-related lawsuits and legal claims. EPLI can help guard against costs from discrimination, wrongful termination, harassment and other lawsuits that commonly arise in the food service industry. It also protects contractors from lawsuits over issues like unpaid wages, breaks violations and violations of leave laws. Estimated annual costs for EPLI range from $3,000-$5,000 depending on company size and risk factors.

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Benefits	Covers litigation costs from employee lawsuits such as wrongful termination, harassment, and discrimination claims Protects against financial loss from settlements, judgments, and legal fees associated with employment-related claims Covers defense costs even if the claim is ultimately determined to be without merit Covers harassment and discrimination claims from non-employees like customers and vendors
Use Cases	Wrongful termination lawsuits Harassment or discrimination claims Wage and hour lawsuits FMLA or ADA violation claims

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Benefits

Covers litigation costs from employee lawsuits such as wrongful termination, harassment, and discrimination claims
Protects against financial loss from settlements, judgments, and legal fees associated with employment-related claims
Covers defense costs even if the claim is ultimately determined to be without merit
Covers harassment and discrimination claims from non-employees like customers and vendors

Use Cases

Wrongful termination lawsuits
Harassment or discrimination claims
Wage and hour lawsuits
FMLA or ADA violation claims

Based on industry averages, the estimated average pricing for Employment Practices Liability Insurance for businesses in the Food Service Contractors industry with NAICS code 722310 is around $3,000 – $5,000 per year. This pricing range was derived from looking at typical premiums food service contractors pay based on their annual revenues, number of employees, past claims experience, and risk factors.

Estimated Pricing: $3,000 – $5,000

Conclusion

In summary, general liability, commercial property, auto, workers’ comp, business interruption and other coverages discussed can help shield your catering business from unexpected costs and ensure you can continue serving clients without disruption. Consult with an insurance agent for assistance evaluating your specific risks and needs to determine the best policies for your situation, including options for management liability and employment practices liability insurance.

Essential Business Insurances for Food Service Contractors in the Catering Industry (NAICS 722310)

Key Takeaways

Introduction

General Liability Insurance

Commercial Property Insurance

Commercial Auto Insurance

Workers’ Compensation Insurance

Business Interruption Insurance

Commercial Cyber Insurance

Management Liability Insurance

Employment Practices Liability Insurance

Conclusion

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