There seems to be some confusion by food truck owners on what Business Income Insurance really is and how it works. This entry is designed to explain just why the coverage is so important and why it’s even more important that you have the right Business Income coverage.
Business Income Insurance or Loss of Business Income coverage is designed to provide loss of revenue to your business after a covered loss. Unfortunately, most small business owners, including food truck operators, don’t think about what they would do should they have a claim and be out of business for some time. It takes a lot of capital to start a food truck. Most owners don’t exactly have a big pile of cash as a rainy day fund. Business Income Insurance can help keep your business going after common losses.
So just what exactly can loss of business income insurance pay for?
- Your wages to pay your mortgage/rent and ordinary expenses.
- Payroll for key employees so you don’t lose them if your truck is out of service.
- Your space at your commissary to keep your contract.
- Your phone and internet bills so you can keep your customers informed of your situation.
- Extra expenses such as funds for advertising and marketing for a “Grand Reopening” once your old truck or new truck is back in service.
What are the types of losses where business income comes to play?
- An auto accident where your truck needs to be repaired or replaced.
- A fire in or around your truck that requires repair.
- A covered equipment breakdown claim that requires repair or replacement of your equipment. A common claim is when a generator fails and you need it repaired or replaced and lose jobs for a few days during repair.
- Your truck is vandalized or stolen and you can serve until repaired or replaced.
The most common example of how Business Income kicks in is when you are in an auto accident with your truck. Sure, most carriers will cover the damage to the truck, but what about the time the vehicle is in the shop? What would have been a $2,000 repair could turn into a $10,000 loss to your business when the truck is getting worked on because you can’t sell! Many food truck owners learn that they don’t have the right Business Income coverage the hard way. A standard Business Owner Policy (BOP) will cover business income for an “insured location.” Most standard BOPs do not cover your truck as a location, but will cover a commissary or home office if that’s what your policy shows as your location. If you are going to have a loss, it is much more likely to happen away from your commissary or office.
Our preferred food truck program has a Mobile Operations Endorsement that describes your location as your truck or anywhere you are conducting business. This is necessary for mobile food vendors as you could be at dozens of venues over the course of a month. Most standard policies that offer Business Income will limit coverage to the insured location. These standard policies typically describe your location as your business address which is usually your home address or commissary. If you have a loss away from the location they have listed, you may be out of luck trying to collect business income. Consult with us on Business Income or any other insurance questions you may have BEFORE you have a claim.
Author: Denny Christner is the owner of Insure My Food Truck and is commercial insurance broker. Insure My Food Truck specializes in Mobile Food Vendors Insurance. Their dedicated staff have worked with partner insurance carriers to find the most competitive and comprehensive insurance package for you. They know how busy you are and promise extremely quick quotes now and certificates of insurance once you are a client. By focusing on quality food trucks, trailers and carts their partners support them and allow them to offer the best service to you! Call or contact them today to find out if you qualify.