Commercial food trucks are becoming a main staple of American street corners, and their owners are looking for insurance.
According to data from Intuit, there are roughly 4,130 food trucks operating in the US, bringing in more than $1.2 million in annual revenue. And those numbers are only getting bigger – industry revenue among food truck operations has increased a whopping 12.4% since 2010, and demand seems to indicate that trend will continue.
With food truck owners spending an estimated 26% of their expenses on insurance, repairs and maintenance, ambitious insurance carriers and savvy independent agents have started to take on this new and emerging market with increasing success.
“This is very big business for us,” said Eden Hancock, transportation manager and underwriter for Genesee General in Alpharetta, Georgia. “Five years ago, I might quote one food truck a year. As demand has grown, I’ve started quoting two or three a week – and that’s just myself. That doesn’t include my other underwriters.”
Appetite among carriers has also grown, Hancock says, though slowly. There are just a handful of companies offering insurance programs for food trucks, and these programs often cater to a very limited portion of operations. As such, she and the agents with whom she works have had more success writing insurance policies on a monoline basis – a technique that typically saves money given current pricing structure, incidentally.
Typically, most food trucks require a standard set of coverage: commercial auto insurance, physical damage, general liability and inland marine for trucks carrying kitchen equipment. While trucks that travel long distances may need additional vehicle policies, with rates that can vary based on garage location, Hancock says the majority tend to operate in the same cities and therefore carry less risk. Potential fire damage too is limited, given that cooking apparatuses are only seen in some trucks and do not reach high temperatures.
The policies themselves are often inexpensive, ranging between $1,800 to $3,000 a unit depending on the vehicle and driver characteristics, and don’t require a terribly complicated approach on the part of the agent.
One thing Hancock does stress, however, is a proper understanding of potential physical damage.
“A lot of agents don’t realize that even though an auto policy covers permanently attached equipment, it will not cover kitchen equipment in a food truck,” she said. “They just want to increase limits to cover the equipment but in this class of business, carriers want a separate inland marine policy.”
Hancock believes that as food trucks continue to grow in popularity, the insurance market will mature and offer coverage that is more specific and plentiful. Until then, though, she and the retail agents with whom she works are enjoying this new trend in transportation and hospitality.
“Food trucks are such an appealing class. Driver turnover is minimal, the revenue is steady and the industry is thriving,” she said. “Working with these people, seeing their unique names and hearing about their food is really neat. I’d love to be able to visit and eat at each of my insureds.”
