What insurance is required for a food truck in California?

A food truck in California requires at least business liability and specific commercial auto liability insurance. Full coverage for a vehicle in California averaged $986.75.

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A former insurance producer, Laura understands that education is key when it comes to buying insurance. She has happily dedicated many hours to helping her clients understand how the insurance marketplace works so they can find the best car, home, and life insurance products for their needs.

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Joel Ohman is the CEO of a private equity backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Jo...

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Reviewed by Joel Ohman
Founder & CFP® Joel Ohman

UPDATED: May 4, 2022

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Here's what you need to know...

  • Food truck insurance should include business liability and specific commercial auto liability insurance in California
  • Full insurance coverage for a vehicle in California averages $986.75 a year, or $82 a month.
  • Although collision and comprehensive coverage may not be mandated by law, replacement costs, or the total loss of your food truck, could put you out of business

As the most populous state in the country and the third largest in terms of area, California is prime territory for the food truck industry.

If you stop to consider that there are more than 39 million people who reside in the Golden State, owning and operating a food truck could very well lead you down streets paved with gold.

However, there are several things potential food truck owners may want to be aware of before sinking a sizeable investment into a food truck in California.

While a little different than car insurance, food truck insurance can be just as important, if not more so, for a business on the go. Just because your business enterprise is on wheels doesn’t mean you won’t need to meet the same requirements and follow a business plan just like you would when setting up a brick and mortar establishment. Your equipment is going to need coverage, since it’s going to see a lot of street time.

A well-crafted business plan could help you determine what types of insurance you will need. Bundling an assortment of insurance products can reduce costs, making it possible to purchase otherwise unaffordable options in coverage.

You should also consider comparing insurance rates for your food truck. Enter your ZIP code into our free rate comparison tool above to help you find the best provider for your situation.

Use the following information as a guide and you’ll be safely serving the public in no time at all.

The Importance of a Business Plan

The importance of a business plan can never be overstated. This goes for food truck owners and their equipment too. Everything you do will be based on your business model and the one thing you will learn early on is that everyone from lenders to insurance companies will expect to see your five W’s outlined for them.

They will want to know:

  • Who – Anyone involved in your food truck business
  • What – What kinds of foods you will be preparing or be transporting
  • When – Your hours of operation
  • Where – This is going to be especially important to insurance providers.
  • Why – Why do you feel this will be a profitable undertaking specifically for you?

And, then there is the additional “How” that actually applies to all of the above.

For example:

  • How do you intend to buy or prepare your foods?
  • You’ve outlined what you intend to sell from your truck but how do you intend to stock your truck?
  • Are you going to purchase pre-made items or will you be setting up operations in a commercial kitchen?

This information is huge in terms of business licensing and business insurance.

When looking at each of these in depth, you’ll see that it’s all about your business plan.

To coin an old cliché, have all your ducks in a row before taking the first step. Think of your business plan as a blueprint for building a business from the ground up.

Unless you read the schematics, you could miss a few very critical steps.

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Why You Should See Your Food Truck as a Capital Venture

There is a specific kind of financier known as a venture capitalist. This kind of investor looks carefully at your long-term goal in terms of profitability. Although you may not be seeking financial assistance, it is wise to learn from their perspective on lending.

They will carefully scrutinize your business plan for any shortcomings which would hinder profitability, and so, too, should you.

These future goals are also going to be important in terms of business and auto insurance. A key takeaway here is that you must carry ample insurance to cover losses you may be exposed to.

A good example would be spoilage of inventory in the event of refrigeration units going bad or an at-fault auto accident with injuries. Do you carry enough of the right kinds of insurance to cover those losses? You’re going to be a restaurant on wheels, which means you’re going to need to cover not only the vehicle, but potential personal injury to anyone near or working inside of the food truck.

What licenses are needed to start a food truck in California?

Although you will need to be compliant with all rules and regulations for operating a business in the State of California, it is imperative to understand just how important licensing and certifications are within the food industry.

One of the biggest issues within the food service industry is the potential for illness due to contamination.

Your food truck may be exempt from the requirement of obtaining a safe handling certification but where you prepare your foods may meet the criteria for Safe Handler’s Certification.

If you are required by law to hold any certification whatsoever, an insurance provider may refuse to cover you if you are not in compliance with the law. 

This regulation includes occupational licensing as well as food handling certification. An insurance company will only insure entities that meet with legal requirements.

Bear in mind that each county and municipality may have additional requirements above and beyond California legislation. Always check legal requirements in your specific area of the state to ensure you are properly registered to do business as a food truck vendor.

What kind of insurance do you need for a food truck?

As a general rule of thumb, there are actually three types of insurance coverage you will need for a food truck in California. You will need insurance for:

  1. Your business
  2. Your food truck in California
  3. Your employees

This coverage will all be classified as commercial insurance and rates will be set accordingly.

You can shop around for the cheapest rates but before doing so, it is imperative to understand just what type of insurance you need and why the lowest priced policies might not always be the cheapest in the long run.

Here is where you need to learn about what types of insurance are mandatory and which types of insurance offer the best protection against loss.

When searching for the best insurance for a food truck in California, you will be looking for business as well as auto insurance. It is almost always better to choose a provider that offers both types of coverage if that insurer offers bundle discounts.

First, however, you may want to learn about the types of coverage you may need to have.

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Business Insurance

A food truck in California is legally a business entity. As such, you will be required to purchase mandatory liability insurance as set forth by law. Typically this is categorized as casualty insurance, which is further broken down into:

  • Workers’ compensation – To replace wages and cover medical bills if an employee is injured on the job.
  • Commercial general liability – To protect against liability for bodily injury (BI) or property damage (PD) resulting on the premises or from faulty products. In this case, it may be bad or contaminated food.
  • Commercial umbrella – This is a supplement to your commercial insurance policy that covers amounts greater than the amounts stipulated in your policy.

The law is quite clear on which types of insurance you will need to purchase, but of the four, only commercial umbrella will always be left to your discretion.

According to the California Department of Industrial Relations, any company employing one or more people must purchase workers’ compensation.

What is covered with a commercial auto policy?

Commercial auto insurance is much like personal car insurance with the same types of losses being covered. A food truck in California is required to carry:

  • Bodily injury liability – Minimum of $15,000 per person or $30,000 per accident
  • Property damage liability – Minimum of $5,000
  • Underinsured motorist (UIM) BI – Same minimums as BI above
  • Uninsured motorist (UM) property damage – Minimum of $3,500

As a business owner, you can clearly see how those policy limits can be totally insufficient if you, or an employed driver, should be at-fault in an auto accident in California.

Why do you need food truck insurance?

While you could look at each coverage to see what kinds of risks you are being exposed to, the bottom line is always going to be the same.

In any scenario, if the fault is a result of an intentional action or negligence attributed to a person or the property of your food truck business, you can incur substantial financial losses.

You are always at risk of losing the business you have worked so hard to build. 

Whether your employee rear-ends the vehicle in front of him, or a customer gets a bad burrito and ends up with food poisoning, the liability lies with the business.

Depending on the severity and extent of the loss, you could owe an amount far greater than your liability coverage extends.

This risk is why most businesses opt to carry umbrella insurance for amounts above and beyond their policy limits.

Whether you are leasing a food truck in California or are the owner, the business is yours even if the vehicle isn’t. The business, as an entity, holds the liability and should be adequately insured. You should consider the vehicle business equipment which will require additional coverages to guard against any potential incident.

Instead of looking for the cheapest coverage which may not give you the protection you need, why not seek out insurance companies that offer bundle discounts? Buy all your insurance under one roof and get the best rates for multi-policy holders. Since there are so many coverage options for a mobile business, this could end up saving you money in the long term.

Do compare rates but don’t shop by price alone. Spending a few extra dollars today could save you tens of thousands tomorrow. Ask yourself if the cheapest insurance is worth the risk of losing everything.

Enter your ZIP code into our free rate comparison tool below to find the best auto insurance for your needs.

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