Hand Over Those Food Truck Keys If An Employee Gets Injured

Let's start with the definition of Workers' Compensation insurance...

Workers' Compensation - provides protection to the employer against liability imposed by law to pay benefits to any worker injured in the course of and arising out of employment, without regard to fault or negligence on the employer's part or any other person.  

Workers' Compensation insurance is usually the last thing a food truck client purchases from me. You need Auto insurance to register the truck or to pick up the truck from the manufacturer. You need General Liability if you plan on showing up to a private lot or food truck event. You may ask yourself when is Workers' Compensation required? Most new food trucks start out with just the owners operating the truck and are not required to have Workers' Compensation. However, from the moment you hire that first employee...you are required by law in almost all states (check laws in your particular state) to have Workers' Compensation coverage.

Now before there were gourmet food trucks, traditional catering trucks would go around town serving food to construction and industrial workers. It was a white catering truck with with no signage, no brand, no website, no  following and standard food offerings. If an employee got badly injured and there was no Workers' Compensation...well then you just fold up shop and start a new entity. Plus the truck was likely leased so there was no real asset tied to the business. So imagine you fail to purchase Workers' Compensation for your food truck employees in today's gourmet food truck age. You have spent a ton of time creating a concept, building a website, creating a menu, getting permits, tweeting and building a solid customer base. If your employee gets injured, can you really afford to just fold the business?? If you said no, then you need to purchase Workers' Compensation insurance.

I recommend looking up in your specific state what the fines are for not having Workers' Compensation in place. In California, there is a $1,500 penalty per employee without Workers' Compensation and other applicable fines. http://www.dir.ca.gov/dwc/dwc_home_page.htm

Perhaps you will try to make your employees independent contractors. In almost all instances there is no such thing as an independent contractor on a food truck. So that isn't a way out. Perhaps your family or friends are helping, well they are still considered employees. An employee is defined as someone you engage or permit to work. Plus if a friend or family member seriously gets injured and racks up medical bills from helping out on the truck...do you think they won't sue you?

Now that you realized you may need to purchase Workers' Compensation, I want to inform you about some things you should know before you get a policy started. Workers' Compensation premiums are calculated by the class code rate and the amount of gross wages paid to the employee. Premium costs range (as of 8/2011) from 4.5%-8% of total payroll. As a business owner, you must provide an estimated annual wage amount at the beginning of a policy. At the end of a policy, an audit will be performed to determine the actual premium due based on actual wages paid. In order to perform this audit, a business owner is required to provide the owners names, employees' names, actual gross wages and likely quarterly IRS 941 reports for all four quarters during the coverage period. 

IF you pay your employees under the table, that IRS 941 form will likely be an issue. You can't just report only some employees payroll to the state. If you aren't reporting all payroll to the state or insurance carrier, well then that is fraud and we all know what that could mean.

I hope this helps every food truck operator realize the need to get a Workers' Compensation policy in place. I encourage you to reach out to me if you want to discuss the topic in more detail or need a quote.

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My Insurance Journal Radio Interview - Mobile Food Vendor Insurance Market Trucking at High Speed

Insurance experts hungry for new business have found the mobile food truck business to be one of the healthier growth markets in the past few years. Technology can help to service these mobile customers quickly and efficiently. Yet to be really successful in this program business, Matt Carlson, vice president of Risk Strategies Co., says agents and brokers need to provide a lot of education up front to clients not familiar with their insurance requirements.

Why You Should Always Ask For The Insurance Requirements FIRST!

Congratulations...you just landed a great opportunity to serve food at a large office building lot, college campus, festival or movie studio. In the beginning, they may have asked if you had insurance and of course you said yes. You put a ton of work into planning, organizing and promoting...then they say "oh by the way...here are our insurance requirements".  Suddenly you see the nitty gritty details of what they consider "adequate" insurance to serve food at their property/event. Too often I see building management or property owners using the same contract for a general contractor as they would for a food truck. A food truck should not be required to purchase $1,000+ of extra premium for an event they are profiting $1,000 on. I get it, the location/venue/event is protecting themselves. However, don't hand a food truck the same contract as you would a plumbing/electrical/etc contractor. So I advise all you food trucks out there to get the insurance requirements up front before you are knee deep in the process. Also don't be afraid to negotiate some the of coverages and limits down. Good luck out there!

Six Ways to Reduce a Food Trucks Exposure of Being Robbed

Local news stations in Los Angeles were buzzing about the two recent food truck robberies last week. (http://latimesblogs.latimes.com/lanow/2011/01/video-captures-robbbery-of-koreatown-food-truck.html)
I hope this doesn't become an escalating trend in LA or other cities. Unfortunately, food trucks are targets for a number of reasons...

• Almost all cash transactions.
• Depending on the city, some food trucks are forced to park on dark and secluded side streets due to regulations on their proximity to brick and mortar restaurants.
• Each food truck only has 2 to 3 people and easy access to unlocked side/back doors.
• Most food trucks are not outfitted with any type of security cameras or features. 
• Tend to operate evenings or late nights.

Food Network's The Great Food Truck Race series revealed some insight to the industry and how food trucks operate. It also showed how food trucks were collecting thousands of dollars in cash...this potentially got would-be robbers thinking about their next target.

There are some elements of a property insurance policy that can protect truck owners from a loss resulting from a robbery. So be aware you can purchase an insurance policy that includes this coverage. However, the cost to add the coverage "may" outweigh the chances of it actually happening to your truck.  By deciding not to purchase the insurance, you have decided to self-insure the exposure/risk.

Whether or not you decide to purchase property insurance, it still makes sense to implement some risk management tactics to protect your income and employees. Some areas of risk management/loss control to potentially consider implementing are:

• Purchase a wireless credit card processing system to reduce the amount of cash on hand.
• Have periodic cash pick-ups by a manager or cash service.
• Mount exterior lights on truck to brighten up the area around the truck at night.
• Lock all side/back doors at all times or just evening services.
• Mount dummy or real cameras with a notice that security cameras are in use.
• Use the old buddy system and try to park with other food trucks. There is safety in numbers.

All six of these suggestions may help reduce the risk of a robbery. If you have any other ideas, I suggest you leave a comment with your idea on reducing the risk of a robbery. I'm sure other food truck operators would appreciate your comments.

As always, contact me for all your food related or anything on wheels insurance needs.

Why You Shouldn't Get Auto Quotes DIRECT From Progressive Insurance

Progressive Insurance is definitely a viable option for food truck or catering truck auto insurance. Progressive is an insurance company that you can access "directly" (via their website, etc) or by an appointed Progressive "broker". In the past, it seemed Progressive's Auto policies were a little more expensive than most insurance companies.  However, Progressive is becoming more of a competitive player for Auto insurance as the food truck industry matures.

I recently had a food truck client that decided to purchase an Auto policy "direct" from Progressive and then a General Liability policy from CateringTruckInsurance.com. There is a significant disadvantage to that structure because it creates more work for the food truck owner when requesting certificates of insurance. Now the truck owner will need to contact their insurance broker (for the General Liability, Workers' Compensation, etc) AND Progressive to get the necessary evidence of insurance to drive onto that lot. So that means two separate calls/emails for two separate certificates of insurance for each event. Why make it hard on yourself? Streamline this process by selecting one broker to represent your risk in the market place. Most importantly, select a broker that is an expert in the industry.