Last Updated: July 22, 2024
Business insurance claims are more common than most people realize. In 2020, one study found that around 55.8% of U.S. small businesses filed an insurance claim.
That study also revealed that three out of four businesses experienced an event that could have led to a claim. In these cases, the reasons behind not filing a claim ranged from a lack of coverage to avoiding the hassle of filing one.
However, knowing what claims you’re most likely to face as a food business owner and how to file them is one of the best ways you can safeguard your livelihood from their negative financial impact.
That’s why we’re sharing real examples of liability insurance claims we’ve gotten at Food Liability Insurance Program (FLIP) as well as risk prevention tips and a step-by-step guide to filing a claim.
Theft Claim Example
85% of small businesses reported experiencing theft in 2023.
A wide variety of food vendors, including food trucks, rely on generators when they’re vending at various locations and events. As a result, generator theft is one of the most common claims we see.
One of our policyholders reported a stolen generator that would cost $4,710 to replace. While not all generators are worth thousands of dollars, less expensive models still cost hundreds of dollars.
Thankfully, their claim was covered because they had tools and equipment insurance.
Customer Injury Claim Example
Did you know the restaurant industry spends over $2 billion on slip-and-fall injuries?
We see these claims all the time at FLIP because it’s very easy for customers to injure themselves in, on, or around your farmers market booth, food truck, catering equipment, and more.
Take this policyholder’s experience, for example: a customer in line at their hot dog food truck tripped and fell over a decorative flower box near the service window. The customer injured their knee and filed a claim.
FLIP’s general liability insurance covered this $99 claim.
Property Damage Claim Example
Third-party property damage claims aren’t as common as slip-and-fall claims, but they do come up often.
Sometimes, these incidents can feel very out of your control. For instance, one of our policyholders was vending at a food festival when strong gusts of wind uprooted their booth’s canopies. The covers blew away and crashed into two vehicles, causing $16,048 in damages.
Because this vendor had a FLIP policy, which includes general liability insurance, the claim was covered and they didn’t have to pay for repairs out of pocket.
Fire Claim Example
Many people might not realize just how common workplace fires actually are. In fact, fires are the fourth most common type of business insurance claim in the United States.
When you’re working with ovens, grills, and stoves, the chance of accidentally starting a fire is high. Or, if you work in close proximity with other food businesses, they might start a fire that damages your business personal property.
For example, one of our policyholders was vending out of their food trailer at a festival surrounded by lots of other vendors in close quarters. Unfortunately, the food truck next to them caught fire and was close enough to cause $9,402 in damages to their trailer.
Their tools and equipment insurance covered this claim.
Water Damage Claim Example
While you can take a lot of steps to mitigate risks and prevent accidents from happening, one thing none of us can control is the weather.
Weather can be extremely destructive, damaging your equipment to the point of needing expensive repairs or even replacements. For mobile food businesses that set up shop in multiple locations, often outdoors, the weather can be a particularly big concern.
Water can be just as destructive as fire when it comes to your business’ property, as one FLIP policyholder learned. A severe rainstorm caused water to seep into their food trailer, which damaged their fryer.
Their FLIP tools and equipment insurance policy paid out $5,000 towards a new fryer.
Hail Damage Claim Example
While less common than rain, hail storms can cause a lot of damage in a short amount of time, depending on the size of the hailstones. And much like the above example, if you have a food truck or trailer that is often parked outside and exposed to the elements, you might face expensive repairs after a hail storm.
One policyholder understands this all too well after what happened to their food trailer. A sudden, massive hail storm rolled through their town and caused so much damage to their food trailer that the total cost to repair it was $10,260.
Tools and equipment insurance helped cover the cost of this claim.
Food Product Liability Claim Example
Food poisoning and unlabelled allergens are food product liability cases we see all the time.
The slightest temperature change can give rise to harmful bacteria that makes someone sick. Similarly, accidental cross-contamination can result in a customer having an allergic reaction to your food product.
One individual filed a claim with us because of an allergic reaction to tree nuts after eating some baked goods made by one of our policyholders. This person claimed that the product’s packaging did not contain any warnings about tree nuts, and after eating them they were admitted to the emergency room for medical treatment.
This $15,000 claim was covered by our policyholder’s product liability insurance, which is included in every base FLIP policy.
Defamation Claim Example
Anywhere from 36–53% of U.S. small businesses are sued each year, and this includes defamation lawsuits involving libel.
One of our policyholders who posted cooking videos online was hit with a defamation lawsuit after they allegedly stole another creator’s work and claimed that it was theirs. The other creator claimed that this resulted in a financial and reputational loss to their business.
The policyholder’s legal costs added up to $3,281, which their personal and advertising injury insurance was able to cover. This coverage is included in every base FLIP policy.
How to Prevent Claims Like These From Happening
While it isn’t possible to predict everything that could go wrong and result in a claim, here are some strategies you can incorporate to reduce your risk:
- Maintain clean and safe premises free of clutter and tripping hazards
- Train yourself and your employees in proper food handling techniques, including safe storage temperatures and how to avoid cross-contamination
- Conduct regular inspections of food storage areas and prep stations to ensure they meet health codes
- Provide comprehensive training for employees that includes safety protocols, proper equipment use, and emergency procedures
- Keep your equipment in working order with regular maintenance checks and prompt repairs
- Clearly label allergens on menus and food packaging to alert customers with allergies
- Document any incidents that occur and could lead to claims, like slips and falls, equipment malfunctions, and the like
- Get liability insurance for food services to financially protect you in the event of an accident
If you don’t already have insurance, you can get a free quote from FLIP in 10 minutes or less. Fill out our online application to get started!
How to File A Claim with FLIP
Nobody wants to file a claim. By the time you start the process, something unfortunate has already happened and you probably feel frustrated and stressed.
We get it — that’s why we make the process of filing a claim as painless as possible.
In fact, you can file a claim with FLIP in just four easy steps:
- Log in to your user dashboard
- Start the claims process by clicking on “File A Claim”
- Fill out all of the required fields
- A claims adjustor will reach out to resolve your claim in 7–10 days
Remember that all policies have conditions and exclusions, so filing a claim doesn’t necessarily mean you will receive coverage. Always check your policy to make sure you know what it does and doesn’t cover, or give our customer service team a call at 844.520.6992. They can answer any questions you may have about your coverage.
Frequently Asked Questions
Why Would an Insurance Company Deny a Claim?
Your claim could get denied for one of the following reasons:
- The policy doesn’t cover that type of claim
- You didn’t file the claim on time
- Your insurance company has a reason to suspect fraud
Otherwise, your policy should cover all or part of the claim unless you have exhausted your policy’s aggregate limit. Your claims adjustor can answer questions about why a claim was denied.
Does Food Product Liability Insurance Cover Product Recalls?
No, most product liability insurance policies do not cover product recalls. Instead, it can cover the cost of medical bills, loss of income, pain and suffering, and emotional distress that a customer experiences because of your food product.
In the food industry, product liability claims tend to include food poisoning and allergic reactions.
Are There Any Limitations on the Types of Claims That FLIP Will Cover?
Yes. All insurance policies, including FLIP’s, have conditions and exclusions that determine which claims are eligible for coverage and which aren’t. The claims your policy can cover depend on the types of coverage you have.
For example, if you opt to add tools and equipment insurance to your policy for an additional cost, you can receive coverage for stolen or damaged business equipment. If you don’t choose to add this coverage, you would not receive coverage for this claim.
What Documentation Is Required When Filing a Claim With FLIP?
When you file a claim with FLIP, we need to know your policy number and we need to provide a description of the event that led to this claim.
We will also ask you to provide other information, including:
- The date of the incident
- Your policy effective date
- Your policy expiration date
- Your name, address, phone number, and email
- The location of the incident
- The police or fire department that reported the incident (if applicable)
The more information you can provide us with, the faster we’re able to process and resolve your claim.
