First of all, I am not an insurance agent - I work in the vending business. And none of the information in this article should be considered as legal advice. Always speak to an insurance agent or broker about the specific needs of your vending business.
There are three aspects of your operation that might need insurance:
- Your Vehicle
- Your Business
- Your Employees
And you will need four different types of insurance:
- Commercial Auto Liability Insurance
- General Commercial Liability Insurance
- Commercial Property Insurance
- Workers’ Compensation Insurance
Insurance for Your Vending Truck
You need vehicle insurance as soon as you buy your vending truck.
Commercial auto liability insurance is similar to your personal car insurance. However, because a vending truck can cost more, you need to take out an insurance policy with much higher limits. Commercial auto insurance typically includes:
- Collision insurance to cover damage to your vehicle if you collide with another driver on the road.
- Comprehensive insurance to cover you in the event of a non-traffic incident, such as theft. In some areas, this can happen a lot. There was a huge crime wave most recently where a couple of our trucks were broken into.
- Medical coverage to pay for medical bills in the event of an accident.
- Uninsured and underinsured motorist coverage to protect you if you are involved in an accident with a driver who does not have insurance themselves.
Sometimes, commercial auto insurance may also include rental vehicles and personal vehicles used for business purposes. For example, if an employee gets into an accident on the way to the store to buy more office coffee supplies, your business could be held liable for the accident since the employee was doing something for your business. If your commercial auto insurance covers personal vehicles used for business purposes, you’ll be protected from repair costs and potential medical bills from these sorts of incidents. Be sure to find out if your policy covers this type of situation.
Keep in mind that many commercial auto insurance policies will primarily cover your truck itself, and they may not cover damage to any product in the truck.
Finally, before letting anyone drive your vending truck, make sure you have a copy of their driving history. You can certainly ask about each employee’s driving history on job applications, but you can’t assume that each person is being honest—no matter how nice they are.
Insurance for Your Business
In addition to insuring your vehicle, you also need to insure your business. There are two types of insurance you’ll need to protect your business—general commercial liability insurance and general commercial property insurance.
General commercial liability insurance protects you if you get sued for things like:
- Causing physical damage to others (such as by breaking someone else’s property)
- Using someone else’s business trademark
- Making false claims in promotional materials
This type of insurance is incredibly important to have. Even if you haven’t done anything wrong, if someone else thinks you have, that person can sue you. Liability insurance helps you cover the cost of a lawsuit—and if you are found to be negligent, the insurance will also cover what you did wrong.
General commercial property insurance covers damage to the various property and equipment involved in running your business, such as:
- Your product on your truck
- The computers you use to run your business
- Property you own or lease to run your business (such as your warehouse)
Commercial property insurance does not cover your actual truck, but you will very likely need to carry it in addition to your standard vehicle insurance policy.
Some insurance companies also offer umbrella insurance coverage, which is one thing that you can purchase in addition to your other policies. It increases the limits of your existing policy in order to cover extreme situations that may not be covered by your other policies. Ask your insurance agent or broker if your vending business should also have an umbrella policy before purchasing your insurance.
Of course, there are a few other instances that may require additional insurance. You may need a Certificate of Insurance (COI) for each location that you service. Some accounts will not allow you to work on their premises until you can provide a COI that shows them listed as additionally insured on your policy. Don’t worry—that doesn’t mean you need to purchase an extra policy or coverage for each account you want to work with. You may just need to pay an administrative fee to have the COI instated. Ask your agent or broker if there will be a charge for this service.
The COI names the account as “additionally insured” as a way of showing that you are adequately covered in case you cause damage to the property. For example, if one of your employees breaks something while installing a machine, your insurance policy will cover the costs with a COI in place. Ask each account you work with to provide you with their specific requirements for the COI in writing and deliver this to your agent or broker.
If you’ll be doing a lot of work for your vending business out of your own home office, you should also speak with the insurance company that manages your homeowner’s policy. Property and equipment in your home that would typically be covered by your homeowner’s policy may not be covered if they are used for business purposes and the insurance company doesn’t know about it. Make sure your insurance company knows about your home office space so that your business equipment and activities will be covered.
Insurance for Your Employees
If your business has any employees, you need to have workers’ compensation insurance.
Workers’ compensation insurance usually covers an employee’s medical bills and lost pay if he or she suffers an injury on the job. Most states require businesses to carry at least some workers’ compensation insurance, so be sure to find out what kind of coverage you need to have.
Though you might think that work-related injuries are limited to dangerous jobs like construction and mining, working on a route can actually be pretty risky. Your employees are constantly lifting and moving heavy objects and could easily injure themselves by falling in or out of a truck, or lifting incorrectly.
At some point in time, someone is probably going to get hurt—and if that person needs medical attention, you’ll be glad you have workers’ compensation insurance in place.
Where Do I Get Insurance?
It's important to work with someone who can help you choose the correct types of insurance to purchase for your vending business. Working with an insurance agent or broker also makes the process of getting insurance a lot less daunting and stressful. Your insurance representative will work closely with you and answer your questions whenever you’re unsure about the type of coverage you need.
Do you get an insurance agent or an insurance broker? Both can help you purchase, manage, and make claims on your insurance policy.
Agents work on commission paid by the insurance company. Independent agents represent multiple insurance companies, while direct agents represent a single company and will only advise you on that particular company’s policies.
Brokers are similar to independent agents in that they represent multiple insurance companies. However, brokers must undergo specific training and receive certification as regulated by your state. Agents do not. Brokers also take a more comprehensive approach to your business and have a higher obligation to make sure you are adequately insured on all fronts. Because of this, brokers often charge more.
If you want to know more, check out Hiscox for customized coverage for small business professionals as low as $22.50/mo.