So you're ready to take your catering business to the next level. You've been managing with your personal vehicle for smaller gigs, but now you're booking bigger events that require a proper delivery van. Maybe you need to transport more equipment, keep food at the right temperature, or just look more professional pulling up to venues. Whatever the reason, buying that first business vehicle is exciting—and it comes with an insurance requirement that catches a lot of new business owners off guard.
Here's what surprises most people: your personal auto insurance doesn't just become inadequate when you start using a vehicle for business—it typically won't cover you at all. Most personal policies now include specific exclusions for food delivery and catering work. If you get into an accident while transporting food or equipment for a paid event, your claim could be denied entirely. That means you'd be personally liable for damages, injuries, and legal costs. Not exactly the business expense you budgeted for.
Why Personal Auto Insurance Doesn't Cover Catering Work
Personal auto policies are designed for commuting, running errands, and personal use. Insurance companies price these policies based on typical driving patterns—your daily commute, weekend trips, occasional long drives. When you start using your vehicle for business purposes, especially commercial activities like catering and delivery, everything changes.
Many personal auto policies now explicitly exclude coverage for vehicles "used for the pickup or delivery of food or any products for the purpose of compensation." This isn't some obscure fine print—it's a standard exclusion that insurers have added specifically because of the rise in gig economy delivery work and small food businesses. Even if your policy doesn't have this exact language, it likely contains a general business use exclusion that would apply to your catering deliveries.
The risk profile is simply different. You're driving more frequently, often during peak traffic hours when events are scheduled. You're transporting valuable equipment and perishable food that could cause additional damage in an accident. You might be making unfamiliar routes to new venues, backing into tight loading areas, and dealing with the stress of time-sensitive deliveries. Insurance companies understand these risks and price accordingly—which is why they won't cover them under a personal policy.
What Commercial Auto Insurance Actually Covers
Commercial auto insurance is built specifically for vehicles used in business operations. When you get a policy for your catering van, you're getting liability coverage that protects you if you cause property damage or injuries while driving for business. This covers medical expenses, legal fees, and property repairs if you're at fault in an accident.
The minimum liability limits vary by state, but they're generally the same as or slightly higher than personal auto minimums. However, here's the crucial difference: these limits apply to business use. If you're delivering food for a wedding and cause an accident, your commercial policy responds. Your personal policy wouldn't.
Beyond basic liability, you can add collision and comprehensive coverage to protect your vehicle itself. Collision covers damage from accidents, while comprehensive handles theft, vandalism, weather damage, and other non-collision incidents. For a new catering business, this coverage is worth considering—your van is likely one of your most valuable business assets, and replacing it out of pocket could devastate your cash flow.
Most commercial policies also offer medical payments coverage, which pays for medical expenses for you and your passengers regardless of fault. This can be valuable if you're injured in an accident, as it provides immediate coverage for medical bills while liability questions get sorted out.
The Hidden Coverage Gap: Hired and Non-Owned Auto
Even after you buy commercial auto insurance for your new van, there's another coverage gap you need to address: what happens when your employees use their personal vehicles for business, or when you rent a vehicle for a large event?
This is where hired and non-owned auto insurance comes in. It's typically an inexpensive add-on to your general liability policy or business owners policy (BOP), but it provides crucial protection. Non-owned coverage applies when your employees use their personal vehicles for business purposes—picking up last-minute supplies, delivering items to a venue, or running business errands. Hired coverage applies when you rent vehicles for larger events or temporary needs.
Here's how it works: if your employee causes an accident while driving their personal car on a business errand, their personal auto insurance is primary. But what if the damages exceed their coverage limits? Or what if their insurance has lapsed without you knowing? Your business could be found negligent and held liable for the difference. Non-owned auto coverage kicks in after your employee's personal limits are exhausted, protecting your business assets.
Most small catering businesses don't think they need this coverage because they only have one vehicle. But consider this: you're catering a wedding and realize you forgot a critical piece of equipment. You send your prep cook to grab it from your kitchen in their personal car. On the way back, they cause an accident that injures someone. Without hired and non-owned coverage, your business could face a devastating lawsuit. The coverage typically costs just a few hundred dollars annually—a bargain for the protection it provides.
What to Expect for Costs
For most small catering businesses adding their first vehicle, commercial auto insurance typically runs $147 to $227 per month per vehicle, based on 2025 industry data. That works out to roughly $1,762 to $2,724 annually. Your actual cost will depend on several factors.
The type of vehicle matters. Standard cargo vans typically cost 15-20% less to insure than specialized vehicles like Sprinter vans or refrigerated trucks, simply because they have lower values and simpler modifications. Your location makes a big difference too—rates can vary by 20-50% based on where you operate. Urban areas with higher traffic density and accident rates will cost more than rural locations.
Your driving record and those of any employees who'll drive the vehicle are crucial. Clean driving records can significantly reduce your premiums, while accidents or violations will increase them. If you're a new business owner without an established commercial driving history, expect to pay toward the higher end of the range initially.
Here's a money-saving tip: many insurers offer package policies that bundle commercial auto with your other catering business insurance—general liability, inland marine (for equipment), and product liability. These packages can save you 20-30% compared to buying each policy separately. If you're already carrying business insurance, ask your agent about adding commercial auto to your existing policy.
Getting Started with Your First Commercial Auto Policy
The process of getting commercial auto insurance is straightforward, but you'll need to have certain information ready. Insurers will want to know the make, model, and year of your vehicle, its VIN, how you'll use it, estimated annual mileage, and who will be driving it. If you have employees, you'll need their names, dates of birth, and driver's license information.
Get quotes from at least three insurers. Commercial auto rates can vary significantly between companies, and the insurer that offered you the best rate on personal auto might not be competitive for commercial coverage. Many business owners find that specialized commercial insurers or agencies that focus on food service businesses offer better rates and more relevant coverage than general consumer insurance companies.
Don't just focus on price. Ask about coverage specifics: What are the liability limits? Is there a deductible for comprehensive and collision? Does the policy include medical payments or personal injury protection? What's the process for adding additional vehicles as your business grows? Understanding these details now prevents surprises later.
Before you drive your new vehicle off the lot or take it on its first catering job, make sure your insurance is active. Don't rely on any grace period or assume your personal policy will cover you "just for a few days." The moment that vehicle is used for business purposes, you need commercial coverage in force. Most insurers can bind coverage immediately over the phone or online once you've provided the necessary information and payment.
Adding your first business vehicle is a milestone worth celebrating—it means your catering business is growing and taking on bigger opportunities. Just make sure you're protecting that investment and your business with the right commercial auto insurance. The cost is manageable, especially when bundled with your other business policies, and the protection is essential. Without it, a single accident could wipe out everything you've built. Take the time to get proper coverage before that first delivery, and you'll have one less thing to worry about as your business continues to grow.
