We are always ranting about how food trucks with employees need to carry workers' compensation insurance (see our Duck Test entry). Beyond the legal requirement, doing good by your staff and ultimately protecting yourselves, food truck owners should consider the current state of the market. Insurance rates (especially workers' compensation) tend to fluctuate with the economy. Did you know that right now rates are possibly at the lowest point in 5-6 years? If you have yet to secure workers' compensation insurance or are just starting a truck, read the below and consider locking in coverage before rates start going back up.
Soft vs. Hard Markets:
Insurance professionals refer to insurance markets as "hard" or "soft." Simply put, a hard market is when losses start to get out of control, carriers respond by increasing rates or decline to offer coverage completely. The market dries up leaving less competition and higher rates. A soft market is when losses are stable and there are many markets competing for business. Recent workers' compensation insurance reforms have helped rates stay at these low levels, but carriers are beginning to see losses on the rise and are increasing their rates.
What does this mean for food truck owners?
Due to the downturn in the economy we have seen clients with lower than typical payroll. Combining low payroll and lower workers' compensation rates means truck owners are seeing dramatically lower insurance costs. However, health care costs continue to rise. Losses are starting to take their toll on carriers and we are beginning to see the rates creep back up. To put this back into the roller coaster metaphor, business owners just finished the thrill of the ride because rates have dropped steadily for the past 5-6 years, but they are likely hearing the first clicks for the ride up to the next peak.
We prefer calm rides. Dramatic rate changes are difficult to handle for everyone. Unfortunately workers' compensation in California has historically been a "Space Mountain" rater than a "Peter Pan" adventure. Prepare yourselves now by managing your claims, revisiting your loss control efforts, and sticking with a carrier that can endure the ride. Very few carriers offer workers' compensation for food truck operators. This is primarly because they still do not understand gourmet food trucks and the fact that they are not constantly moving. We work with a few preferred carriers that can offer competitive rates for workers' compensation to food truck operators (only in selective states). If you have questions about workers' compensation insurance or want to lock in your rates with Insure My Food Truck, contact us.