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The History of Catering Insurance

25. June 2013 16:27

History of Catering Insurance

The history of catering insurance – and of insurance in general – is pretty interesting stuff. Some business owners do not give a second thought to how insurance for caterers began, but as the owner of a catering business, you may wonder from time to time where this type of specialized insurance came from in the first place. The development of insurance for catering business actually began thousands of years ago, which may come as a surprise to you. 

In today's catering industry, carrying insurance is a necessary part of conducting business, but this situation was not always the case. Insurance for catering business developed much in the same way as insurance for restaurants.

The Old Way of Dealing with Risk

Managing risk is a fact of life, especially if you own a business. During ancient times, insurance was more or less a type of trade association among the merchant marines of Greece, Rome and China. Transporting goods across vast distances was an extremely profitable endeavor, but it was also extremely dangerous and risky. In fact, losing a ship to bad weather or simply getting lost in the vast expanse of uncharted seas happened quite often. In one manner of speaking, Property Insurance was the first type of business insurance. Specialized and liability insurance coverage did not develop until thousands of years later, since catering service on the high seas was not a popular business idea at the time.

Lighting a Flame Under the Seat of the Insurance Business

Until the 17th century, insurance coverage was still a mix-and-match set of financial protections that were not formalized or consolidated into a single industry. If your farm burned to the ground, you essentially had to rely on the kindness of your neighbors to help you recover. In 1666, however, the Great Fire of London changed everything. 

People feared the massive amount of damage that large fires in urban areas could cause, so when a huge fire nearly torched London to oblivion, smart entrepreneurs rose to insure property against the risk of fire. Some historical accounts assert that fire insurance developed because the Royal Exchange (Great Britain's stock exchange) almost completely burned down, and the financial losses were enormous. Caterers benefited from fire insurance because hosting events in the smoldering husk of a lavish home was simply bad for business.

The American Way: Specialized Insurance by Industry

In America, specialized insurance did not develop until hundreds of years later. Changes to the laws of the land, which established the precedents for liability claims, presented a unique business opportunity. In the wake of the Great Depression, types of social "insurance," including Social Security and Workers’ Compensation, developed, and a few decades later in the 1960s, the modern insurance industry truly started to take shape. Catering insurance grew out of the expansion of the food service industry as the number of legal cases involving caterers increased. Insurance companies became very good at underwriting the risks of the catering industry and offered businesses customized coverage as a result.

Insurance for your catering business has a long history, which may come as a surprise to you. The first insurances were more or less brands of property insurance, but as the juggernaut of the American economy grew during the 20th century, insurance companies expanded the scope of business insurance products to include the catering industry, too.

know your business risks

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Restaurants | Risk Management | Small Business Risk Management

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