Baked goods store insurance

How to Insure Your Baked Goods Store

Bread baking rolls and croissants in baked goods store

Baked goods stores are retail establishments (not restaurants or cafes) that are primarily engaged in selling baked goods not for immediate consumption (not designed to be eaten on-site in a sit-down atmosphere) and not made on the premises. 

These businesses sell a wide variety of baked items, including muffins, bagels, donuts, and cakes, to other businesses and the general public. They function similarly to other types of retail stores, with the exception that their primary product is food. 

If you own a baked goods shop, you have numerous risks just like any retailer. You also have some increased risk exposure specific to selling food.  

With the help of a local independent insurance agent, you can find out the best way to insure your baked goods store with a comprehensive set of business insurance policies that are tailored to your unique risks. 

Why Do I Need Baked Goods Store Insurance? 

What would happen if a customer had an allergic reaction to a donut purchased in your store because it was improperly labeled? 

What if a customer slipped on a wet floor in your store, fell, and broke an ankle?

What if you had a fire on your premises that destroyed all of your inventory, shelves, fixtures, computers, and your cash registers? 

What if someone vandalized your property, breaking your front door and destroying inventory? 

Like any small business owner, you need business insurance to protect your investment when the unexpected happens. You need protection when you sustain a property loss after a fire, a severe storm, or a break-in. And you need additional protection in the event that someone is injured on your premises or as a result of consuming a baked good purchased at your shop. 

Here are just a few things that can go wrong that should be addressed with baked goods store insurance:

  • A customer or supplier slips and falls in your shop
  • A customer becomes ill after consuming something purchased in your store
  • Guests in your store damage furniture, bathrooms, display cases, or equipment
  • Inventory is contaminated or spoiled
  • Employee injuries
  • Fire, extreme weather, or a natural disaster
  • Theft or vandalism by customers or employees


What Does Property Insurance cover? 

You need a variety of insurance policies to create a complete baked goods store insurance program. Your physical assets are the first things you need to protect. There are several types of business insurance policies that cover your commercial property. 

Commercial Property Insurance

  • Covers your building (if you own it), as well as its contents, including all of your furniture, computers, office furniture and supplies, inventory, paper products, and indoor signage.
  • Responds when there is a fire, a storm, theft, or vandalism in your store and your commercial property is damaged or destroyed.
  • Example: If a fire damaged your stockroom and all of your office equipment, inventory, and supplies, commercial property coverage would pay for repairing and replacing the damaged property.

Business Interruption Insurance

  • Part of your commercial property insurance.
  • Pays for loss of income and certain fixed expenses (e.g., rent, salaries, temporary relocation expenses, etc.) if your business must close due to a covered loss.
  • Example: If your business had to close to make repairs to the roof after a storm, business interruption insurance would help you pay for lost income while you had to close during repairs. It would also pay for rent, employee salaries, and utility bills while your revenue is limited. 

Utility Interruption Coverage

  • Business interruption coverage for the specific circumstances surrounding an interruption in your utility services, such as power or water. 
  • Example: If a transformer blows and you have no power for several days, this coverage offers income protection as well as reimbursement for spoiled food and other related losses.

Employee Dishonesty and Crime Coverage

  • Protects your store if an employee or a group of employees engage in theft, forgery, or fraud that damages your business.
  • Also offers coverage in cases of shoplifting and vandalism.
  • Example: If cash is stolen from your cash register—by an outsider or an employee—your crime coverage reimburses you for your losses.

What Does Liability Insurance Cover? 

Liability insurance is your next line of defense in protecting your baked goods store from costly problems. It protects your business when you are considered to be negligent or blamed for causing harm to an individual or another business. 

  • Commercial general liability (CGL) insurance provides broad protection for third-party bodily injury and property damage claims. 
  • Also provides coverage for product liability, advertising liability, slander, and libel claims against your baked goods shop.
  • Example: If a guest has an allergic reaction to a muffin purchased at your shop because it was not properly labeled as containing a known allergen, your general liability policy pays for direct costs (medical bills, etc.) as well as attorney fees, court costs, settlements, and judgments if you are sued. The product liability portion of your CGL policy responds here. 
  • Example: If a passerby comes in to use your restroom and slips on a wet floor, breaking an ankle, your general liability policy covers any claim for damages. The premises liability portion of your CGL policy responds here. 
  • Example: If a guest becomes ill from eating a spoiled or contaminated bagel, even if the contamination occurred at the supplier, your general liability insurance covesr the resulting financial losses (medical expenses, legal expenses) if you are included in a lawsuit. The product liability coverage included in your CGL policy responds here, as well. 

Baked Goods Stores Need Insurance Coverage for When Food Goes Bad

Baked goods stores need special coverage for inventory losses due to contamination or spoilage. 

While you are not making any of your products on-site, there are still a variety of scenarios in which products can become contaminated (e.g., an air conditioning vent in your store ceiling drips water onto shelves filled with baked goods) or spoiled (e.g., refrigeration failure).

Contamination and spoilage coverage pays for certain losses if food products are spoiled or contaminated due to refrigeration breakdown, utility interruption, or some other type of foreign substance contamination. 

If your local board of health or another agency forces you to close because of food contamination, your contamination and spoilage insurance may cover you for lost income during the shutdown period, as well as costs related to cleaning contaminated equipment, and disposing of and replacing spoiled food. 

Other Baked Goods Store Insurance Policies to Consider

Aside from major property and liability risks, baked goods store owners are likely to need several other insurance policies to protect them from financial harm and unexpected events. Talk to your independent insurance agent about your need for the following. 

  • Commercial auto insurance protects any vehicles owned by your baked goods store. In addition, if employees drive personal vehicles for business use—like picking up at a bakery or making occasional deliveries—you need hired and non-owned auto liability insurance.
  • Workers’ compensation insurance is required for any business that has employees. It protects your workers—including store managers, stock persons, and cashiers—from the costs of work-related injuries and illnesses. This coverage pays for medical bills and lost wages for employees who sustain cuts, burns, slip-and-fall injuries, repetitive motion injuries, or any other injuries or illnesses related to their work. 
  • Cyber liability insurance protects your baked goods store if you are the victim of a cyber breach. If your computer network or website is hacked and confidential customer or vendor information is exposed, the damage to your reputation and bottom line can be insurmountable. 
  • Employment practices liability coverage protects you if a current or former employee sues you for discriminatory employment practices.

How Much Does Baked Goods Store Insurance Cost? 

The cost of baked goods store insurance depends on the policies you choose, the unique risks your business faces, the value of your inventory and equipment, and other factors like your location, number of employees, and the size of your establishment. 

An independent agent can work with you one-on-one to determine the types and amounts of coverage you need. Your agent can get quotes from multiple insurance companies so you can evaluate the cost and coverage options and make the best choice. 

Benefits of an Independent Agent

Independent insurance agents simplify the search process for finding the right baked goods store insurance. They’ll walk you through some handpicked policy options and explain the details.

Most importantly, they’ll be there for you when claim time comes. They know the ins and outs of the process and will make sure your claim is handled appropriately. 

The Lowdown on Online Quotes

Online quotes can be tempting. They are fast and easy to get—but are they accurate? And are you getting quotes for the right coverage? For business owners, choosing speed over accuracy can cost you.  

Online quotes can’t and don’t see the whole picture. They can leave out important coverage that will leave you devastated if something unexpected happens. And they can leave out cost-saving opportunities that an agent can help you take advantage of. 

Instead of getting an online quote, find an independent insurance agent now, and get one-on-one consultation and affordable options for the best coverage for your unique needs. 

Now, who's ready to get their insurance problems solved?