There’s nothing like a pretzel. Whether you’re biting into a fresh-baked pretzel or chewing on hard pretzels, few baked goods are as universally loved. And if you’ve managed to start a pretzel shop to capitalize on these irresistible twists, you know that.
However, there’s more to suppyling deliciousness to the masses when it comes to running a pretzel shop. More specifically, you may be aware of running the day-to-day operations, but what happens when something goes wrong?
Imagine the following scenarios:
- A worker accidentally burns themselves on an oven.
- A customer gets an allergic reaction to an unintended ingredient in a specialty pretzel.
- Your inventory is ruined when a refrigerator fails overnight, leaving spoiled dough and lost profits.
Even if you have basic protection, half-baked insurance policies can leave you exposed to claims that may potentially turn your business stale - or worse, may chew into your personal assets. The solution is to get up to speed on which types of small business insurance you need to protect your pretzel shop, as well as knowing how to reduce costs so that you’re paying the lowest premiums possible.
Insurance can be complicated, but don’t let it get you twisted out of shape. Independent insurance agents can find the most affordable and comprehensive insurance coverage for your pretzel shop. As you read this article, be sure to write down any questions you may have, since an independent insurance agent can offer unbiased advice to get the best coverage you deserve.
Types of Insurance You’ll Need for Your Pretzel Shop
Generally speaking, most pretzel shops only need a few types of coverage:
- Liability insurance
- Business owners insurance
- Workers’ compensation insurance
Because pretzel shops are often located in high-traffic areas, including shopping malls and strip malls, they are at a greater risk than other establishments. While this is great for business, the downside is that it can present lots of possibilities for lawsuits. Even for pretzel shops that bake off-premises, it’s important to have coverage for all of life’s challenges in our highly litigious culture.
If a customer walks into your pretzel shop and slips on a wet floor after an employee mops up a spill, you will be held liable for medical bills. Similarly, if a customer bites into a fresh pretzel that burns their mouth, they may want to sue you for damages. Or if a competitor claims you committed slander, libel or even stole their ideas, liability insurance can help pay your legal fees to protect your business.
Whatever the situation, a lawsuit can be expensive to your profits - or even put you out of business. Instead, having general liability insurance provides coverage up to a policy’s limits, protecting your business in exchange for premium payments, which may be monthly, quarterly, or yearly.
Business Owners Policy
Pretzel shops aren’t too dissimilar from many small businesses, where protection against normal mishaps is necessary to run a functioning business. That’s where a business owners policy (BOP) can provide general protection against things like:
- Fire damage
- Storm damage
- Equipment breakdown replacement, such as a refrigerator or oven malfunction
- Inventory replacement
- And more
Workers’ Compensation Insurance
Chances are that if you own a pretzel shop, you’ve got at least a few employees and staff to handle the many roles in the pretzel business. From bakers to cashiers, delivery drivers and more, it’s important to have a comprehensive workers' compensation insurance plan in place should an employee be injured, become ill, or have other health-related issues. Workers’ compensation insurance can pay for medical bills, rehabilitation expenses, lost wages, and more. Best of all, workers’ comp can help retain employees that would otherwise have to find other employment to replace lost income while incapacitated.
Of course, these are just basic coverages that you will need to operate your business and minimize your risk. Other types of insurance include:
- Commercial automobile insurance
- Umbrella insurance
- Earthquake insurance
- Flood insurance
- Errors and omissions (E&O) insurance
- Product liability insurance
Of course, no two pretzel shops are completely alike or have the same insurance needs. That’s why it’s important to speak with an independent insurance agent to go over the details of protecting your business optimally. You may want to adequately insure your pretzel shop while participating in a weekly farmers market or at off-site catering events. For this and many other concerns, independent agents are here to help you succeed.
How Much Does It Cost to Insure a Pretzel Shop?
Depending on who you ask, insuring a business can range anywhere from $300 to $3,000 annually, but the national average tends to be $1,200 per year. This means that you can protect your business against substantial claims for about $100 a month - not a bad compromise for peace of mind and asset protection, no?
Cost Factors for Most Types of Insurance
That being said, there are a number of cost factors that can drive up (or lower) the cost of premiums, depending on the nature of your pretzel shop:
- Payroll size: Because workers’ compensation insurance pays benefits to employees based on a percentage of their salary, payroll size directly influences premium costs for workers’ compensation insurance.
- Employment status of employees: Full-time employees cost more to insure, since they spend more time directly involved in your workplace and are exposed to more potential accidents.
- Number of employees: The more employees your pretzel shop has, the greater the premiums.
- Size of premises: The larger your business location(s) , the more opportunities there are for claims to be made. Therefore, you’ll end up paying more for insurance premiums
- Condition of the property: Newer buildings will often draw lower costs because updated facilities are often safer and generally in better shape.
- Business hazards: The more hazardous the operations of your pretzel shop, the higher the premium costs. If your business has dangerous appliances, like commercial freezers or heavy-duty mixers, you can expect premiums to be higher.
- Claims history: Businesses with few claims in their history will often get a discount, and those with more claims than are typical will have higher premiums.
- Severity potential: If your pretzel shop generates lots of revenue or has substantial assets, such as inventory, expect higher premiums to cover the replacement cost.
NAICS Code for Insurance Costs
Your insurance premiums are directly tied to how the government classifies your business according to industry. Every industry in the US has a North American Industry Classification System (NAICS) code, which is used for insurance and a variety of other financially related purposes, such as qualifying for business loans and taxation. Consequently, the NAICS code system is used by your insurance company to compute premiums and risk.
A business may often have a primary NAICS code (the code that best fits your business) and a secondary code (if your business has other elements of a second industry). Most pretzel shops are classified under the primary code of 72, which stands for ‘Accommodation and Food Services.’ However, if your pretzel shop is engaged in other forms of retail, your business may have a secondary code of 44 or 45, designated under ‘Retail Trade,’ as well as other variations.
If you don’t know what your company’s NAICS codes are, an independent insurance agent can help you determine which NAICS code your pretzel shop is classified under.
Benefits of an Independent Insurance Agent
Independent insurance agents have access to multiple insurance companies, ultimately finding you the best coverage, accessibility and competitive pricing while working for you. Find an independent insurance agent in your community here.