Americans love bakeries. In search of Sunday morning doughnuts or a fresh loaf of bread to serve with dinner, people sometimes drive many miles for these sweet indulgences from the best bakers in town. Owning such a business can be quite lucrative, but it is not without its risks. Fortunately, you can protect your small business with a comprehensive bakery insurance policy.
Bakeries in America, 2007 Statistics
- According to the U.S. Census, there were 2,617 commercial bakeries in operation in 2007
- These bakeries employed a total of 141,206 employees
- Bakeries made nearly $26 billion in sales in that year
- Bakery employees received nearly $5 billion in pay, averaging about $35,000 per employee
What Kinds of Insurance Do Bakery Owners Need?
Whether you own a small neighborhood bakery or a large chain of bakeries, you will need to protect your business and finances with a variety of insurance policies. These policies include:
- Workers compensation insurance: Burns and other work-related injuries are not uncommon in a bakery setting. Workers compensation provides medical coverage for employees who are injured on the job and is required by law in nearly every state. You can buy this coverage through your state’s worker’s compensation insurance program or through a commercial insurance provider. Refer to your state’s guidelines or speak with an independent agent in the Trusted Choice network for more information.
- Unemployment insurance: This coverage is included in your state taxes. Once you establish and register your bakery with your state’s workforce agency, they will begin collecting taxes and your business will be covered.
- Disability insurance: If your bakery is located in California, Hawaii, New Jersey, New York, Rhode Island or Puerto Rico, you will be required to purchase this insurance for your employees. Otherwise, it is optional. You may want to offer disability coverage to your employees through a group coverage plan.
- Medical insurance: Most bakeries employ fewer than 50 people and are not required to provide health insurance for their employees. If you own a larger bakery and employ more than 50 people, the Affordable Healthcare Act requires you to subsidize health insurance for these employees. A Trusted Choice member agent can help you find insurance providers that offer affordable rates through group insurance for small business plans.
- Commercial vehicle insurance: Many bakeries offer catering and delivery services. If your bakery uses a company-owned vehicle, you will need to insure it properly with a commercial vehicle insurance policy that meets your state’s minimum liability coverage amounts.
- Bakery Insurance: This is a variation of a general business insurance policy that is specifically designed to meet the coverage needs unique to bakery owners. It provides all the coverage offered by a basic small business insurance plan while including options that are pertinent to the risks inherent in the bakery business.
What Does Bakery Insurance Cover?
Bakery insurance will protect your small business from the potential hazards that can lead to financial devastation. Some coverage options you should consider are the following:
- Liability: Bakery liability insurance typically has two parts, and each offers coverage for the risks you may face in your place of business. In each case, all related court costs and legal fees are included in the coverage.
- General liability: If a customer is injured inside your bakery or in the parking lot and feels that you are responsible, you may be sued for damages. General bakery liability insurance provides coverage against lawsuits brought on by third-party injuries.
- Product liability: If your baked goods become contaminated with hazardous particulates such as broken glass, or with a food-borne illness such as salmonella, your product liability insurance will provide coverage against related liability claims.
- Property: Property coverage comes in two parts. Be aware that in most cases, flood damage is excluded from this coverage, so you will need to purchase a separate flood insurance policy if your business is at risk for flooding.
- Building coverage: This is necessary only if you own the building in which your bakery is housed. It will provide compensation for damages to the building’s structure in the event that it is severely damaged by fire, inclement weather, vandalism or any other covered catastrophes.
- Contents coverage: If a covered event leads to damages to your property within the building, including kitchen appliances, display shelves and artwork, this insurance will provide compensation. Covered events often include severe weather, fire, falling objects, vandalism and theft.
- Equipment breakdown: Your equipment is vital to your business. If an industrial oven or mixer breaks down because of a power surge, mechanical failure or other problem, you may suffer decreased output, or worse, need to close down shop until repairs can be made. This coverage will provide assistance with repair or replacement costs and can provide compensation for lost income while production was halted.
- Food spoilage: An extended power outage can cause food in your refrigerators and freezers to spoil. If you are forced to throw away a lot of expensive food items due to contamination, this coverage can provide the compensation you need to recover.
- Loss of income: This is similar to equipment breakdown coverage in that it provides a continuation of income while business operations are temporarily halted. If any covered event, such as a severe windstorm or a fire, forces your business to temporarily close, this coverage can provide enough income to allow you continue making payments on your business’s monthly bills and to continue employee salaries. This coverage generally lasts for up to one year.
Do Your Research
When it comes to finding the best bakery insurance options for your business, the devil is in the details. It's not just the cost of insurance you should be worried about, it's the coverage. Do you have enough liability insurance? Do you have enough coverage to reimburse you for the total worth of your operation if a fire destroyed the building? You may need some assistance making sure you're getting the best insurance possible.
Lawyers and financial advisors are great people to turn to when you're trying to understand your assets and liabilities. From there, just make sure you're working with an insurance agent who understands the risks your business faces, and can find you the best policy possible. You can shop online for quotes initially, but in the end, make sure your insurer is highly rated, your coverage is adequate for your needs and risks, and your agent is responsive and helpful.