FACT: Americans love bakeries, carbs and all. Marble ryes, Sunday donuts and gender reveal cakes have created a thriving business opportunity that’s rooted deep in gluten-packed comfort.
Bakeries in America, 2017 Statistics
- Bakeries made nearly $24.1 billion in sales in 2017
- Bakery products make up 2.1% of the U.S. GDP, $311 billion in total economic output
- Retail bakery sales are expected to increase by an average of 5.5% per year through 2021
- 65% of bakeries have <10 employees, 44% have one to four employees
If you’re strongly considering jumping into the bakery market, you’re going to want to make sure you’re properly covered. And that’s what independent insurance agents are here for. But first, let’s talk about the kind of coverages you should be considering as you open up shop.
What Kinds of Insurance Do Bakery Owners Need?
Whether you own a small neighborhood bakery or a large chain, you’ll need to protect your business and finances with coverages that include:
- Workers compensation insurance: Burns, bumps, and other work-related injuries are not uncommon in a bakery setting. Workers compensation is required by law in nearly every state and provides medical coverage for employees who are injured on the job. You can buy this coverage through your state or through a commercial insurance provider. For more info and local regulations, refer to your state’s guidelines or speak with an independent insurance agent.
- Unemployment insurance: This is already 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. It provides temporary financial assistance to workers who become unemployed through no fault of their own.
- Disability insurance: This coverage pays part of an employee’s income if they can’t work due to illness or injury. It’s required by law in California, Hawaii, New Jersey, New York, Rhode Island, or Puerto Rico. Otherwise, this insurance coverage is optional.
- Medical insurance: Most bakeries have fewer than 50 employees and are not required to provide health insurance. But if you own a larger bakery with more than 50 employees, the Affordable Healthcare Act requires you to provide health insurance. An independent insurance 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’ll 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 sweet little package of insurance policies that are specifically designed to meet coverage needs unique to bakery owners. It provides all the coverage offered by a basic small business insurance plan, while including options that are designed specifically for the needs of bakery owners.
What Does Bakery Insurance Cover?
Bakery insurance is designed to protect your small business from potential hazards that can lead to serious financial loss. Some coverage options worth considering include:
- Liability: This coverage typically has two parts. Each offers coverage for the legal risks you may face, including all related defense and court costs.
- General liability: If a customer is injured inside your bakery or in the parking lot and feels that you are responsible, you could be sued for damages. General liability insurance provides coverage against lawsuits brought on by injury to third-parties or property damage.
- Product liability: If your baked goods become contaminated with hazardous “extra ingredients” like broken glass, or food-borne bacteria, your product liability insurance will provide coverage against related liability claims.
- Property: Property coverage comes in two parts. Important to note: 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 needed if you own the building your bakery’s in, or are obligated to insure it. It provides compensation for damages to the building’s structure if it is severely damaged by fire, hail, vandalism, or any other covered catastrophe.
- Contents coverage: If a covered event damages your property inside of the building, like 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 equipment (with the exception of an oven, which typically only requires maintenance work) breaks down because of a power surge, mechanical failure or other problem, you’ll no doubt be unable to keep up with demand, lose revenue, and potentially 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 spoilage, this coverage can provide the compensation you need to recover.
- Loss of income: This coverage compensates for your lost profits and ongoing expenses should your bakery operations have to be suspended because of a covered loss, like a fire. The coverage can provide income to allow you to keep your employees, pay your bills, and survive during the repair or rebuilding process. Many policies cover these costs for 12 months, but some may provide even more.
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 if a fire destroys 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. After that, an independent insurance agent can see you through the rest.
The Benefits of an Independent Insurance Agent
Independent insurance agents are kind of like the Google of insurance quotes. You tell them what you’re looking for, and they bring in the results. And since they aren’t tied down to one carrier, they’re free to shop around and bring multiple policy options to the table.
And it gets better, you don’t have to review the policy options alone. They’ll walk you through everything you need to know about finding the right coverage, and price, for you. But it doesn’t end with your signature. Along the way, if something bad ever happens, they’ll handle the entire claim process for you and deal with the carrier, so you can focus on your baking empire. How sweet is that?