Bakery insurance is a form of small business insurance customized to meet the specific needs of both commercial and home bakeries. Selecting the right coverage for your bakery insurance policy is crucial, as it can protect your bakery from a potentially crippling financial loss, from customer slips and falls to severe employee injuries like burns.
To ensure your unique bakery gets all the coverage it needs to protect its operations, revenue, and more, the best course of action is to work with a trusted independent insurance agent. They’ll be with you every step of the way while selecting the right policy for your bakery. They’ll get you set up with coverage that considers all your business’s specific risk areas.
The Best Bakery Insurance Companies
|Bakery Insurance Companies||Star Rating|
|Southern States Insurance|
Many insurance companies sell bakery insurance, but a lot of them don’t advertise it by name. Most insurance companies that sell small business insurance can create a customized insurance package for you based on the needs of your bakery, while a few others already offer a package titled bakery insurance.
While a ton of insurance companies could create a bakery insurance policy for you, finding coverage could also depend on the area you live in. That being said, one bakery insurance company outshines its competitors:
- Best overall bakery insurance company: Progressive
Progressive offers business coverage for bakeries across the country. Progressive’s extensive catalogue includes not only bakery and business insurance, but also auto insurance, dental insurance, umbrella insurance, life insurance, and much more. Progressive can cover your bakery whether it’s run out of your home or as a separate business entity. The carrier’s Progressive Advantage Business Program makes finding coverage even easier by providing a fast and personalized experience while offering discounted rates.
All together, Progressive’s coverage offerings for bakeries combined with its multitude of high customer ratings, experience, and financial strength make the insurance company an excellent choice to meet the needs of your bakery.
Types of Insurance Needed by Bakeries
Your bakery needs several forms of coverage to protect it in case something goes wrong. Bakeries need coverage for not only the structure of the building, but also for you as the owner, your customers, and your employees should a crisis occur.
The main types of coverage needed by bakeries are:
- Workers’ compensation: Workplace injuries like burns, slips, and falls are common in bakery settings. Workers’ compensation insurance is required by law in most states for many businesses with more than one employee. About 44% of all bakeries have more than one employee. Coverage reimburses for medical treatment of employees who get injured on the job and can be purchased through your state, or a commercial insurance provider. For more info on local regulations, refer to your state’s guidelines or speak with an independent insurance agent.
- Unemployment insurance: This coverage is already included in your state taxes. Once you’ve established and registered your bakery with your state’s workforce agency, they’ll begin taxing you, and your business will be covered. Unemployment insurance provides temporary financial assistance to workers who unexpectedly lose their job 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, and Puerto Rico. Otherwise, disability insurance is optional.
- Commercial vehicle insurance: Many bakeries offer catering and delivery services. If your bakery uses a company-owned vehicle, you’ll need to get it equipped with the proper coverage, meaning a commercial vehicle insurance policy that meets your state’s minimum liability requirements.
What Does Bakery Insurance Cover?
Bakery insurance exists to protect your small business from potential hazards that can lead to serious financial loss. Some of the major coverage options worth reviewing with your independent insurance agent include:
- Liability coverage: Liability coverage is usually broken down into two main components. Each type provides coverage for potential legal risks, including attorney, court, and settlement fees.
- General liability: If a customer gets injured inside your bakery or in the parking lot, you could get sued for the damages. General liability insurance protects you against lawsuits brought for third-party injuries 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 provides coverage against liability-related claims.
- Property damage coverage: Property insurance also usually comes in two parts. It’s important to note that in most cases flood damage is excluded from this coverage, so you’ll need to purchase a separate flood insurance policy if your business is at risk for flooding.
- Building coverage: Building coverage is necessary if you own the building your bakery operates out of, or are obligated to insure it. This coverage provides compensation for damage to the building’s structure if it gets severely damaged by fire, hail, vandalism, or any other covered catastrophe.
- Contents coverage: If a covered event damages your property inside the building, like kitchen appliances, display shelves, or artwork, contents insurance will provide compensation. Covered events often include severe weather, fire, falling objects, vandalism, and theft.
- Equipment breakdown coverage: Your bakery’s equipment is vital to the business. If your equipment breaks down due to a power surge, mechanical failure or other problem, you might lose operating hours and revenue, and may need to temporarily close until repairs can be made. Equipment breakdown coverage reimburses for repair or replacement costs and lost income while production is halted. *Note that ovens are often excluded from this coverage, since they typically only require maintenance work.
- Spoilage coverage: An extended power outage can cause the food in your refrigerators and freezers to spoil. If you’re forced to throw away a lot of expensive food or ingredients due to spoilage, this coverage can provide the compensation you need to recover.
- Loss of income coverage: This insurance aspect compensates for any lost profits and ongoing expenses should your bakery operations have to be suspended due to a covered loss, like a fire. Loss of income coverage can allow your bakery to keep its employees, pay the bills, and survive during the repair or rebuilding process. Many policies cover these costs for 12 months, but some may provide longer coverage periods.
What Isn’t Covered by Bakery Insurance?
Though bakery insurance covers a lot of components for business owners, it doesn’t cover just anything. The following are examples of commonly excluded perils under bakery insurance policies across the map:
- Employee dishonesty
- Breakdown of appliances such as steam boilers
- General wear and tear of equipment, etc.
- Routine maintenance fees
- Earthquake damage
- Nuclear reaction and war
- Power failure (unless it causes damage to computer systems)
- Temperature/humidity changes
- Inexplicably lost inventory
- Flood damage
Your independent insurance agent can recommend additional coverages you may need that aren’t included in a bakery insurance policy.
How Much Does Bakery Insurance Cost?
The cost of your bakery insurance policy will depend on a number of factors. However, on average, bakery owners across the US pay about $65-$79 monthly for a business owners policy. That means a median annual premium of $864. Of course, if you add additional coverages for your business, you can expect to pay a bit more than this.
Your bakery insurance policy’s cost will be determined by reviewing a few different factors, such as:
- The type of bakery: This includes more than just if you’re serving donuts or biscuits out of a large office space or a little truck. The kind of equipment your bakery uses will affect the risk involved in operations. More danger means more money for insurance.
- The location of the bakery: Larger cities tend to have higher costs for insurance, for starters. But depending on where you are specifically, your location may be more subject to various weather-related risks. Bakeries along the coast may have premiums up to 20% higher than in other areas of the state due to the increased threat of hurricane damage.
- The number of employees: The more you've got, the more workers' comp you’ll need.
- How much business you generate: Premiums are calculated based on business projections for the upcoming year. If your workload doubles, so will your premium, most likely.
Starting with a business owners policy provides the advantage of combined property and liability coverage at a discounted rate. Additional factors that further influence the cost of your bakery insurance include:
- The size of your bakery
- Your bakery’s annual revenue
- Your bakery’s specific location
- The value of any insured equipment
- Your bakery’s specific operations
|Average bakery insurance coverage limit:|
|$1 million per incident|
|Average bakery insurance deductible:|
|Median annual bakery insurance cost:|
How much bakery insurance do I need?
|You need enough bakery insurance to cover all the main components of your business, including:|
|Your bakery’s structure|
|Your bakery’s inventory|
|Your bakery’s employees|
|Your bakery’s revenue|
|Your bakery’s special equipment|
|Your bakery’s expensive food and ingredients|
|Your bakery’s legal risks|
Many of your bakery’s coverage needs are addressed in a bakery insurance policy. An independent insurance agent can help you add extra coverages to your policy to provide your business with a full picture of protection. You’ll need enough coverage to prepare for major disasters, like adequate liability insurance to cover a huge unexpected lawsuit and enough commercial property insurance to cover you if a fire burns down your entire bakery.
Finding Discounts and Savings on Bakery Insurance
While bakery insurance isn’t necessarily cheap, fortunately many insurance companies offer a handful of competitive discounts and other ways to save money on coverage. An independent insurance agent is especially skilled in finding money-saving hacks for bakery insurance customers.
The discounts available vary greatly depending on which insurance company you go through, but here are a few examples of common discounts offered on bakery insurance policies.
- New/updated construction discount: Your property insurance coverage could receive a premium discount if your bakery’s building was recently built or updated.
- Safe premises discount: You could receive a discount on the liability portion of your coverage if your bakery provides especially safe premises to prevent customer injury.
- Annual premium discount: You could qualify for a discount on your bakery insurance if you opt to pay your premiums annually in one lump sum, rather than monthly installments.
- Security systems discount: Your bakery might qualify for discounted property coverage if your building is equipped with security measures like burglar alarms or cameras.
- Formal safety plan discount: Your workers’ comp coverage could be discounted if your bakery provides a formal safety plan to help avoid employee injury, sickness, and death.
- Insurance package discount: You’re likely to save quite a bit on your bakery insurance if you shop for a special packaged product of all the protections you need, vs. purchasing each required type of coverage separately.
An independent insurance agent can not only help you find all the coverage your bakery needs to maintain smooth operations, but also find the most affordable rates by browsing a number of different insurance companies’ bakery insurance products.
Mishaps and Scenarios to Think about for Bakeries
When getting set up with bakery insurance, it’s a good idea to think about some common mishaps that could affect your business in order to prepare for these in advance. Here are just a few common mishaps and scenarios to consider when looking into purchasing bakery insurance.
- Your bakery gets damaged or destroyed by a natural disaster: If a destructive natural disaster rolls through your town and hits your bakery, you’ll need to make sure your property insurance is up to snuff. While property insurance covers many natural disasters, it typically doesn’t cover flood damage or earthquakes. You’d need a separate policy to prepare for either of those disasters, and an independent insurance agent can help you find the right coverage.
- A customer gets sick after eating your baked goods and sues you: Whether your bakery is found to be responsible for a food poisoning claim or not, you’ll need to have enough liability coverage to protect your business either way.
- One of your employees gets into an accident with the company vehicle: If your bakery makes deliveries, it’s important to get commercial auto insurance to protect those vehicles while they’re out on the road, or parked in the lot. A regular auto insurance policy will not cover vehicles used for business purposes.
- One of your employees burns themselves while baking a cake: Burns are some of the most common injuries in bakeries, and they can be costly to treat. That’s why it’s so important to make sure you have enough protection for your employees under a workers’ compensation policy.
An independent insurance agent can list off several more examples of common mishaps and scenarios to consider while browsing through your available bakery insurance options. They’ll help your business anticipate and prepare for the worst by selecting the best available coverage for your needs.
Frequently Asked Questions about Bakery Insurance
Bakery insurance is essentially a special type of small business insurance customized to protect owners of bakeries. The agreement between the insurance company and the bakery states that the insurer will cover financial losses that befall the business. Only specific perils stated in the policy will be covered by the insurance company. Policies come with a list of specified non-covered perils, as well.
Since one policy won’t work for every type of bakery, or each specific business’s owner, you’ll want the help of an independent insurance agent. Together, the two of you will work to assemble a package of different coverages to protect yourself and your business against risks unique to you. Bakery insurance is designed to keep your business afloat following a huge disaster, such as property destruction or lawsuits.
|If you’re renting a property to run your bakery out of, you’re probably required to carry commercial property insurance on it by your mortgage lender. You might also be legally required to carry other forms of insurance, such as workers’ comp if your bakery has more than one employee. You’ll need to check your state’s specific guidelines to be sure. An independent insurance agent could also help answer this question for you in your specific area.|
If you purchase commercial liability insurance by itself, the average cost is about $42/month for coverage for a small business. However, if you purchase a business owners policy that packages liability coverage and property damage coverage together, you’ll benefit from a greatly discounted rate. Business owners policies cost a median of $72 monthly.
Many folks run cookie and cake businesses out of their homes. If you operate a small business such as a bakery out of your home, if it’s not too profitable, the cost of insurance coverage may not be worth it. To better assess if coverage is necessary for your home-based bakery, consider your annual revenue, the cost of your inventory and other supplies, and the risk your business may pose from a legal standpoint.
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.
TrustedChoice.com Article | Reviewed by Paul Martin
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