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June 29, 2023

There are 6,000 retail bakeries and nearly 3,000 commercial bakeries across the US that generate approximately $30 billion in revenue each year. All those cakes, breads, and pies account for 2.1 percent of the gross domestic product of the United States.

Americans love getting a fix for our sweet tooth, and it's challenging to walk by the smell of freshly baked bread and pastries. Running a bakery is a niche business with some unique needs.

One of those needs is bakery insurance to protect the business if something goes wrong. While you might make the best pies or pastries, you might not know much about insurance.

Read on to learn more about the insurance you need to protect your bakery business.

What Is Bakery Insurance?

Bakery insurance is a special kind of insurance for bakery businesses. It's designed to insure and protect the small business while taking into account its unique risks.

Because a bakery has some distinctive features and equipment compared to other small businesses, the policy is written to protect these specific items.

Why Bakery Business Insurance Is Unique

Bakery insurance is unique because it addresses a bakery's specialized needs.

The policies evaluate how an employee or customer might sustain an injury. The right program will include coverage for the unique equipment inside a bakery.  A good risk management plan for a bakery would also include liability in the event a customer becomes ill after consuming the bakery's products.

When working with an insurance agent, you want to be sure you select an agent who understands your business and how the risks of your business differ from others to ensure proper coverage is in place for those perils.

Let's take a closer look at the specific coverage you should have for your bakery.

Liability Coverage

Liability coverage is the insurance that protects a business against claims resulting from injuries to other people or damage to other property.  Liability can cover legal costs or any fees and payouts that an insured is responsible for if found legally liable.

Several types of specific liability coverage should be a part of the bakery coverage.

General Liability

General liability insurance protects the bakery from potential injuries that a bakery customer might sustain if they fell inside the bakery or in the parking lot.

The bakery could get sued if they fall on the ice or a wet spot on the floor and sustain an injury. General liability insurance protects the bakery in the event of a lawsuit.

Product Liability

Of course, as a bakery, your goal is to serve your customers yummy treats. Yet, sometimes things go wrong that you don't plan on happening.

If a bakery item had some form of contamination or was spoiled and made a customer sick, the product liability insurance protects you.

Property Damage Coverage

Most bakeries sustain a brick-and-mortar location for customers to visit. Part of the bakery insurance coverage should include insurance that protects the actual building that holds the bakery business.

Building Coverage

Building insurance coverage protects the physical structure of the building repairs.

Building coverage also includes damage resulting from:

  • Hail
  • Vandalism
  • Other storm damage
  • Fire

If your bakery suffers a fire and there's damage, this insurance will cover it.

Contents Coverage

In addition to covering the physical structure of the building, you also want insurance coverage that protects the contents.

This can cover any physical items you need to run your bakery business, like:

  • Professional grade mixer
  • Oven
  • Baking sheets and racks
  • Cooking utensils

Contents Coverage would protect the bakery if it experienced a fire, severe weather, vandalism, theft, or falling objects.

Equipment Coverage

Bakeries require special equipment like commercial-grade mixers, ovens, refrigerators, etc.

If one of these necessary items is broken, stolen, or damaged, it would be very difficult and, in some cases, impossible to keep your business running. This insurance protects you from the loss of equipment and the potential of being unable to produce your products.

Spoilage Coverage

Any business that handles food, including a bakery, should have spoilage coverage in their insurance plan.

If your business loses power for an extended period and food spoils, this coverage will reimburse you for the loss.

Large quantities of ingredients are expensive, and this would save you a significant loss.

Loss of Income Coverage

Let's say your bakery is forced to close. Perhaps the business suffers a fire, or there is a severe storm that causes damage to the building. You can't open the doors and sell your goods.

This is a worst-case scenario for small businesses. You don't make money if you can't open the doors.

This insurance coverage protects from a potential loss of income so the business can stay afloat.

Insurance for Employees, Customers, and You

You need additional insurance to protect the human aspect of your business. Let's take a look at this part of your insurance coverage you should have to be protected.

Worker's Compensation

Worker's compensation insurance is required in most states. It protects both your bakery as a business and the workers.

If a worker is injured on the job, the worker's compensation coverage will pay for medical care. It can also cover lost wages and rehabilitative care if it's necessary.

If an injured employee decided to sue you, the insurance company would represent you.

Disability Insurance

Disability insurance could protect the owner or operator of your bakery operation. If they're injured on the job and can't perform their normal duties, then disability coverage pays their income while they cannot work.

Many worker's compensation packages include some form of disability coverage, so be sure to ask your insurance provider so you don't pay for double coverage.

Commercial Vehicle Insurance

Your bakery may own a company vehicle used for deliveries or catering events. You need to have specialized liability coverage on the vehicle. Most states have minimum requirements for liability coverage for commercial vehicles.

You may also want to consider Comprehensive and Collision coverage on your vehicle so you have physical damage coverage for the vehicle.

Make Sure You've Got the Bakery Insurance Coverage You Need

If you own or run a bakery business, you want to protect yourself by getting the right coverage in place to protect you from those unexpected events that could topple a small business without it.

For more information about bakery insurance and to discuss your specific coverage needs, we can help. Contact us today to learn more and ensure you have the right insurance coverage for your bakery.

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