There are an estimated 23,158 retail bakers in the United States, according to SafeGraph. Bakeries are popular establishments that sell a wide range of goods, such as bread, cakes, cookies, pastries, and pies. In their daily operations, bakers use equipment like mixers, ovens, and fryers to produce high volumes of delicious products.
Many bakeries also have indoor areas open for the public to view display cases filled with treats to sample the options. Like any business that serves the public, bakeries face a number of risks that could result in a financial loss. Insurance is one of the best ways that bakery owners can protect their investment.
What Types Of Insurance Does A Bakery Need?
Insurance helps protect bakeries against unexpected incidents that could put them at risk for financial losses, lawsuits, or reputational damage. The type of insurance a bakery needs will depend on its size, location, and level of risk. Here is a look at some of the most common types of insurance acquired by bakeries.
Bakeries are at risk for encountering significant property loss. Costly equipment and machinery can become damaged, baked goods can get ruined, and the building itself can suffer damage or complete destruction. Commercial property insurance covers a wide range of scenarios, from weather-related damage to vandalism. Property insurance typically covers the actual building, as well as the contents inside it.
Bakery owners can be held liable for incidents that occur on the premises, such as a “slip and fall” accident that occurs after mopping. A general liability insurance policy can protect a business against formal lawsuits or third-party claims. Coverage may also include product liability, meaning if the food served to a person causes them to become ill or injured, the bakery would remain protected from the financial repercussions.
Equipment Breakdown Insurance
Bakeries depend heavily on their equipment to maintain steady production. If a piece of essential equipment suffers damage due to a mechanical failure or power surge, a bakery could be forced to shut down temporarily or permanently. Equipment breakdown coverage can help pay to repair or replace damaged machinery.
Food Spoilage Coverage
Food spoilage coverage is a must for bakery owners. If a bakery should suffer an extended power outage, food kept in refrigerators and freezers can spoil, resulting in hundreds or thousands of dollars in losses. Food spoilage coverage helps pay for lost compensation that the business would have received if it was able to sell the food that spoiled.
Loss Of Income Insurance
A bakery could be forced to close unexpectedly due to a fire, storm damage, or similar events. While the business is shut down, rent payments, mortgages, payroll, and other bills will still accumulate. Loss of income coverage can provide a bakery owner with compensation to keep these payments up-to-date.
Employee Dishonesty Insurance
Many modern bakeries accept cash, credit card payments, and checks. There is always a chance that an employee could steal money or property from their employer. Employee dishonesty insurance can help cover losses when employees choose to steal.
Cyber Liability Insurance
If a bakery has an online presence, collects customer information, or accepts online orders, it needs cyber liability insurance. A cyber liability insurance policy offers coverage for computer fraud, cyber extortion, funds transferred fraud, cyber terrorism, business interruption, and electronic data restoration.
Inland Marine Insurance
Inland marine insurance provides coverage for damage to any tools or equipment that the bakery uses outside of its main location. Many bakeries offer delivery and catering options that put the business at risk for damaged equipment or lost tools. Coverage protects damage to delivery and catering equipment, such as food carts, trays, or warmers.
Commercial Auto Insurance
Bakeries that own or rent delivery vans, trucks, or other vehicles used for work purposes should have a commercial auto insurance policy. Auto insurance provides protection in the event that an accident occurs when delivering food or transporting goods. It can also be useful if an uninsured driver hits the vehicle or if a delivery truck becomes damaged due to inclement weather.
Workers’ Compensation Insurance
Bakeries contain a wide range of hazards that could potentially cause injury to employees, such as hot ovens and powerful mixing tools. Most states require employers to acquire workers’ compensation insurance if they employ three or more people. Workers’ compensation helps cover expenses like medical bills and lost wages in the event of a work-related illness or injury.
What Are The Benefits Of Acquiring Bakery Insurance?
Insurance can be a complex topic but the benefits of acquiring coverage are well worth the effort. The right insurance policies can help protect bakeries from a wide range of liabilities and unexpected events. Here are some of the key benefits that bakeries can enjoy when they acquire insurance:
1. Protect Employees
Employees are a business’s greatest asset. Many bakery owners rely on their workers to perform day-to-day tasks, such as baking delicious goods, providing customer service, and keeping the building clean and hygienic. Protecting employees from possible illnesses or injuries should be the main priority for every business. Workers’ compensation insurance and other types of coverage can help protect employees and keep them financially secure.
2. Avoid The Financial Consequences Of Property Damage
Bakeries rely heavily on their equipment and machinery, such as ovens, fryers, freezers, mixers, and refrigerators. If a piece of property should break down or suffer damage, it could prevent the bakery from continuing to bake goods or serve customers. Property insurance can provide business owners with the compensation they need to quickly repair or replace damaged property.
3. Meet Third-Party Requirements
If a bakery is renting space from another person, they may be forced to meet certain requirements. Some landlords require renters to have adequate coverage to protect them in the event of a fire or other incident. If a bakery has borrowed money from a financial institution, the loan agreement may also require the borrower to provide proof of certain types of insurance.
4. Guard Against Dishonest Employees
There are many ways that employers can respectfully encourage honesty from their employees, such as screening prospective workers and conducting thorough background checks. However, there is always a risk that an employee could steal money or property from the bakery. With coverage like employee dishonesty insurance, employers can gain peace of mind that any monetary losses from employee theft or fraud will be covered.
5. Prevent Financial Ruin From Costly Lawsuits
Businesses can face lawsuits from customers, ex-employees, vendors, or others that file a claim. Even if a claim is found invalid, a bakery could still lose money due to costly court fees and the expense of hiring a lawyer. Liability insurance can help protect against these expenses and prevent a business from having to shut down due to financial concerns.
6. Block Financial Losses From Cyber Attacks
Today, many bakers have an online presence. Some bakeries have their own website that provides customers with information and menu options. Others have online ordering options that make it easy for customers to order from their phone or computer. Whenever a business chooses to go online, they face cybersecurity risks. Cyber liability insurance protects against a wide range of cyberattacks, including computer fraud.
7. Replenish Lost Income
A bakery may be forced to close temporarily due to a fire, storm damage, or another incident that prevents normal operations from resuming. When this type of situation occurs, a bakery owner stands to lose their entire income. A loss of income insurance policy helps ensure that business owners can continue paying their bills even during periods of closure.
How Much Does Bakery Insurance Cost?
The cost of bakery insurance differs based on the type of coverage, amount of protection, the value of business equipment, the location of the bakery, and similar factors. According to Insureon, the average cost of a business owner’s policy for bakery owners is approximately $65 per month or a median annual cost of $795. For this type of policy, the deductible is generally around $500 with a limit of $1 million per occurrence.
Another essential type of insurance that most bakeries require is workers’ compensation. The median cost of a workers’ compensation policy is about $165 per month or approximately $1,995 a year. This coverage helps pay for lost wages and medical fees for employees who become ill or injured on the job.
General liability insurance is a must for every bakery regardless of location. The average bakery will spend about $40 per month for a general liability policy, or about $485 per year. A general liability policy protects businesses from customer property damage, customer injury, and advertising mistakes.
Discounts may be available for bakeries that help save money on insurance. Some property insurance policies offer discounts for bakery buildings that have been recently built or updated. Bakery owners may also receive discounts on the liability portion of their coverage if they take the proper steps to create safe premises for customers. Discounts may also be available for add-ons like security systems.
Contact An Experienced Georgia Insurance Brokerage
Bakery insurance is an essential type of coverage that can be customized to meet the unique needs of the business. Many types of businesses fall under the bakery category, such as donut shops, cupcakeries, cake shops, mobile bakeries, baked manufacturers, home-based bakeries, and wholesale distributors.
When it comes to finding the best bakery insurance policies for a business, it is important to speak with an experienced insurance broker. For more information about the costs and benefits of acquiring insurance for a bakery or to request a quote, contact the professionals at Southern States Insurance.