If you are thinking of starting a bakery business in your home, or if you already have a home bakery, you need to consider insuring your business against the common risks a home bakery business involves. Some home bakery owners rely on their homeowners insurance to protect them, but they do so at their own peril.
What Is An At-Home Bakery?
An at-home bakery is exactly what it sounds like—a bakery business that you operate out of your home’s kitchen. Home bakeries provide bakers an opportunity to sell products that are made in their own home. Usually, at-home bakeries are smaller in scale than retail or wholesale bakeries.
An at-home bakery is a good option for people who enjoy baking and are not yet ready to invest capital in a lot of special equipment or commit to a commercial lease. At-home bakeries are also a great way for bakers to operate their business and limit their exposure to coronavirus.
Although home-based bakeries tend to be small businesses and hire very few, if any, employees, they still face risks similar to those of any bakery business. Having adequate insurance coverage is important, yet some at-home bakeries believe their homeowners insurance provides some coverage. If that describes your at-home bakery, you are underinsured.
What To Expect From Homeowners Insurance
You should expect your homeowners insurance to provide very little coverage of losses related to your at-home bakery. Homeowners insurance policies provide minimal coverage for home-based business losses, and many policies exclude coverage for any such loss.
Your homeowners insurance likely provides personal property coverage to help protect your personal belongings, however, the Insurance Information Institute notes that homeowners insurance usually provides minimal coverage for business property located at your home. Additionally, your homeowners insurance likely provides even less coverage (or none at all) for business property that is located elsewhere.
Where A Bakery Insurance Policy Can Help
Bakery insurance is a type of business insurance that can be customized to meet the specific needs of home bakeries. You can get the best coverage and protect yourself and your bakery from the risks that you are likely to face in your home bakery.
You may already have a general liability policy, which is required in many states as a condition of obtaining a business license. That coverage protects you against liability for injuries to your bakery customers that occur on your premises. If you have employees, you may also have workers comp insurance, which is also required in many states.
None of those types of policies will cover the unique risks that operating a bakery commonly involves, whether the bakery is a commercial retail, wholesale, or at-home bakery. The types of coverage available under a bakery insurance policy include:
For any bakery business of any size, food spoilage is a significant risk. Imagine having a freezer or refrigerator breakdown that will take time to repair or replace, or a power outage that lasts for a few days. Any food kept in refrigerators or freezers begins to spoil. You cannot sell it and you have no choice but to throw it out.
With food spoilage coverage, you will be covered for the lost compensation you would have received for that food if you could have sold it.
Loss of Income
With loss of income coverage, you are protected if your bakery has to close due to catastrophic events like a fire or storm damage. This coverage will provide you with the funds you need to pay your bills while your bakery is shut down.
With equipment breakdown insurance, events like a power surge or a mechanical failure can cause significant losses if your baker has to slow its production or close up shop temporarily or permanently. Imagine what business losses you will incur if your ovens or mixing equipment or a refrigeration unit breaks down. Equipment breakdown coverage is important to have because it will cover the cost to repair or replace your equipment.
Protect your business against losses caused by fire or natural disasters, theft or vandalism.
Cyber coverage protects you against losses resulting from a data security breach resulting in identity theft or other damage involving a data breach.
Commercial auto insurance protects your bakery against injuries and damage that occurs while you or one of your employees are on the road delivering your products, picking up supplies, or tending to some other aspect of your bakery business.
Business Owners Coverage
This is general liability insurance with specific bakery provisions added on. The coverage is consolidated into a single policy.
Work With The Professional Bakery Insurance Experts At Southern States Insurance
Keep your at-home bakery adequately insured and leave nothing to chance. Contact the bakery insurance experts at Southern States Insurance for more information about the coverage your bakery needs to be protected from future events.