Proof of some amount of basic liability insurance is likely required as a condition of getting licensed by your state to operate a bakery business in your home. However, you may need more coverage than the minimum required by your state, you could be taking significant risks of liability without it. One incident could put your bakery out of business and ruin your finances.
How Do I Cover My Home Bakery?
If you think that your bakery business is covered by your homeowner’s insurance policy, think again. Most homeowner’s insurance policies exclude business activities. Double check your homeowner’s insurance policy before you rely on its coverage. Even if your policy does not exclude your business operation, it likely has limitations on the scope and loss amounts it would cover.
The best way to get adequate insurance coverage is to contact a reputable insurance broker. The broker will help you assess the risks involved in your specific bakery business. Once you both have an understanding of the risks, the broker can help you determine what types of insurance you need and give you guidance on choosing the best policies for your bakery.
The cost of coverage will depend on a range of factors that affect the level of your business’s risk exposure. Those factors include the number of employees your bakery has and their driving records, the volume of business your bakery does, and the number and types of vehicles your bakery owns, operates or leases.
Important Areas Of Insurance Coverage For A Home Bakery Business
The major areas of coverage that a home bakery business should consider are discussed below. The type of coverage and the amount you need depends on specific factors relevant to your home bakery business operation.
General liability coverage is basic coverage required by most states as a condition to granting a business license. It covers claims for personal injury and damage when a customer or vendor suffers an injury while on your premises.
Product liability coverage insures you against claims arising out of someone getting sick from consuming one of your food items or injured using one of your products.
If you have any employees, your state likely requires that your business has workers compensation insurance. It protects your business from claims arising out of injuries to employees. Some states require it if you have only one employee, other states require it if you have three or more employees.
Common types of injuries to bakery employees include burns, cuts, dismemberment by automated machinery, back injuries, and slip-and-fall injuries. Workers comp insurance covers your business for these claims.
Coverage for Personal Property Such as Tools and Equipment
A bakery needs special tools and equipment to operate—ovens, blenders, refrigerators, and so forth. Even office equipment such as a computer or credit card reader can be insured. If any of this equipment is damaged or stolen, it would probably impair your ability to operate your bakery until those items are replaced. Insuring these items will protect you against this kind of risk.
Extended power failures or equipment breakdowns can result in food spoilage. Coverage for food spoilage will protect you against losses resulting from these kinds of events.
Medical and Damage to Property Owned by Others
If you are doing business at a facility other than one owned by your bakery, make sure you have insurance coverage to protect you against claims for injuries and damage to property while you are doing business on that property.
Commercial Auto Insurance
This coverage will protect you if you cause an accident while you are out doing bakery business, such as going shopping for bakery supplies or delivering bakery products to a customer. This insurance coverage will cover claims for injuries to other people and damage to their property resulting from the accident.
Professional Liability or Errors and Omissions
This coverage protects you against damage resulting from your negligence. For example, suppose you contracted with a customer to deliver baked goods to a special event where the guests paid the customer an admission fee. The contract was executed six months in advance of the event. You neglected to put the event on your calendar and forgot about the commitment and did not perform as promised. Your failure caused damage to your customer. Your customer could file a claim against your bakery based on professional negligence and a court could hold you liable for the losses suffered by your customer.
If your basic coverage does not cover legal fees that could be associated with any of these claims, consider having that added to your coverage.
Contact The Bakery Insurance Team At Southern States Insurance For More information
Any business, no matter how small, needs adequate insurance coverage to protect itself against losses resulting from accidents and injuries. A home bakery business is no different. Make sure your bakery business is fully protected by consulting with the bakery insurance specialists at Southern States Insurance. They are experienced with home-based bakery businesses and can design a policy tailored to your bakery insurance needs.