Operating a bakery is a great way for culinarians to profit from their passion. Food is a necessity, and baked goods are considered an evergreen market that can expect to enjoy strong demand, even during a recession. Georgia bakeries are in a particularly good position to thrive as the state is known for its business-friendly laws and low costs of living.
However, bakery owners must obtain financial protection for the risks involved in operating this type of business. Bakeries are subject to many of the same risks faced by other types of retail businesses, such as property damage and bodily injury, but there are also significant risks posed by the sale of food products to the public.
Who Needs Bakery Insurance?
Every bakery needs insurance due to the risk of property damage and injury to customers. It is required for bakery owners as well as those operating a home-based bakery.
The Cost Of Bakery Insurance In Georgia
Different types of bakeries have different needs. A large bakery that distributes products to restaurants and supermarkets have different needs than a smaller operation focused on birthday or wedding cakes. Likewise, retail bakeries with facilities for on-premises consumption have greater risks than those that focus solely on production.
The cost of bakery insurance is influenced by many factors, including:
- The type of bakery and equipment used
- The number of employees at the bakery
- The location of the bakery, particularly its proximity to large cities
- The types of food offered by the bakery
- The amount of business the bakery generates
- The number of vehicles owned by the bakery
- The bakery employees’ driving records
- Whether the bakery owns or rents its space
Therefore, it can be difficult to provide a specific cost that bakeries can expect to pay for their insurance. Bakery owners should discuss the specifics of their business with an insurance agent and request a customized quote.
However, it may be helpful to look at overall trends for a general idea of how much bakery insurance may cost. Bakery owners typically pay around $65 per month for a business owners policy (BOP). Those with annual premiums pay a median of $795. Medians are often a better representation of the typical insurance costs for a bakery than average amounts because they eliminate high and low outliers.
A BOP includes general liability and property insurance, making it a great starting point. However, there are other types of insurance that bakeries also need, such as workers’ compensation insurance which costs around $165 per month or $1,995 annually.
Types of Insurance Georgia Bakeries Need
The price of bakery insurance in Georgia also depends on the specific types of policies that a bakery obtains. Some of the most useful types of insurance for Georgia bakeries include:
General Liability Insurance
This coverage type handles claims resulting from individuals becoming injured at a Georgia bakery’s premises and offers protection from third-party lawsuits. For example, it may provide coverage if an employee slips and falls inside the bakery, whether the floor is wet because it is raining or because an employee recently mopped the floor. Most commercial leases require businesses to secure a general liability insurance policy.
Property Insurance
Georgia bakeries have expensive machinery and equipment that can be damaged or destroyed. Property insurance covers incidents that involve damage to a bakery’s property, including the building itself and the assets inside of it, such as baked goods.
Property insurance protection includes perils such as weather damage and burglary. However, one risk that makes property insurance indispensable for Georgia bakeries is fire. There are many ways that fires can start in a bakery, and property insurance can offer valuable protection.
Bakeries must also follow government regulations to prevent fires, such as ensuring their wiring is up-to-date, carrying out frying operations under fire suppression systems with automatic fuel shutoffs, having equipment inspected and maintained regularly to avoid overheating and wear or tear, and keeping regularly tagged fire extinguishers in the facility.
Business Owners Policy
A BOP is an option for many Georgia bakeries. It is a special type of insurance package offered to smaller businesses that allows them to bundle their commercial property insurance with general liability insurance at a discounted price compared to buying each component individually.
Equipment Breakdown Insurance
Bakeries rely on equipment to perform daily tasks, and even a short power surge or mechanical failure can be enough to force the bakery to close its doors, whether it is a temporary shutdown or a permanent one.
Equipment breakdown coverage can cover the costs of repairing or replacing important equipment such as ovens and mixers. A breakdown is considered as a direct physical loss that causes damage to equipment that requires replacement or repair. However, equipment breakdown coverage does not cover equipment that has worn out due to age.
Food Spoilage Insurance
Another essential type of coverage for Georgia bakeries is food spoilage protection. If the power goes out at a bakery for an extended period of time, food that is kept in the bakery’s refrigerators and freezers can spoil, rendering it unsafe for sale to the public. Food spoilage insurance will pay for the compensation that the bakery could have received had they been able to sell the food that spoiled.
Product Liability Insurance
In bakeries, like all food businesses, the products sold could hurt consumers in some way. For example, baked goods may be contaminated with physical objects such as plastic or glass. There is also the potential for foodborne illnesses such as E. coli and salmonella. Product liability coverage can cover bakeries in the event that a customer is harmed by a product that they sell. A single food poisoning outbreak could be enough to force a business to close, but product liability insurance can help mitigate the damage and offset the high legal costs associated with these incidents.
Loss Of Income Insurance
Loss of income insurance covers a bakery in the event that it is forced to close because of perils such as storm damage or fire. This coverage can help bakeries to make recurring payments that are still due while the business is closed, such as mortgage payments and payroll. Most policies will cover these costs for up to 12 months, but some offer longer coverage periods.
Commercial Auto Insurance
Bakeries that own or rent a delivery van or truck must obtain proper insurance to cover potential accident scenarios, such as inclement weather while driving at low visibility during early morning deliveries, sudden shifts in traffic that can cause a driver to lose control of the vehicle, and being hit by an uninsured driver.
The minimum requirements for auto liability insurance in Georgia are:
- $50,000 bodily injury liability coverage per accident
- $25,000 bodily injury liability coverage per person
- $25,000 property damage coverage per accident
Workers’ Compensation Insurance
In Georgia, bakeries are required to have workers’ compensation insurance if they regularly employ three or more employees. The term “regular” refers to anyone who works for the bakery on a regular basis, and this includes seasonal and part-time employees. It offers protection to employees who become injured or ill on the job and protects the bakery against lawsuits related to these incidents.
Bakery employees are exposed to a range of dangers while carrying out their work. For example, pastry chefs use hot ovens and stoves and handle hot oven trays throughout the day which can result in burns. Equipment with rotating blades and other moving parts could cause cuts or dismemberment, while back injuries are common when lifting heavy raw materials such as sacks of flour. Spills of ingredients like flour or sugar could cause a slip and fall accident.
In addition, many bakery employees begin their shift in the early hours of the morning, which means fatigue could make them more vulnerable to workplace accidents.
Workers’ compensation insurance covers the lost wages and medical bills of employees who sustain injuries or illness at work, and it can also cover permanent disability and vocational retraining.
Cyber Liability Insurance
For bakeries that take online orders, collect customer information, or have a website, cyber liability insurance provides important coverage if there is a cyberattack or data breach. It can cover computer fraud, funds transfer fraud, electronic data restoration, and cyber extortion, among other types of incidents.
Flood Insurance
Flood insurance is normally excluded from standard business property insurance policies, so bakeries that are situated in areas prone to flooding should consider obtaining a separate flood insurance policy for maximum protection. A commercial flood insurance policy can cover the costs of damage to the bakery’s physical contents and assets, including inventory, computers, and equipment, as well as the walls, roofing, and ceiling of the bakery.
Inland Marine Insurance
For bakeries, inland marine insurance offers coverage for damage incurred by tools and equipment that are moved from place to place outside the main location. For example, if a bakery caters, it can offer protection for damage caused to delivery equipment such as food warmers and carts.
Saving Money On Bakery Insurance In Georgia
Insurance agents can help budget-conscious bakeries find ways to save money on coverage. For example, some bakeries may be eligible for a safe premises discount or a new/updated construction discount. Bakeries might also be able to qualify for a discount by paying their premiums annually instead of in monthly installments. Bakeries that have a formal safety plan can often receive discounts on workers’ compensation insurance.
Reach Out To The Experienced Business Insurance Agents
To find out more about bakery insurance or receive a custom quote, speak to the experienced commercial insurance agents at Southern States Insurance. With offices throughout Georgia and access to nearly every major insurance carrier, the experienced pros at Southern States Insurance are well-positioned to find clients the best value for their business.