Many people open bakeries because they want to be involved in a business that brings people happiness. However, running a bakery comes with its share of challenges, and owners need to strike a balance between providing outstanding goods and staying profitable. This can be particularly difficult to achieve when the potential risks of operating a bakery are factored into the equation.
Bakeries, like all food production and service businesses, are high-risk work environments. From injuries to customers and damage to the property to food spoilage and equipment breakdowns, bakery owners need to secure the right type of insurance to minimize the damage when something unexpected occurs.
Outlined below are the top 12 liabilities that bakery businesses face, along with advice on the types of insurance policies that can address each risk.
One of the most common risks that small businesses such as bakeries face is third-party bodily injury claims. If an accident occurs within the business or as a result of its operation that results in physical injury to a customer or another individual who is not an employee, it could lead to an expensive lawsuit.
There are lots of ways that customers can be injured in a bakery. For example, they could trip over an uneven surface or cord or slip in a spilled liquid and fall. Customers may also be injured in the bakery’s bathroom or parking lot.
Commonly referred to as slip and fall accidents, a bakery could be found legally liable to pay a significant amount of money for legal defense, medical expenses, and other expenses in such incidents. The general liability component of a bakery’s insurance policy can provide coverage for third-party bodily injury claims.
One of the biggest liabilities for bakeries and other food industry professionals is accidentally causing a customer to become ill. Although your bakery may be following all relevant health and safety standards to the letter, these types of accidents do occur, whether it stems from poorly prepared food, foodborne illness, or cross contamination with an allergen.
There is also the possibility of the food sold by a bakery becoming contaminated with physical objects from the kitchen, such as pieces of plastic. Customers may also file a lawsuit if they break a tooth biting into an unusually hard baked good.
In lawsuits related to customers becoming ill from consuming their products, a bakery could be found liable for full medical expenses as well as other costs. A product liability insurance policy can cover the costs that arise in cases where customers get sick from the food or services the bakery provides.
Damaging A Customer’s Property
Third-party property damage claims may arise if an accident occurs in the bakery that damages a customer’s property. For example, if a server at a bakery accidentally ruins a customer’s laptop by spilling a beverage on it, the bakery could end up in court.
Experts warn that property damage accidents occur more often than many business owners believe, and even minor lawsuits of this nature can add up. Therefore, bakeries should ensure that they have coverage for third-party property damage claims.
Business Equipment Loss
Although it may be difficult to imagine heavy baking equipment getting lost, many things can happen that can put the equipment that a bakery relies on for its everyday operations at risk. For example, equipment may be destroyed in a fire or stolen by thieves. Repairing or replacing baking equipment, computers, and electronic devices used to carry out transactions can be very expensive, so this type of insurance can help bakeries cover repairs and resume business as quickly as possible.
Advertising Injury Claims
Bakeries may face accusations of advertising injury, which encompasses claims of stolen ideas, copyright infringement, slander, libel, and invasion of privacy. Most bakeries do their best to respect other businesses’ intellectual property. However, legal action could be taken against a bakery for an advertising injury even if it is unintentional. The bakery will still need to defend itself in court, and these claims can quickly become costly.
General liability coverage offers financial protection in cases where another business takes legal action against a bakery for a claim of advertising injury.
Loss Of Commercial Space
Another common liability that bakeries face is the damage or loss of their commercial space due to a covered accident, a crime, or a natural disaster. Bakeries are run in a broad range of locations, from retail sites to homes and commercial kitchens. Damage that renders the business space unusable could cost the business a significant amount of money.
Bakeries need to obtain insurance that covers their commercial space to reduce the financial burden they would face if some type of disaster occurred.
Bakeries may not be thought of as technological businesses, but like all small businesses, cyber thieves are increasingly turning their attention to easy targets that do not have the budget for cutting-edge security measures.
Bakeries that collect or store information online or on computers, such as customer payment information, could be liable to pay thousands or tens of thousands of dollars in expenses should that information be compromised as part of a cybersecurity breach.
Bakeries can obtain cyber liability insurance to help mitigate the costs of first- and third-party claims stemming from cyber breaches.
Providing Customers Bad Advice
Many bakeries’ activities extend beyond simply selling their baked goods and other food to customers. For example, some bakeries offer baking lessons and other fun activities that can help generate business and boost community engagement. However, these functions come with their own set of risks that could negatively impact the business.
For example, if a host provides bad advice during a baking lesson or forgets to mention something important and a student is injured, this could lead to legal action for professional negligence. These claims can be very expensive to defend. Therefore, bakeries that host lessons, activities, and demos should obtain a professional liability endorsement to protect against negligence claims.
Delivery And Transportation Risks
When a bakery’s employees are making deliveries or traveling to pick up supplies, they could face commercial automobile risks such as hazardous weather conditions, distractions, or driver fatigue that lead to accidents. Even a single accident can cost a business a significant amount of money in terms of vehicle repairs and bodily injuries.
Commercial automobile insurance is strongly recommended for bakeries that make deliveries or use motor vehicles for any aspect of their operations. It can protect the company from the time and money involved in replacing or repairing vehicles that are damaged in car accidents, along with the medical and hospital bills and other expenses of people who are injured in an auto accident. This type of insurance can also be expanded to protect from losses due to non-accident impact events, theft, and vandalism.
Most bakeries would be unable to carry out their normal operations if their equipment were to fail. Even a single piece of equipment breaking down because of a power surge or mechanical failure could result in the loss of significant revenue or force the bakery to close temporarily until the equipment can be repaired.
Equipment breakdown coverage can provide bakeries with reimbursement for the replacement and repair costs of broken-down equipment and the income that they lose while their equipment cannot be operated.
Bakeries are required to follow regulations pertaining to safe food temperatures at all times to prevent the risk of foodborne illness and ensure their customers’ safety. However, in the event of an extended power outage, a bakery may be unable to keep food at a safe temperature. When the food in a bakery’s refrigerator or freezer spoils, it must be discarded, which can result in a significant loss for the business.
Spoilage coverage can give bakeries the compensation they need to recover after these types of incidents, such as the amount of money that they could have earned if the food did not spoil and they had been able to sell it.
There are many ways that the employees of a bakery can be injured on the job. Bakery employees regularly work with ovens and fryers that put them at risk of burns. Likewise, using knives and bread slicers puts employees at risk of cutting themselves. There are plenty of opportunities for employees to accidentally slip and fall in the kitchen, whether the floor is wet from washing dishes, or a slippery pile of flour or oil has collected on the ground.
For bakery employees who operate kitchen machinery with rotating blades or other moving parts, the risk of injury is even higher. Working in a bakery may also require repeatedly lifting heavy bags or boxes of supplies, which can result in musculoskeletal injuries.
Workers’ compensation insurance provides essential coverage in cases where employees are injured on the job. It offers reimbursement for their medical treatment and lost wages, protecting both the bakery and the employee. In more severe cases, it can cover permanent disability and vocational retraining.
Reach Out To The Experienced Georgia Bakery Insurance Agents
Whether you operate a small independent bakery or are running a larger chain, it is imperative to protect your livelihood with insurance.
To find out more about how bakery insurance can provide protection against the many risks faced in the bakery industry or to receive a custom quote, reach out to the experienced insurance agents at Southern States Insurance.
With offices located throughout Georgia and access to a broad range of insurance carriers, Southern States Insurance agents can help bakeries find the best value for their business.