Bakery Insurance Policy Information
Bakery Insurance. Bakeries produce baked goods such as bagels, biscuits, breads, cakes, cookies, crackers, pastries, pies, and rolls. Some are commercial operations that mass-produce large quantities of baked goods. These tend to be highly automated, with the distribution of products primarily to grocery stores, restaurants, and supermarkets. They may have a retail store selling directly to the general public.
Other bakeries are smaller operations that use manual processes to customize and specialize in a particular product such as birthday or wedding cakes. Some retail bakeries have facilities for on-premises consumption, such as a donut shop or a full-service restaurant.
When it comes to buying fresh loaves of bread or rolls for dinner or Sunday morning croissants, Americans love their bakeries. Owning a bakery can be a lucrative endeavor, although it is certainly not without some risks. A comprehensive bakery insurance policy can help you protect your small business from potential loss and liability, so you can remain profitable, even when perils are afoot.
Whether you own a small bakery in your neighborhood or a big chain bakery line, protecting your finances and your business with the right level of bakery insurance coverage is important.
Bakery insurance protects your business from lawsuits with rates as low as $37/mo. Get a fast quote and your certificate of insurance now.
Below are some answers to commonly asked bakery insurance questions:
- What Is Bakery Insurance?
- How Much Does Bakery Insurance Cost?
- Why Do Bakeries Need Insurance?
- What Type Of Insurance Do Bakeries Need?
- What Are Bakeries Risks & Exposures?
- What Does Bakery Insurance Cover & Pay For?
What Is Bakery Insurance?
Bakery insurance is a type of insurance that provides coverage for businesses that operate bakeries, pastry shops, and other similar establishments.
This type of insurance typically includes coverage for property damage, liability, and business interruption. It may also include coverage for loss of income due to equipment breakdown, theft, and other perils.
Additionally, bakery insurance may provide coverage for food spoilage, product liability, and workers' compensation.
Overall, bakery insurance helps to protect a business from financial loss in the event of unexpected events or accidents.
How Much Does Bakery Insurance Cost?
The average price of a standard $1,000,000/$2,000,000 General Liability Insurance policy for small bakeries ranges from $37 to $49 per month based on location, size, payroll, sales and experience.
Why Do Bakeries Need Insurance?
Bakeries need insurance for a variety of reasons. One of the main reasons is to protect against potential lawsuits. For example, if a customer becomes ill after consuming a product from the bakery, they may choose to file a lawsuit against the bakery. Insurance can help cover the costs associated with this type of situation.
In addition, bakery insurance can also protect against property damage. If a fire were to break out in the bakery, insurance could cover the cost of repairing or replacing any damaged equipment.
Bakeries also need insurance to protect against employee injuries. If an employee were to get hurt on the job, insurance could cover the cost of medical bills and lost wages.
Overall, insurance is an important aspect of running a bakery. It can provide financial protection against unexpected events and help ensure the longevity of the business.
What Type Of Insurance Do Bakeries Need?
Even small bakeries needs bakery insurance policies to guard against potential risks in the business from liability and property damage.
Some bakery insurance policies to consider include all or some of the following:
General liability insurance. This is a general policy that is designed to cover the unique risks of the bakery business. It provides coverage of basic business insurance for small business with a special focus on the risks that are known throughout the bakery industry.
Worker's comp insurance. Work-related injuries such as burns, slip-and-falls, or other injuries are not at all rate in the bakery industry. Worker's comp insurance is mandated in for all employees other than the business owners. This type of coverage provides employees with needed medical coverage to handle injuries and illnesses with work-related causes.
Unemployment insurance. This type of coverage is provided with your state tax bill. After establishing your bakery and registering the business with the workforce agency in the state in which you do business, the state begins collecting tax and your business is covered with this type of insurance.
Medical insurance. Under the Affordable Care Act, if your business employs more than 50 people, you must subsidize your employees' health insurance. Work with an agent to insure that you're in compliance with the law and your employees are covered.
Commercial auto insurance. If you offer delivery services in your bakery or you do off-site catering, then chances are that you need commercial auto insurance. This type of policy covers company-owned vehicles and must be maintained at the state's minimum coverage levels or better.
What Are Bakeries Risks & Exposures
Premises liability exposure is light if visitor access is limited to repairmen and inspectors. If tours are given or retail operations are conducted on-premises, all life safety codes must be met to assure visitor safety. Good housekeeping and nonslip flooring finishes are critical to minimizing slips and falls. Spills of liquids should be promptly cleaned up and warning signs posted.
Exits should be clearly marked and free of obstacles. Adequate interior and exterior lighting should be available in the event of a power outage. Parking lots and sidewalks need to be in good repair, with snow and ice removed.
Products exposures are moderate due to the possibility of contamination, spoilage, and foreign objects in the baked goods. The workplace must meet all FDA specifications for sanitary working conditions and be arranged to prevent foreign substances from entering the processing area. Controls must be in place to prevent contamination from exposure to chemicals such as insecticides and pesticides. Stock dating and rotation are important factors. Recall procedures must be in place that can be activated quickly.
Environmental impairment exposure may be significant if underground tanks are used to store cooking oils or fuel for vehicles or equipment. Storage and waste disposal must comply with all federal and state requirements. All waste items must be removed regularly by a qualified outside contractor. Ovens used to bake yeast products may release ethanol into the atmosphere. An ethanol abatement system must be in place, preferably a catalytic oxidation system. If there are underground storage tanks, a UST policy will be required.
Workers compensation exposure can result from burns caused by the ovens, machinery, and equipment, cuts or accidental dismemberment from rotating blades or moving parts on machinery, foreign objects in the eye, hearing impairment from noise, back injuries or a hernia from lifting, and slips and falls from spills and inadequate housekeeping. Safety equipment should be provided, and all machinery should be properly guarded.
Prolonged exposure to flour dust can result in abrasion of tooth enamel, allergic reactions, asthma, and contact dermatitis. Ventilation systems should be in place in fermenting areas and on ovens to prevent the accumulation of noxious gases that can lead to lung injuries and asphyxiation. Forklifts should be equipped with backup alarms and be refueled in well-ventilated areas. Drivers are exposed to slips and falls and lifting injuries at customers' locations, hold-ups if they carry money on routes, and injuries from vehicle accidents.
Property exposures are significant. Ignition sources include the automated conveyance and processing equipment, baking/cooking ovens, electrical wiring, heating, and air conditioning systems, and refrigeration/cooling equipment. Combustibles include the fuel sources for the baking/cooking equipment, grease, and oil from any deep-fat frying operations, dust from the baking ingredients, and packaging materials. All machinery and equipment, including the ovens, must be inspected and maintained regularly to avoid wear and tear or overheating losses. Wiring must be up to date and of sufficient capacity.
All machinery should be grounded to prevent static buildup and discharge. There should be adequate ventilation systems in place to prevent dust from flour and other dry ingredients from building up and spontaneously combusting. All frying operations must have automatic fuel shut-offs and be done under a fire suppression system. A sprinkler system is preferred. There should be annually tagged fire extinguishers throughout the facility. With any food product, even a small fire loss can be significant as state, local or federal regulations may require the disposal of major portions of stock and raw materials that have been exposed to fire, smoke, water or heat.
Spoilage losses can be severe if the refrigeration and cooling equipment malfunctions or loses power. Controls, such as alarms, must be in place to warn if power is out or if the temperature rises in coolers and freezers. Backup systems, such as emergency generators, should provide power if an outage or shutdown occurs. The business income exposure can be very high as some production equipment may be difficult to repair or replace quickly.
Equipment breakdown exposure is high due to the automated machinery and equipment used in the mixing and baking processes. All machinery and equipment must be regularly inspected and maintained. If there are boilers, operational safety valves must be in place.
Crime exposure is from employee dishonesty of both inventory and money. Background checks should be conducted on all employees. The inventory must be under the supervision of more than one individual so that there are checks and balances. There must be a separation of duties between persons handling deposits and disbursements and handling bank statements. Regular audits by an outside firm should be conducted. Theft of money and securities may be a concern if drivers collect monies or if there are retail operations. Receipts should be issued for any cash payments received.
Inland marine exposure is from accounts receivable if the bakery bills customers, computers (which may include computer-run processing systems), contractors' equipment for forklifts, goods in transit, and valuable papers and records, including inventory records, customer files, quality control information, contracts with suppliers and distributors, and proprietary recipes. Most bakers transport their own goods on their own trucks. Most operate on a tight time schedule with early morning deliveries. Collision and overturn are the major causes of loss.
Business auto exposures can be significant. As early morning delivery is important to maintain product freshness, drivers may be required to deliver goods in darkness or during periods of inclement weather. They should be assigned to routes to increase their familiarity with traffic patterns. Drivers should have a commercial license and acceptable MVRs. Vehicles must be regularly maintained with records kept in a central location.
What Does Bakery Insurance Cover & Pay For?
Bakeries can be sued for various reasons, including:
- Food poisoning: If a customer becomes ill after consuming a baked good from the bakery, they may sue the bakery for negligence or product liability.
- Slip and fall accidents: If a customer slips and falls on a wet or slippery surface in the bakery, they may sue the bakery for negligence.
- Allergic reactions: If a customer has an allergic reaction to an ingredient in a baked good and the bakery failed to properly label or disclose the allergen, they may sue the bakery for negligence.
- Intellectual property infringement: If a bakery uses a copyrighted or trademarked image or logo without permission, they may be sued for intellectual property infringement.
- Employment-related claims: If an employee is injured on the job or experiences discrimination or harassment, they may sue the bakery for damages.
Insurance can help protect bakeries from these types of lawsuits by providing coverage for various claims, including:
General liability insurance: This type of insurance covers a bakery in the event of bodily injury or property damage claims, such as slip and fall accidents or food poisoning. It can also provide coverage for advertising injury claims, such as intellectual property infringement.
Product liability insurance: This type of insurance covers a bakery in the event of claims related to the safety or quality of their products, such as food poisoning or allergic reactions.
Workers' compensation insurance: This type of insurance covers a bakery in the event that an employee is injured on the job.
Employment practices liability insurance: This type of insurance covers a bakery in the event of claims related to employment practices, such as discrimination or harassment.
For example, if a customer sues a bakery for food poisoning, the bakery's general liability insurance may cover the cost of legal fees and any damages awarded to the customer. Similarly, if an employee sues a bakery for a work-related injury, the bakery's workers' compensation insurance may cover the cost of medical expenses and lost wages.
Commercial Insurance And Business Industry Classification
- SIC CODE: 2051 Bread and Other Bakery Products, Except Cookies and Crackers, 2052 Bakeries - Cookies and Crackers, 2053 Bakeries - Frozen Bakery Products (except Bread), 5461 Retail Bakeries
- NAICS CODE: 311812 Commercial Bakeries, 311821 Cookie and Cracker Manufacturing, 311919 Other Snack Food Manufacturing, 311813 Frozen Cakes, Pies and Other Pastries Manufacturing, 311830 Tortilla Manufacturing, 311111 Dog and Cat Food Manufacturing, 311824 Dry Pasta, Dough, and Flour Mixes Manufacturing from Purchased Flour
- Suggested Workers Compensation Code(s): 2002 Pasta or Noodle Manufacturing, 2003 Bakery - Salespersons & Drivers
Description for 2051: Bread and Other Bakery Products, Except Cookies and Crackers
Division D: Manufacturing | Major Group 20: Food And Kindred Products | Industry Group 205: Bakery Products
2051 Bread and Other Bakery Products, Except Cookies and Crackers: Establishments primarily engaged in manufacturing fresh or frozen bread and bread-type rolls and fresh cakes, pies, pastries and other similar "perishable" bakery products. Establishments primarily engaged in producing "dry" bakery products, such as biscuits, crackers, and cookies, are classified in Industry 2052. Establishments primarily engaged in manufacturing frozen bakery products, except bread and bread-type rolls, are classified in Industry 2053. Establishments producing bakery products primarily for direct sale on the premises to household consumers are classified in Retail Trade, Industry 5461.
- Bakery products, fresh: bread, cakes, doughnuts, and pastries
- Bakery products, partially cooked: except frozen
- Biscuits, baked: baking powder and raised
- Bread, brown: boston and other-canned
- Bread, including frozen
- Buns, bread-type (e.g. hamburger, hot dog), including frozen
- Buns, sweet
- Cakes, bakery
- Charlotte Russe (bakery product)
- Frozen bread and bread-type rolls
- Pastries, except frozen: e.g., Danish, French
- Pies, bakery
- Rolls, bread-type, including frozen
- Rolls, sweet
- Sponge goods, bakery
- Sweet yeast goods
Description for 5461: Retail Bakeries
Division G: Retail Trade | Major Group 54: Food Stores | Industry Group 546: Retail Bakeries
5461 Retail Bakeries: Establishments primarily engaged in the retail sale of bakery products. The products may be purchased from others or made on the premises. Establishments manufacturing bakery products for the trade are classified in Manufacturing, Industry Group 205, and those purchasing bakery products and selling house-to-house are classified in Industry 5963.
- Bagel stores-retail
- Cookie stores-retail
- Doughnut shops-retail
- Pretzel stores and stands-retail
Bakery Insurance - The Bottom Line
Find the best Bakery insurance policy for your bakery's unique needs by working with a seasoned agent. Consult with a commercial insurance broker to determine which coverage types you need and any riders or policy endorsements that you must purchase to fully protect your business' financial future.
Additional Resources For Food Service Insurance
Learn about restaurants, bars, liquor stores commercial insurance coverages. See how small business food service insurance help protect against accidents, oversights and lawsuits resulting from business operations.
- Bagel Shop
- Coffee Shop
- Concession Stand
- Farmers Market
- Grocery Store
- Ice Cream Shop
- Internet Cafe
- Liquor Liability
- Liquor Store
- Sandwich Shops
- Specialty Food And Restaurants
The food service industry is a vital part of the economy and plays a crucial role in providing food to individuals and businesses. However, it is also a high-risk industry that is prone to numerous potential liabilities and risks. That's why it's important for food service businesses to have insurance in place to protect themselves against financial losses and legal issues.
One of the main reasons the food service industry needs commercial insurance is to protect against liability claims. When running a food service business, there is a risk of someone getting sick or injured due to food poisoning or food allergies. Insurance can provide coverage for these types of claims, helping to cover the costs of legal fees and damages.
Another reason the food service industry needs insurance is to protect against property damage. This can include damage to the business's physical location, such as from a fire or natural disaster, or damage to equipment, such as kitchen appliances. Commercial insurance can help cover the costs of repairs or replacement, ensuring that the business can continue to operate smoothly.
Additionally, commercial insurance can provide coverage for losses due to unexpected events, such as theft or vandalism. This can be especially important for food service businesses, as food products and equipment can be expensive to replace.
The bar and liquor industry is highly susceptible to accidents and injuries. With the presence of alcohol, there is a higher risk of slip and fall accidents, fights, and other mishaps that could result in serious injuries to employees or patrons. Insurance can provide coverage for these types of incidents and help protect the business from financial liability.
In summary, business insurance is essential for the food service industry due to the numerous risks and liabilities that can arise. It can provide financial protection against potential losses and legal issues, helping businesses to operate safely and securely.
Minimum recommended small business insurance coverage: Business Personal Property, Business Income and Extra Expense, Spoilage, Equipment Breakdown, Employee Dishonesty, Money and Securities, Computers, Valuable Papers and Records, General Liability, Employee Benefits, Umbrella, Hired and Nonowned Auto & Workers Compensation.
Other commercial insurance policies to consider: Building, Earthquake, Flood, Leasehold Interest, Real Property Legal Liability, Accounts Receivables, Bailees Customers, Fine Arts, Cyber Liability, Employment-related Practices, Environmental Impairment, Liquor Liability, Business Automobile Liability and Physical Damage, Garagekeepers and Stop Gap Liability.