What Insurance You Need for Your Bakery
You make our lives sweeter! You don’t want to spoil things by not having the right insurance for your bakery or cake-making business.
Is your bakery on Front Street near Union Station, attracting morning commuters looking for a sweet breakfast? Or is your bakery near the Yonge-Dundas Square where your business regularly attracts shoppers looking for a snack? Do you have a bagel shop on Bathurst Street or St. Clair Avenue West?
Do you have a cookie-making shop near the Royal Ontario Museum? Does your cake-making business operate on the Danforth? Are you running a pastry shop on Spadina Avenue?
No matter your Toronto location, your Western business insurance expert will give you top-notch advice and ways to save.
What types of bakers need an insurance package to protect their business?
You need a bakery insurance package if you own:
- Bakery
- Pastry shop
- Cake-making business
- Cookie-making business
- Cupcake shop
- Donut shop
- Bagel shop
- Pie shop
- Wedding cake maker
What if I run a home bakery?
If you own a home-based bakery, you need baker’s business insurance to protect you from third-party liability lawsuits, or a fire or flood.
Your homeowner’s policy is not designed to protect a commercial operation running out of where you live.
How will a bakery insurance package protect my business?
You need to protect your bakery or cake-making business from the potential risks associated with its daily operations.
Without insurance, you would have to cover these costs out of your own pocket. Can you take on that kind of risk?
A baking Insurance package can help protect you from these 3 common claims:
- A customer slips and falls at your bakery shop and breaks her arm and sues you.
- A customer says your baked goods were contaminated and made them ill.
- An employee steals money, customer data or equipment from your business.
As a bakery business owner, here’s an insurance check list:
- Do you have the best business insurance rate for your baking business?
- Do you have the right amount for your deductible and regularly review it to make sure it’s the right amount for you?
- Is your number of employees up to date?
- Do you know the value of your equipment and is it properly insured?
- Have you thought about the consequences of your business getting hacked?
What’s in a bakery business insurance package?
Commercial General Liability (CGL) Insurance: It’s probably the most important type of insurance you need for your baking business. It helps protect your bakery or cake-making business when there is a third-party bodily injury or damage on your premises.
If a customer gets injured on your premises, your CGL insurance may cover the costs to pay for the customer’s medical expenses, and your legal fees and court-related costs if you are sued.
Your CGL policy also can help protect you from libel, slander, copyright infringement, and false advertising allegations.
How much CGL insurance do I need?
It’s not uncommon that a bakery or cake-making business owner would carry at least $2 million in CGL coverage, or more depending on the size of your operation.
Speak to your Western business insurance expert about the CGL insurance that you need to protect your baking business.
Product Liability Insurance: This type of insurance helps protect you against liability claims and lawsuits arising from the products you sell.
If a customer gets sick after eating one of your baked goods, this type of insurance may cover the cost of the customer’s medical expenses and your legal and court-related costs to defend yourself.
Equipment Breakdown Insurance: Your baking business likely has expensive electrical and mechanical equipment to keep your products either frozen or refrigerated.
Equipment breakdown insurance provides coverage for property damage from the sudden and accidental breakdown of insured equipment not automatically covered by a standard commercial property policy.
You’ll need to have a list of your bakery equipment and how much it’s worth.
Commercial Property Insurance: Whether you own or rent your bakery location, commercial property insurance protects your store and its contents from insured risks that can happen, such as fire, theft, flood, or vandalism.
If vandals smash a store window, commercial property damage could cover the costs of replacing the window and cover any damage or vandalism inside your business.
Commercial property insurance typically includes flood insurance, but what if there’s a heavy rain and the sewers back up and your business is flooded?
You should consider adding sewer backup or overland flood coverage extensions, which standard business insurance policies typically do not cover.
Business Interruption Insurance: This type of insurance supports you when your bakery can’t operate due to a covered loss. It can mean the difference between recovering from a loss and closing your baking business permanently.
There are many losses that can force your baking business to shut down. Some examples include:
- Damage to your storefront from fire or vandalism
- Damage to a neighboring business
- A major reduction in revenue due to a client/supplier facing losses of their own
- A disruption in your supply chain
Business interruption insurance can help with expenses such as:
- Payroll
- Rent
- Utilities
- Property taxes
- Alarm monitoring
- Relocation of your business
Crime Insurance: It should be part your bakery insurance package.
Crime insurance can protect you against theft, credit card fraud, forgery, counterfeit, and other types of fraud that employees sometimes commit.
Cyber Insurance: If you process debit and credit card transactions, online or in person, you need cyber insurance. Your system could be vulnerable to cyberthieves.
Without cyber insurance, you will have to pay out of your pocket for the cost of restoring your bakery’s system if it’s hacked.
You may also be liable for damages to third parties whose information has been stolen and you may have to pay for notification expenses to inform customers affected by a breach.
Commercial Auto Insurance: If you have a business car, van, or truck that you use for your bakery business, it won’t be covered by your personal car insurance policy. You will need commercial coverage as part of your insurance package.
If you own five or more vehicles and use them exclusively for your bakery’s business purposes, such as deliveries, you will need fleet insurance.
What if my bakery delivers products via a third-party app and I get sued?
As the business owner, the liability falls back on you for any products sold through any platform. Read through the agreement you have with the third-party delivery provider to see if there could be any terms and agreements that remove your liability once the product enters the delivery car.
What is an additional insured endorsement on a bakery insurance policy?
If your bakery hosts an event at another location other than your shop, the event organizer and property owner may require you to add them as ‘additional insureds’ on your policy.
When you do this, you are extending your insurance coverage to them if your bakery or employees cause an accident or are involved in an accident at that event.
How much will my bakery insurance cost?
It will depend on the size of your baking business. Are you an industrial operation or a shop? The number of employees, annual revenue, past claims, and your location will also affect how much insurance you need.
Ask your Western business insurance expert to determine the right level of coverage for your bakery store.
What do I do if my baking business has an insurance claim?
- Contact your broker immediately after any business-related mishap. Waiting to file a claim can confuse insurers about the severity of the damages to your business.
- Know your policy so that when you contact your broker you are familiar with what will be covered or not.
- Document the damage. Take photos right away and write down what happened.
- Do not throw away damaged goods after taking photos. Keep the physical evidence so that your adjustor can see it.
- Do not invite lawsuits. Don’t say anything that could be used against you, especially if you aren’t sure what happened.
- Be honest about what your damaged property is actually worth. Damaged commercial property is generally valued according to its actual cash value or replacement value.
Western Financial Group has licensed BUSINESS INSURANCE EXPERTS to get your bakery or cake-making business the right insurance package. Our experts are available now to help you navigate the business insurance journey to protect your baking business.
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