Bakery Insurance

Bakery Business Insurance

Small business and home-based bakeries need to be mindful of the risks they face from third-party liability lawsuits as well as unexpected accidents or events.

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Insurance for bakeries

All bakeries and cake-making businesses need a comprehensive insurance policy to protect their businesses from the risks they face. Whether it’s the building where you make and store baked goods, the transportation you use to ship your product to customers, and unforeseen circumstances that can arise with no warning.

A customized bakery business insurance policy is designed to protect from risks associated with your baking facility and operations, such as third-party bodily injury or property damage lawsuits, or if a fire. It can also cover you from the cost of a claim by a customer who alleges the food you made caused them to get sick.

Insurance for Canadian bakeries may vary between the type of business you own and operate, no matter what kind of baked goods you create. That is why you should work with a licensed broker to determine what risks your bakery faces, the kinds of coverages you require, and who can find you the right type of policy at the best price.

What the annual premium is for bakery business insurance depends on many factors, including:

  • The services you provide and the goods you sell
  • Your years of experience as baker or bakery shop owner
  • Where your shop is located and the size of the shop
  • Your annual and projected revenue
  • How many employees you may have
  • The equipment you have onsite
  • Your claims history

You have the option to choose the level of coverage. Many small business bakeries carry at least $2 million of liability coverage. Speak to your broker to determine what the right level of coverage is for you.

A wide range of bakery businesses needs insurance coverage to help them get back to business after suffering an unexpected loss.

Examples of bakery businesses that need business insurance, include:

  • Bagel shops
  • Bakeries
  • Cake makers and decorators
  • Cookie makers
  • Cupcake shops
  • Donut shops
  • Pastry shops
  • Patisseries
  • Pie shops
  • Wedding cake makers

What about home-based bakeries?

Yes. Even if you operate your bakery business out of your home, you need a business insurance policy to protect your business from unforeseen events such as a fire or flood, as well as third-party liability lawsuits.  A typical homeowner’s insurance policy may not provide you with adequate coverage or any coverage at all since personal home insurance is not designed to protect a commercial or business operation running out of a residential dwelling.

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Common claims scenarios

customer inside bakery shop

Problem: A customer visiting your bakery to pick up a cake trips, falls, and is injured while walking through the front entrance. The customer suffers a fractured ankle and sues your bakery for third-party bodily injury.

Outcome: Your commercial general liability insurance may cover the costs to pay for the customer’s medical expenses and your legal defence fees and court-related costs.

cupcake on table

Problem: A customer who purchased a dozen cupcakes from your bakery falls ill after eating a few of them and decides to sue you claiming the cupcakes were contaminated.

Outcome: Your product liability coverage within your commercial general liability policy may cover the cost of the customer’s medical expenses as well as your legal and court-related costs to defend yourself.

bakery shop owner at the cash till

Problem: You notice some of the kitchen utensils are missing and money appears to be disappearing from your cash register at the end of a business day.

Outcome: Unlike your baked goods, theft is tough to swallow. Your commercial crime insurance coverage may pay for the cost to replace your kitchen utensils and the money that is stolen from your cash register or safe.

Frequently asked questions

Do I need to let my insurance broker know if I change ingredients to my food items?

Yes. Any material changes to your products or business needs to be approved by the insurance company through your broker to ensure those aspects of the business are still covered under the policy. If a change is made to your business and the coverage does not apply, then it is likely that a potential claim will not be covered.

Will I be liable for lawsuits if I sell my baked goods from a third-party delivery app?

Yes. The liability falls back onto the owner of the business for any products sold through any platform. You will need to look over the agreement you have with the third-party delivery provider, as there might be terms and agreements that remove your liability once the product enters the delivery vehicle.

What is an ‘additional insured’ endorsement on a bakery business 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’ to your policy. By doing so, you are extending your insurance coverage to them if your bakery or employees cause or are involved in an accident at that event. Speak to a licensed broker about additional insureds if you need it. Oftentimes, you can include additional insureds to your policy at no cost to you.

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