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

The Canadian baking industry is one of the most lucrative in Canada. More than 49,000 Canadians work in a bakery, many of which are small businesses, and they generate $5 billion in GDP annually. Canada’s bakeries represent the second-largest food manufacturing sector, behind meat product manufacturing. Furthermore, Canadian bakeries are the fastest-growing food sector, with an average annual GDP growth rate of 5.4% since 2015.

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.

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What is bakery business insurance?

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 does it cover?

A comprehensive insurance policy for a bakery shop may include the following types of coverages:

Do bakers need insurance?

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. As such, you may require a retail insurance policy. 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.

How much does it cost?

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.

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Common claims scenarios

Frequently asked questions

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.

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.

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