For years, you have been a great baker and pastry chef. Everyone in town has known it since before you graduated from high school. And now, you have finally reached the point where you are ready to open your small bakery.
You have all the latest equipment, you've hired the best employees, and you have customers who are excited and awaiting the grand opening of your bakery.
While you're working hard to make sure that everything goes right, you have to do what you can to mitigate all of the things that could go wrong.
Types of Insurance Coverage for a Bakery
We have listed the different types of coverage for your bakery. There are many more options but these are just a few of the most important.
Business Owner's Policy
A business owner's policy, also called a BOP, consists of policies and endorsements which are put together and sold as a bundle for specific industries. Usually, buying them as a package means you pay less for the business owner's policy than you would for the individual coverages.
You should ask about a business owner's policy when you talk to your insurance professional about coverages.
Commercial General Liability
For whatever reason, we are witnessing more and more recalls for food and ingredients which are suspected of containing foodborne illnesses. Unfortunately, even though you, as a baker, would be a buyer and not a supplier of such ingredients, when a consumer gets ill because of foodborne illnesses, their attorney will generally name everyone in the chain -- from the farmer to the baker.
Generally speaking, commercial general liability insurance (CGL) contains the agreement that the insurer will compensate the insured business for third-party claims that food contamination or foodborne illness claims resulted in bodily injury including illness, disease, or death.
Most of the time, commercial general liability policies have standard exclusions which indicate that the insurer will not pay for injuries under specific circumstances. Given this fact, you will want to be cognizant of what those exclusions are.
Commercial general liability coverage is also valuable if a customer suffers an allergic reaction to an ingredient in your baked goods, scalded by cocoa or coffee, as well as any injury to the customer's person or property while in your bakery or an event which your business is servicing.
Commercial Property Insurance
Commercial property insurance policies cover risks such as fire, power outages, surges, theft, baking equipment, and such things as losses from your cloakroom or valet parking.
If ever you need to close your business due to damage, food contamination, or catastrophic conditions, business interruption coverage can help you to cut your losses. It can pay for lost income, among other things.
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