Common Mistakes Bakery Owners Make When Buying Insurance
By Bakerybizinsurance
Running a bakery is a labor of love — from the smell of freshly baked bread to the joy of creating custom cakes for happy customers. However, behind every successful bakery lies the responsibility of protecting your business from risks that could arise at any moment. Fires, equipment breakdowns, injuries, or even lawsuits can turn your dream bakery into a financial nightmare without the right bakery insurance coverage.
At Bakerybizinsurance, we specialize in helping bakery owners like you find comprehensive, affordable, and customized insurance plans that protect your livelihood. Unfortunately, many bakery owners make common mistakes when purchasing insurance — mistakes that can cost them thousands of dollars. Let’s take a look at these pitfalls and how to avoid them.
1. Not Understanding the Coverage You Actually Need
One of the biggest mistakes bakery owners make is assuming that a basic business insurance policy will cover everything. While general liability insurance is essential, it might not protect against equipment damage, spoilage, or employee injuries.
What You Should Do:
Take the time to understand all available options. Most bakeries need a combination of:
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General Liability Insurance – Covers third-party injuries, property damage, and lawsuits.
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Commercial Property Insurance – Protects your building, ovens, mixers, and refrigerators.
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Workers’ Compensation Insurance – Required in most states if you have employees; it covers medical costs and lost wages from workplace injuries.
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Product Liability Insurance – Protects your bakery if someone becomes ill after eating your products.
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Business Interruption Insurance – Helps replace lost income if you’re forced to close due to fire, flood, or equipment failure.
By bundling these under a Business Owner’s Policy (BOP), you can simplify coverage and save money.
2. Choosing the Cheapest Policy Instead of the Right One
It’s easy to be tempted by the lowest insurance quote — especially when you’re watching every dollar. However, choosing the cheapest bakery insurance often means sacrificing essential coverage or higher deductibles that hurt later.
What You Should Do:
Focus on value, not price. At Bakerybizinsurance, we help bakery owners compare policies from multiple top-rated insurers to find the best coverage at competitive rates — without hidden gaps.
3. Ignoring Workers’ Compensation Requirements
If your bakery employs bakers, cashiers, or delivery drivers, you’re legally required in most states to carry workers’ compensation insurance. Some small bakery owners mistakenly think this doesn’t apply to them — until an employee gets hurt on the job.
What You Should Do:
Get workers’ compensation coverage early. It protects both you and your employees by covering medical expenses and lost wages after workplace injuries. Without it, you could face fines or lawsuits.
4. Overlooking Equipment Breakdown and Spoilage Coverage
Your ovens, mixers, and refrigerators are the backbone of your bakery. If one breaks down unexpectedly, you could lose not only equipment but also your stock of perishable goods.
What You Should Do:
Add equipment breakdown insurance and food spoilage coverage to your policy. These cover repair costs and compensate for lost inventory — keeping your bakery up and running with minimal disruption.
5. Not Reviewing and Updating Policies Regularly
As your bakery grows, your insurance needs evolve. Whether you open a second location, expand your menu, or hire more employees, your policy should keep up. Many owners forget to update their coverage, leaving them underinsured.
What You Should Do:
Schedule annual insurance reviews with your provider. At Bakerybizinsurance, we offer free policy audits to ensure your coverage always aligns with your business’s current needs.
6. Forgetting About Liability for Delivery and Catering Services
Many bakeries now offer catering, food delivery, or mobile bakery services. Unfortunately, your regular liability policy might not cover vehicle accidents or damage during deliveries.
What You Should Do:
Ask your insurance agent about commercial auto insurance and inland marine coverage (for equipment or goods transported off-site). These add-ons protect your business beyond your bakery walls.
7. Not Knowing the Difference Between Personal and Business Coverage
Some small bakery owners work from home or use personal equipment for baking. However, homeowner’s insurance typically doesn’t cover commercial activities. If a fire damages your baking equipment, your insurer may deny your claim.
What You Should Do:
Purchase home-based bakery insurance or a business owner’s policy specifically designed for cottage bakeries. This ensures your business assets are protected.
8. Skipping Product Liability Insurance
Even with the strictest hygiene standards, accidents happen. A customer might experience an allergic reaction or claim food poisoning after eating one of your pastries. Without product liability coverage, your bakery could face an expensive lawsuit.
What You Should Do:
Include product liability insurance in your policy bundle. It’s affordable and could save your bakery from financial ruin in the event of a claim.
9. Not Working with an Experienced Insurance Agent
Every business is unique — and so is every bakery. Yet, many owners buy generic policies online without consulting a specialist. These policies often overlook the specific risks bakery owners face.
What You Should Do:
Partner with an experienced provider like Bakerybizinsurance. Our agents understand bakery operations, from daily baking schedules to equipment use and food safety standards. We’ll tailor your insurance plan to cover your exact needs.
10. Failing to Plan for Business Interruption
A power outage, fire, or natural disaster can halt production instantly. Without income, you may still have to pay rent, utilities, and employee wages.
What You Should Do:
Include business interruption coverage in your plan. This vital protection helps replace lost income and covers ongoing expenses during downtime — so you can focus on getting back on your feet.
Final Thoughts
Owning a bakery comes with risks — but with the right insurance, you can protect your hard work, reputation, and future growth. Avoiding these common mistakes is the first step toward building a solid foundation for your business.
At Bakerybizinsurance, we make buying bakery insurance simple, affordable, and stress-free. From general liability to workers’ compensation, we help you design the perfect coverage package for your bakery’s unique needs.
Frequently Asked Questions (FAQs)
1. What type of insurance does a bakery need most?
A bakery typically needs general liability insurance, property insurance, workers’ compensation, and product liability coverage. A business owner’s policy (BOP) can bundle these for cost savings.
2. Is bakery insurance mandatory?
Certain coverages, like workers’ compensation and commercial auto insurance, are legally required in most states if you have employees or delivery vehicles.
3. How much does bakery insurance cost?
The cost depends on factors such as location, size, equipment, and number of employees. On average, small bakeries spend between $500 and $2,000 annually on basic coverage.
4. Does bakery insurance cover food spoilage?
Yes, but only if you include food spoilage or equipment breakdown coverage. This helps reimburse you for losses caused by power outages or mechanical failures.
5. How can I get a quote for bakery insurance?
You can get a personalized, no-obligation quote by contacting Bakerybizinsurance. Our experts will review your needs and create a policy that fits your budget and coverage goals.