How Much Does Bakery Insurance Cost? (2023 Rates)

Thang Truong
Thang Truong
Updated on:

Are you considering combining your love of baking with your business acumen? Before you hang your open sign, you should consider your insurance needs. Choosing the right insurance for your bakery is crucial to protect you from the losses you could face should there be an accident in your kitchen or simply on your property. 

The average bakery insurance cost per month

The average cost of bakery insurance is $50 per month, or $600 per year. That is for a general liability insurance policy only. General liability insurance is the most common policy for bakery businesses. It protects bakery businesses from third-party lawsuits related to bodily injuries and property damages.

If you add more coverages, your bakery insurance premiums will go up. Below is the summary table of the average costs of different coverages for bakery businesses.

Bakery insurance coveragesAverage cost
General liability insurance$50 per month
Business Owners Policy (BOP)$115 per month
Additional product liability coverage$40 per month
Commercial property insurance$110 per month
Commercial auto insurance$125 per month

Keep in mind that these are just the averages. Your rate will be different. Make sure to shop around with a few companies to compare several quotes to find the cheapest one for your bakery business. Work with a top broker like Simply Business, Insure Pro, or CoverWallet, to get and compare several quotes online conveniently.

General liability insurance cost for bakeries

General liability insurance isn’t a legal requirement, but it’s a wise financial decision to have it. A general liability insurance policy protects you from lawsuits related to bodily injuries and property damages caused at your workplace or by you and your employees in your bakery operations. Lawsuits could cost you and your business if you aren’t protected by general liability insurance. General liability insurance is often paired with commercial property insurance in a business owner’s policy. Business owner policies can also include other add-ons depending on your insurance company. 

The average cost of a general liability insurance policy for bakeries is $50 per month, or $600 a year.

Learn more at general liability insurance cost and the best general liability insurance companies

Product liability insurance cost for bakeries

Most bakeries need to have product liability insurance to protect you from law suits when your customers sue you because they believe the cakes or cookies they purchase from your business caused to be sick. In such cases, product liability insurance will cover you in these lawsuits, including court fees, attorney cost, and settlement costs.

It is often that small bakeries add this coverage to their general liability policy to save costs. But bigger bakeries can choose to buy this policy separately as well. If your bakery supplies cakes and cookies to large grocery chains like Walmart, Target, Traders Joe, or Whole Foods, etc. it is likely that these large grocery chains would require you to have an appropriate product liability policy and add them to your policy as an additional insured.

The average cost of a product liability insurance policy is $210 per month. However, small bakeries pay an average of $40 per month to add product liability coverage to their general liability policy.

Learn more at product liability insurance cost and the best product liability insurance companies

Commercial property insurance cost for bakeries

Commercial property insurance protects your bakery business location, including its contents. All of your bakery equipment and machinery are covered by commercial property policy.

This coverage is often required by your landlord if you rent your business location or by your mortgage lender if you have a loan on your business’s property.

The average cost of commercial property insurance for bakeries is $110 per month, or $1,320 per year.

Learn more at commercial property insurance cost and the best commercial property insurance companies

Commercial auto insurance cost for bakeries

If you or your employees use a vehicle or vehicles for your bakery business, from making delivery or do grocery runs, you must have commercial auto insurance. Your personal auto insurance won’t cover it if you are involved in an accident and are at fault. Commercial auto insurance addresses the higher risks of using your car for business purposes. Learn more why businesses must have commercial auto insurance.

Learn more at commercial auto insurance cost and the best commercial auto insurance companies.

Workers comp insurance cost for bakeries

If you have any employees, you will be required to have workers’ compensation insurance. Almost every state requires workers’ compensation policies if you own a business and have an employee. If you work alone, you aren’t necessarily required to have workers’ compensation insurance. 

Learn more at workers comp insurance cost and the best workers comp insurance companies

The factors affecting the cost of bakery insurance

The cost of your bakery insurance will depend on a few factors. Here are a few of them: 

  • The type of bakery you have. The determining factors here include the products you sell, whether you are using a food truck or a large storefront, and the kind of equipment you have. More extensive operations often have a more significant risk, which means larger premiums. 
  • The location of your bakery. Insurance premiums are often higher within a large city than in a rural area. For example, coastal towns tend to have higher insurance rates than inland areas. Your location within the country can also be a factor due to weather concerns. 
  • The number of employees you have. Since worker’s compensation is a requirement in almost every state, the number of employees directly affects your business insurance premiums. The more employees you have, the higher your premiums will be. 
  • How much business you have coming in. Typically, insurance premiums are calculated by incorporating your projected income into the estimate. If you generate more revenue, your insurance premiums will likely go up. 

Other factors that could affect the cost of your bakery insurance are: 

  • The value of any equipment you have insured on the property. 
  • Your specific business model—what you bake and for whom. 
  • The size of your bakery.

Ways to save on your bakery insurance

Bakery insurance isn’t necessarily inexpensive, but there are ways to save money on your insurance policies. Comparing rates from multiple companies is one of the easiest ways to find savings for any insurance policy. An easy way to shop for multiple quotes is to contact an insurance broker such as CoverWallet and have them do the legwork for you. Typically, with a broker, you provide information once, and they gather multiple quotes for you. 

Some insurance companies offer discounts to help business owners save money on their premiums. However, those discounts vary greatly depending on the company. Some things that can help you get a discount include paying your premiums in one payment annually, having a security system, being in a new or recently updated building, and bundling your coverage into one plan. Some companies also offer discounts for providing safety training for your employees. 

A tip for shopping for the best rates is to ensure that you are shopping for equal coverages with equal limits and deductibles. Otherwise, you might not be getting the best deal after all. Talk to your insurance agent or broker to determine which discounts are available to you. 

Who needs bakery insurance?

Bakery insurance is small business insurance designed to protect home bakeries and commercial bakeries. If you make a living baking and selling pastries, desserts, or loaves of bread, you should consider bakery insurance. Some examples of the companies that should consider bakery insurance are: 

  • Bakeries: home or commercial bakeries
  • Pastry shops
  • Wedding cake shops
  • Cafés
  • Bagel shops
  • Donut shops
  • Anyone who makes bread, pies, cookies, rolls, or pretzels

Best bakery insurance companies

Many insurance companies offer business insurance for bakeries. That can make it confusing trying to find the best one for your bakery business. We have done the research and here are our recommendations of the best bakery insurance companies for your consideration.

  • CoverWallet: Best for getting several bakery insurance quotes all in a single place
  • Simply Business: Best for low-cost bakery business insurance
  • Hiscox: Best for bakeries with unique insurance requirements
  • THREE: Best for complete coverage in a single solution
  • Thimble: Best insurer for new bakeries

Final thoughts

Sometimes small business owners overlook the necessity of having insurance when creating their financial business plan. However, small businesses require insurance to maintain their financial stability. Almost every state requires the purchase of workers’ compensation insurance. Still, other insurance coverage, such as general liability of commercial property insurance, should be considered to help protect your business from unforeseen accidents that can lead to financial disaster.

Thang Truong
Thang Truong

Thang Truong covers small business insurance and small business success at BravoPolicy. He is a licensed P&C insurance agent. Previously, he held product leadership positions at, Capital One, NerdWallet, and Mulberry Technology. He holds a MBA degree from UC Berkeley - Haas School of Business.

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