The Fresh Loaf

News & Information for Amateur Bakers and Artisan Bread Enthusiasts

what other insurance does a bread business need?

koloatree's picture

what other insurance does a bread business need?


I am working on a plan and was wondering what other necessary insurance is needed other than the obvious food product liability insurance. In my case, I plan on leasing a comercial property and running a wholesale business (i.e selling at farmers markets and dropping off product at other businesses). I plan on being the solo operator, purchasing equipment using business credit, and working this business part time. 

Thanks for the help!

LindyD's picture

A bread business is a business.  In your case, it's a small business for now.

You'll need to insure your equipment; if you're leasing a commercial property, read your lease very carefully as you may be required to insure the building.  

If you are using your vehicle in your business, check your policy to see if you're covered.  

I think your best bet is to meet with an insurance agency and talk with an agent. It won't cost you anything but your time.  A meeting with an accountant would also be in your best interests to keep the feds out of your pockets.

Best of luck in your venture!


koloatree's picture


Thanks for the reply, contacting my insurance tommorow!

GloriouslyHomemade's picture

I know you asked about insurance but here is a tidbit on salex tax.

You may have to charge sales tax to your farmer's market customers and pass it on to your state agency, depending on what state you live in. Please don't asume you don't have to charge sales tax to your retail customers until you've checked with your State agency. CA for example, has strange rules about food. A sandwich at Subway for example, carries no sales tax UNLESS it is toasted. If you want the sandwich toasted, then you pay sales tax on it. Arbitrary, I know...but very worth your time in research.

Best of luck!

koloatree's picture

Thanks for the look out.

Urchina's picture

The advice on sitting down with an insurance agent is a good one. We like Triple A (AAA0. 


If you have any assets ( a home, etc.) be aware that as a sole properietor they are not protected from liability. So having a big personal liability / umbrella policy might be a very good decision, in addition to your other insurance. 


Also, you  need to talk with your local health department about their requirements for the kitchen. You may need to go through plan check and have a permit issued by the department. You will almost certainly need a current food handler's certificate. Don't delay on this. In our jurisdiction, transfers of ownership of food facilities (this includes leases and renters) require a transfer inspection, after which the facility  must be brought up to code if it isn't already. This can be expensive and time-consuming -- having a walk-through before you sign the lease agreement can save you some very unhappy surprises. Equipment must also meet specific code standards (ie, NSF or UL-food approved, and for refrigeration NSF-7 is the code standard currently applied in our jurisdiction), so don't acquire any until you know what your local regulator will require. 


(I realize your post was insurance-specific, but I consider a heart-to-heart with a health inspector at your proposed location some of the best insurance you can get). 


Good luck!

koloatree's picture

Hi thank you for your advice! It was just yesterday I was able to speak to the county health rep. After speaking with him, I learned that getting approved in my county for a bakery is not as 'strict' as I thought it was. Basically, a bakery is classified as a risk level 2, whereas restaurants are classified risk level 3. Risk level 3 businesses require a person in charge at all times and carry a food safety license.
To sum up the main things I learned: a commercial bakery space needs to have cleanable floors (concrete, wood, tile, etc...) and walls (dry wall with smooth paint is acceptable!), a 2 or 3 bay sink to wash utensils, an accessible bathroom, and equipment that is not nsf/ul approved is OK! My cost to start has dropped significantly. =)

koloatree's picture

I found this if anyone is interested.


food liability (someone gets sicked eating your baguette)

business liability (equipment i.e ovens, mixers, etc...)

business property (in case you own the building and a customer slips and falls)

business car insurance

loading and unloading insurance (for delivery)


I have read that ideally a business would want 1million coverage for food liability. That can cost anywhere from 500-1000$ a yr.

LindyD's picture

You can form your own LLC (limited liability company) and do business under that name,  thus protecting your private assets from any business liability.

You can even fill out your own forms and e-file.  As a sole proprietor, you don't need an operating agreement.

Just another thing to investigate in your spare time!  ;-)

If you ever meet with an accountant, the LLC is something to talk about.


dulke's picture

Creating a company, whether an Inc. or a LLC, is a good idea.

Check your lease = even if you don't have to insure the building, often you need to insure the HVAC system, and not all policies for tenants include that. You will need sufficient contents limits to cover your own furnishings and equipment and also your own improvements and betterments -  things like lighting, interior walls and doors - structural type things that you add to the premises.

You need liability insurace, both for products liability but also for slip and falls. You need business interruption i8nsurance, which will pay you your lost income if something happens to the business like a fire. It does not cover everything that might shut you down, only things that are a result of something that is covered under the property part of the policy.

If you have employees, you'll need workers' compensation. Usually as owner you are not eligivle, but there are some endorsements that can provide you coverage too, if you are injured at work.

Business auto is also necessary if you have a commerical vehicle. Your personal auto policy might be enough, except that I would increase the limits if yours are low.

Hopefully your agent went over all the potential exposure with you.


bobkay1022's picture

Todays econmy


    Best insurance lots of money.


      Mr Bob




mjsallorganic's picture

Don't like to be a nay sayer, but just sharing.

An LLC does NOT protect your personal property.  You should definitely learn as much as you can about legal structures and of course talk with a good attorney. And, let me say this: find an attorney you really, really like.  Don't just go to any attorney.  Taking the time to find a good fit for you is well worth it.  Additionally, with regard to sales tax--you should not have to (in any state), charge sales tax to wholesale customers.  The sales tax only applies to retail sales.  Here's an entry I found on LLC formation and "protection."


First of all, if someone was to sue you or your LLC what is the difference? You are still being sued "It`s your business" I think you are misinterpreting the concept of an LLC, An LLC is a Limited Liability Company which means that

A limited liability company (LLC) is a business entity that is a hybrid between a corporation and a limited partnership. As with corporations, the LLC legally exists as a separate entity from its owners. An LLC offers limited liability protection for its members and pass-through taxation of the company’s profits.

Although an income tax return must be completed and filed for the LLC, no tax is paid at the entity level. Instead, the profits or losses of the LLC are “passed-through” to the owners (also called members), who must then report the income or loss on their individual tax returns.

Now in basic English: Although, It does offer you some sord of protection it eveything is still passed on down to you. THE OWNER

Have you ever thought of Simply Incorporating and leaving it at that?
Give or take the paper work for a Corporation is much greater and than for an LLC.
One major reason why I decided to go with an Full Corporation (S Corporation) Is because there are more benefits and Separates my personal life from the business. As long as I keep my minutes, bylaws, and all my legal paperwork in good standing they can not pierce the corporate veil and come after me.

Nuevolution2007-3-10 2:47:41