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Even the smallest bakery should have general liability insurance before the dough starts rolling. But most bakery businesses will need that and more:
General liability insurance. This covers your legal costs if a third-party visitor, not an employee, files a claim after getting hurt or sick at your business.
Commercial property insurance. This helps cover the cost of repairing or replacing property after a theft or natural disaster. Most policies let you add coverage for spoiled food.
Workers’ compensation. Most states require workers’ comp for businesses that have one or more employees.
Read on for our picks for bakery insurance.
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NerdWallet Small Business helps you get real-time quotes from 30+ insurers, and instant access to your Certificate of Insurance (COI) through our partner, Coverdash.
Best insurance companies for bakeries
Receive relatively few general liability complaints and commercial property complaints to state insurance regulators based on their size.
Are financially strong according to credit rating agencies, meaning they have the ability to pay claims.
Offer convenient packages or endorsements so your bakery can get fully covered.
Make it easy to get a quote and buy a policy.
Here are our picks for the best bakery insurance companies. We always recommend getting multiple quotes to find the best coverage at the best price.
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250+ small-business products reviewed and rated by our team of experts.
80+ years of combined experience covering small-business and personal finance.
Best business owner’s policy
The Hartford offers a BOP with lots of food service-friendly endorsements — like coverage for data breaches, employment practices liability, spoilage and business income if food contamination forces you to close. This longstanding insurance company has strong financial strength ratings from credit rating agencies and relatively few customer complaints given its size.
Best for bakery manufacturers
Best for getting coverage online
Food Liability Insurance Program (FLIP)
NerdWallet hasn’t rated FLIP business insurance. Its coverage is underwritten by Great American Insurance Group, which has a “superior” financial strength rating from credit rating agency AM Best.
FLIP insures small food businesses, including home bakers, farmers market vendors and bakers who share commercial kitchens. Their food liability insurance policy is a convenient package for bakers operating out of their own homes. It includes general and product liability insurance, along with coverage for damages to spaces you rent.
Policies start at just under $26 per month. You can get a quote and buy a policy online in just a few minutes. But the quote process still gets into nitty-gritty details, like whether you pull a trailer to your farmers market booth. Those specific questions can help ensure you have the endorsements you need.
What is bakery insurance?
Bakery insurance helps protect your business if you get sued, your property is damaged, an employee gets hurt on the job or you have to close temporarily.
Business insurance can also protect bakeries in cases like:
A customer slips on a wet floor and needs medical care.
A customer alleges they got sick after eating your custom cake.
A power surge damages your ovens, stopping production.
Buttercream, milk, eggs and other perishables spoil after a refrigeration failure.
An employee is diagnosed with baker’s asthma, which is often caused by flour dust.
A delivery driver crashes while taking a wedding cake to a venue.
A fire shuts the shop for weeks, while rent, payroll and other bills remain due.
How much does bakery insurance cost?
Bakeries pay $4,200 per year for a BOP on average, according to data from online business insurance company Coverdash shared with NerdWallet in 2026.
Every bakery’s costs vary, though. Yours will depend on:
Number of employees. Workers’ comp premiums are based on how many employees you have and what they do. More employees also generally increases your general liability risk, since more people are interacting with customers more often.
Value of your property. Expensive equipment and imported ingredients cost more to insure than those you can buy at your local grocery store.
Mitigation efforts. You may get discounts on your property insurance if you have security and fire suppression systems or your team has food safety certifications.
Business location. Certain ZIP codes have higher crime rates than others, for instance.
Policy limits. The higher your policy limits, the higher your premium costs tend to be.
Previous claims. Insurance costs usually increase after you file a claim.
The only way to find out what your business’s precise costs will be is to get quotes from insurance companies. Every insurance company evaluates risk a little differently, and each will charge you a slightly different amount based on their calculations. We always recommend getting several quotes to find the best price for you.
Save up to 30% on business insurance
NerdWallet Small Business helps you get real-time quotes from 30+ insurers, and instant access to your Certificate of Insurance (COI) through our partner, Coverdash.
What kind of insurance does your bakery need?
All bakeries should have general liability insurance and commercial property insurance. A business owner’s policy conveniently includes both. If you have employees who aren’t family members, you most likely need workers’ comp too.
General liability insurance for bakeries
Bodily injury, like a slip-and-fall lawsuit.
Damage to some property that belongs to a third party.
Slander, libel or trademark infringement.
General liability insurance also covers some product liability claims. These include bodily injuries caused by a completed product that you sold — for instance, if a customer has an allergic reaction while eating a scone they bought at your shop.
Commercial property insurance for bakeries
Property insurance only covers damage from specific events. These usually include:
Fires.
Lightning strikes.
Windstorms.
Hail.
Vandalism.
Explosions.
Falling objects.
It usually does not cover flood or earthquake damage. If your region is at risk of those events, talk to an insurance agent about additional coverage.
Important commercial property add-ons for bakeries
Standard business property insurance does not include the following types of coverage, but you can usually add them on. These are called endorsements.
We recommend the following:
Spoilage coverage. If food or ingredients go bad due to a covered loss, like a power outage, this insurance will help you replace them.
Equipment breakdown coverage. If a piece of equipment fails unexpectedly, not because of a fire or natural disaster, this policy can help you repair or replace it.
Signs and outdoor property. If a hailstorm damages your patio furniture, this insurance can help you replace it.
Off-premises utility service interruption coverage. If your electric company’s lines go down and your bakery doesn’t have power for three days, this coverage can make up for the income you lost during that time.
Actual cash value vs. replacement value
Your insurance provider uses one of these methods to figure out how much to pay out after a claim:
Actual cash value. This is how much your property is worth today, in used condition.
Replacement value. This is how much it would cost to replace your property with something of similar age and quality.
Think about your proofing cabinet. A new version of a similar piece of equipment almost definitely costs more than yours would if you sold it today. That’s why replacement cost coverage usually pays out more than actual cash value coverage. Replacement cost coverage is usually more expensive, though.
If you want to maximize how much your insurance pays out after a claim, consider replacement value coverage. If you want lower monthly or annual premiums, actual cash value is likely the cheaper option.
Workers’ comp insurance
Additional insurance policies for bakeries
Type of insurance
What it covers
Example claim
How to get coverage
Costs to defend or settle legal cases filed by former employees.
A former worker files a lawsuit saying they were harassed by their manager.
You may be able to add some EPLI coverage to your BOP.
Lost business income and operating expenses as the result of a disaster.
Hail damages your roof and causes a leak. You have to close for two weeks to repair it.
Business interruption insurance is almost always included in a BOP.
Hired and non-owned auto insurance
Provides coverage for when employees or contractors use their personal vehicles for business purposes.
An employee uses their own car to drop off a custom birthday cake and gets into a fender-bender. Their personal auto policy denies the claim because the trip was a commercial errand.
Most commercial auto insurance companies sell HNOA coverage.
Covers vehicles the business owns and accidents you or employees cause in them.
Your bakery van driver rear-ends another car at an intersection.
Most insurers sell commercial auto insurance.
Legal and settlement costs if a customer alleges your baked goods caused illness, injury or property damage.
Someone eats your mislabeled almond croissants, not realizing they contain tree nuts and has a serious allergic reaction. They sue for medical expenses and damages.
Some coverage is probably included in your general liability insurance or BOP. If you want more coverage, you can buy a separate policy.
Bakery products, ingredients, and equipment while they’re in transit or stored somewhere other than your business. (Commercial property insurance covers only what’s inside your building.)
You’re delivering a custom wedding cake to a venue and have to slam on the breaks during the drive, damaging it beyond repair.
Usually sold as a separate policy. May also be called “tools and equipment insurance.”
Employee dishonesty or commercial crime insurance
Financial losses that result from an employee stealing money or property.
A cashier under-reports sales in order to take money from the cash register.
Usually sold as a separate policy.
Financial losses caused by cyber incidents such as data breaches and theft, hacking and ransomware attacks.
Your point-of-sale system gets hacked and customer credit card data is exposed.
You may be able to add some cyber coverage to your BOP.
Adds additional liability coverage above your other policies’ limits.
Your delivery driver causes a serious multi-vehicle crash that sends two people to the hospital. The resulting lawsuit seeks damages well above the $1 million limit on your commercial auto policy.
Usually sold as a separate policy.
What coverage do home bakers need?
If your Kitchenaid mixer gets stolen or your oven catches on fire, your homeowner’s or renter’s insurance may deny your claim because you use them for commercial activity. That’s why you still need business insurance coverage.
Add a homeowners liability endorsement to protect yourself if clients or delivery drivers ever pick up orders at your home. Be careful, though — these policies usually exclude food business liability.
To level up, get a cottage insurance policy. This policy is specifically for home-based food businesses. It’s tailored to fill the liability gaps left by your homeowner’s insurance and usually includes product and completed operations liability.
Say you sell custom cakes out of your home and a customer alleges your buttercream caused a severe allergic reaction. Your homeowners policy excludes business liability, but cottage food insurance would cover the legal defense costs and any judgment.
How to get insurance for your bakery
Follow these steps to get the coverage you need.
Figure out what coverage you need. If you have employees or a commercial lease, you probably have to have workers’ comp, general liability insurance and commercial property insurance. If you operate out of your home, a tailored food liability insurance package might be sufficient.
Get quotes. Compare quotes from at least two different insurers. This helps make sure you’re getting a competitive price. You can also compare policy limits and what endorsements they include (for spoilage or refrigeration failure, for instance). Ensure coverage for things like allergens and off-premises operations, if you need them.
Buy insurance. Choose a package and make your first premium payment. You can usually choose to pay your entire premium upfront or make installment payments. If you choose installments, set up automatic payments if you can. Your coverage could lapse if you miss a payment.
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