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liability isurance for a home bakery?

post #1 of 17
Thread Starter 
i own a home based bakery, i have owned it for 6 years. as it has grown i have decided to start buying all the various insurances required to cover me in various situations. has anyone bought liability insurance for their home business? i was told today that i cannot just get a policy written under my homeowners since i do wedding cake tastings (which are free) they said it puts me in the restaurant category. (my licenses with the dep of ag is a home bakery serving non potentially hazardous foods)[/code]
post #2 of 17
You'll probably get better results through a commercial insurance broker. Many people here insure through State Farm, but if you ask your current insurance company for a referral to a commercial broker they should be able to help you out.
post #3 of 17
I have my home based business insurance through The Hartford
post #4 of 17
Quote:
Originally Posted by AmysCakesNCandies

I have my home based business insurance through The Hartford



+1
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Legal, licensed, and insured since May 2011!
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post #5 of 17
Quote:
Originally Posted by AmysCakesNCandies

I have my home based business insurance through The Hartford




Ditto.
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Check out my cake blog at: http://adventuresofacakediva.com
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post #6 of 17
I am a cottage food baker in Ohio, and my business is registered as an S-Corp. I keep hearing that I need to get liability insurance to protect myself if someone gets sick from my ingredients, but I'm not sure why this is. Does being registered as an S-Corp protect me at all?
post #7 of 17
Quote:
Originally Posted by twinbaker

I am a cottage food baker in Ohio, and my business is registered as an S-Corp. I keep hearing that I need to get liability insurance to protect myself if someone gets sick from my ingredients, but I'm not sure why this is. Does being registered as an S-Corp protect me at all?


If someone gets sick from a cake you sold and they sue you, you will have to pay out of pocket for legal representation to defend yourself, even if it's not your fault. This could cost thousands of dollars or more in lawyer's fees alone. And if there is a settlement or judgment against you, all your personal assets are up for grabs.

Spending $400-500/year on liability insurance will protect you from both the out of pocket cost of lawyers and the cost of any resulting settlement or judgment, up to your coverage amount of course. Since the insurance company has to pay if you lose, they will provide a lawyer and fight for you.

Having an S-Corp does not protect you from liability, but creating an LLC (limited liability corp) does. If you follow the rules of the LLC, your personal assets are protected from judgments. Example: if you have a $1M liability policy and there is a $1.5M judgment against you, the court could seize your bank account/home/car/etc. to pay for the $500K above your coverage limit. But if you have an LLC, they can only go after assets owned by the business. You can elect to have an LLC taxed as a sole prop, partnership, S-Corp, or C-Corp.

Of course none of this is likely to happen, but if you look at the relatively low cost of coverage combined with how many people are consuming your products in a given year and the consequences of even one lawsuit, it's a pretty easy decision. If you are only baking for close friends and family it's not as big of a concern (chances are friends or family would agree to a resolution without getting the courts involved) but once strangers are involved all bets are off.
post #8 of 17
I have my home based business insurance through The Hartford

As stated by a few others, I do too. I found they gave very reasonable rates and have been with them for 3 years now.

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post #9 of 17
It's not just if people get sick from your product. It's more likely that someone would trip and fall while at your house and sue you for that! Insurance is really important if you work from home.
post #10 of 17
I have mine through State Farm.. $250/year for a 1 million dollar policy. It is worth every penny for peace of mind.
post #11 of 17
I would contact the company you are with, or your agent if you have one, and get a commercial liability quote. If you have people coming onto your property for tastings and they are injured, this is NOT covered by your homeowners insurance, and could end up costing you a lot of $.
post #12 of 17
Quote:
Originally Posted by cakegrandma View Post

I have my home based business insurance through The Hartford


As stated by a few others, I do too. I found they gave very reasonable rates and have been with them for 3 years now.


Do you have the General Liability Policy? There are a few and was wondering which one
post #13 of 17

I signed up with The Hartford as well for General liability. Very reasonable for the high amount of coverage. They also include data liability, for customer data being used in fraud, insure your inventory, protect your cakes from say loss of refrigeration, pipe bursting. Plus if someone gets injured on your property for instance during a tasting. Those all are included in the package for bakeries on top of the general someone getting sick from your product lawsuit. I also found that if you want to wholesale products to restaurants or other online markets they may require you to have it before they can accept your products. 

post #14 of 17

I have my insurance through USAA, they source to both the Hartford and RLI.  Both are excellent and inexpensive.  Mine was with RLI, $300 for 1 million of liability.  If you are a USAA member, definitely give them a call.

post #15 of 17
Quote:
Originally Posted by AmysCakesNCandies View Post

I have my home based business insurance through The Hartford

 

me too

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