Company insurance is intended to safeguard the financial assets of a business owner and is a necessary investment for a cupcake maker.
This article will discuss the primary insurance coverage for cupcake bakers, general liability insurance, as well as additional products that are appropriate for this industry.
Cupcake Bakers Need General Liability Insurance
Every firm, regardless of sector, has risks that should be insured. General liability insurance is the most frequent and comprehensive form of coverage that company owners purchase.
General liability insurance covers the following risks:
Physical harm
Damage to property
Medical expenses
Legal defence and decision
Personal and commercial harm
While general liability insurance is not legally needed for companies, operating without it is exceedingly dangerous. If your company is sued, you might face costs in the hundreds of thousands of dollars (or more). The only way to avoid this sort of catastrophe from destroying your organisation is to have an adequate general liability insurance coverage in place to assist pay for these losses.
COMMON SITUATIONS THAT A CUPCAKE BAKER’S GENERAL LIABILITY INSURANCE MAY COVER
Example 1: During a tour of your bakery, one prospective investor lingers at the decorating station. They walk into a hot oven door to catch up with the gang and burn their arm. Their injuries need hospitalisation and intensive care. If they chose to suit, general liability insurance would cover their medical expenses as well as any damages.
Example 2: A consumer enters your bakery and slips on the slick floor. They break their wrist and smash their head as a consequence of the fall. If the consumer sues you for damages, general liability insurance will cover your legal fees as well as any monetary awards made in the litigation.
As a delivery driver backs onto your loading dock, the overhead door malfunctions and crushes down on the delivery truck. The driver is unharmed, but the van is severely damaged and dangerous to operate. General liability insurance would cover the car repair expenses as well as any damages incurred as a consequence of the litigation.
Of course, this is not an entire list of risks covered by a general liability insurance policy, and certain situations may result in a specific peril not being covered. To minimise coverage gaps, it’s always better to speak with your agent about the terms of your policy.
General Liability Insurance Cost
Cupcake makers in America pay an average of $500 – $1,200 per year for $1 million in general liability insurance.
The cost of your coverage will be determined by a number of variables. Among them are your:
Location
Deductible
Employees’ number
Per-occurrence restriction
The overall aggregate limit
You may be able to get general liability insurance at a lower cost if you buy it as part of a business owner’s policy (BOP) rather than as a separate policy. A business interruption policy (BOP) is a more complete option that covers numerous types of coverage, such as business interruption and property insurance.
Other Types of Coverage Required by Cupcake Bakers
While general liability insurance is the most crucial, there are various different types of coverage to be aware of. Other forms of insurance that every cupcake makers should have are as follows:
Insurance for Product Liability
While you stand behind every cupcake you sell, there is always the possibility that a consumer would feel sick after eating one of your cupcakes or have another problem with your product. This insurance will cover any baked goods-related losses as well as your legal expenses if a consumer decided to sue.
Coverage for Workers’ Compensation
Workers’ compensation insurance is required in most states for both part-time and full-time employees. This coverage covers your workers if they are hurt at work or get sick as a result of a workplace accident. It covers not just an employee’s medical expenditures and missed pay if they require time to recuperate, but also any disability benefits resulting from a workplace injury.
Coverage Options for Some Cupcake Bakers
In addition to the insurance listed above, your cupcake baker may need other forms of coverage based on particular features of your business. Some of them may not apply to you, so be sure to ask your agent whether policies are appropriate for your company.
Commercial Umbrella Insurance
A robust commercial insurance coverage protects your bakery against frequent operating dangers. However, in rare cases, your main policy limits may be exhausted, leaving you to pay the additional legal expenses and damages out of pocket. Commercial umbrella insurance gives peace of mind by protecting you beyond the limitations of your main policy.
Insurance for Business Interruption
Closing your doors for repairs after an accident might be disastrous for your company. If your bakery burns down or your storefront is damaged by extreme weather, business interruption insurance can cover part of your financial losses until you can reopen.
Additional Security Measures for Your Company
Although investing in company insurance is simple (and necessary), it should not be your first line of defence. Yes, insurance will reimburse your company for cash losses incurred as a result of an occurrence, but it is much preferable to avoid losses altogether.
With this in mind, here are a few steps you can take to better secure your company:
Make use of legally binding contracts and other business agreements. (We provide free templates for several of the most often used legal forms.)
To safeguard your personal assets, form a limited liability company (LLC) or a corporation. (To discover how to incorporate an LLC or company in your state, see our step-by-step tutorials.)
Keep your company licences up to date.
Streamline the internal procedures of your company. This will eliminate unneeded variables from routine activities and establish a secure, consistent environment in which to do business.
If your company is an LLC, you should check into LLC insurance.