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With Insureon, home bakers can get insurance coverage the same day they apply for quotes.
Fill out our easy online application to compare bakery insurance quotes from top-rated providers.
Business owner's policy
A BOP bundles commercial property insurance and general liability insurance under one plan. It's often the most cost-effective type of commercial insurance for home bakers.
- Customer injuries
- Damaged customer property
- Business property damage
Workers’ compensation insurance
Most states require workers’ comp for baking businesses that have employees. It also protects sole proprietors from work injury costs that health insurance might deny.
- Employee medical expenses
- Disability benefits
- Lawsuits over employee injuries
General liability insurance
General liability insurance covers common third-party claims, such as customer property damage and injuries. Home bakers can bundle it with property insurance for savings in a business owner’s policy.
- Third-party bodily injuries
- Accidental damage to client property
- Libel and slander lawsuits
Commercial auto insurance
This policy covers lawsuits and property damage in an accident involving your bakery’s vehicle. It also covers vehicle theft and damage caused by weather or vandalism.
- Car accidents
- Vehicle theft and vandalism
- Weather damage
Cyber insurance
This policy helps cake and cookie bakeries recover from cyberattacks and data breaches. It's recommended for any business that stores customer information.
- Data breach notification costs
- Fraud monitoring services
- Cyber extortion payments
How much does business insurance cost for home bakers?
Because home bakeries typically have lower overhead and fewer risks than commercial bakeries, they may pay less for business insurance.
Average home-based baking business insurance costs include:
- General liability: $39 per month
- Workers' comp: $130 per month
- Commercial auto: $170 per month
Many home bakers choose a cost-effective business owner's policy, which bundles general liability and commercial property coverage at an average of $102 per month.
What factors affect home bakery business insurance costs?
The cost of your home bakery premium depends on your overall level of risk. Insurance companies evaluate several factors during underwriting when determining your cost, including:
- Products and services offered: Home bakeries that create custom wedding cakes, specialty desserts, or high-volume orders may face higher insurance costs than businesses that sell simple baked goods. More complex products often involve greater liability risks and higher replacement costs if an order is damaged or spoiled.
- Industry risk: Home bakeries and other cottage food businesses can face claims involving allergens, cross-contamination, mislabeled ingredients, or foodborne illness. Businesses that work with common allergens or sell products at farmers markets, events, or retail locations may have greater exposure to liability claims.
- Value and type of equipment: The cost to repair or replace business property can affect your premium. Commercial-grade ovens, mixers, refrigerators, packaging equipment, and other specialized baking tools typically increase property insurance costs because they represent a larger property exposure.
- Annual income: Businesses with higher revenue often pay more for insurance because they typically handle more orders, serve more customers, and have greater financial exposure if a claim occurs.
- Location: Where your home bakery operates can impact insurance rates. Insurers consider local factors such as weather risks, crime rates, legal environments, and state insurance requirements when calculating premiums.
- Number of employees: Hiring employees can increase insurance costs, particularly for workers' compensation coverage. Businesses with larger staffs generally face greater workplace injury and liability exposures than sole proprietors.
- Policy limits and deductibles: Higher coverage limits typically result in higher premiums because the insurer may pay more for a covered claim. Choosing a higher deductible can often reduce your premium, though it increases your out-of-pocket costs when a claim occurs.
- Safety measures and risk management: Insurance companies may view businesses more favorably when they implement food safety procedures, allergen labeling practices, employee training programs, fire prevention measures, and equipment maintenance schedules. Strong risk management practices can help reduce the likelihood of claims and may lower insurance costs.
- Claims history: Businesses with a history of filing claims are often considered higher risk and may pay more for coverage. Home bakeries with a clean claims record may qualify for more favorable rates.
How do I get home bakery insurance?
It's easy to get insurance for a business selling baked goods from home if you have your company information on hand. Our application will ask for basic business details, such as revenue and the number of employees. You can buy an insurance policy online and get a certificate of insurance (COI) with Insureon in three easy steps:
- Complete a free online application.
- Compare insurance quotes and choose policies.
- Pay for your policy and download a certificate.
Insureon's licensed insurance agents work with top-rated U.S. providers to meet your insurance needs and find the right insurance coverage for your cookie and cake business, whether you work independently or hire employees.
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FAQs about home-based bakery insurance
Take a look at answers to some of the most common questions about insurance, licensing, and coverage for home-based bakers.
Do I need a license or permit to open a home bakery?
Many home-based bakeries need a license, permit, or registration before they can legally sell baked goods. However, these requirements vary by state, county, and city, as well as by the types of products you sell and where you sell them.
Several states have cottage food laws that allow home bakers to sell certain nonperishable foods from their homes. But additional permits may be required if you sell at farmers markets, festivals, retail locations, or through wholesale agreements with stores and distributors.
Before opening a home bakery, it's important to check your state's cottage food insurance regulations and local health department requirements to ensure you're compliant.
Am I able to operate a home bakery without insurance?
In many cases, home bakery owners aren't legally required to carry business insurance. However, insurance can provide important financial protection if a customer alleges your product caused an illness, injury, or property damage.
In addition, homeowner's insurance policies often exclude business-related claims. So, without business insurance, you'd be responsible for paying legal fees, settlements, medical expenses, or property losses out of pocket.
Some clients, venues, markets, distributors, and retail partners may require you to name them as an additional insured on your general liability insurance before allowing you to sell your products. And, if coverage is required, you may also need to provide a proof of insurance.
If you hire employees, your state may require workers' compensation insurance, even if your bakery operates from your home.
Does homeowner's insurance cover my home bakery?
Homeowners insurance is designed to protect your home and personal belongings. While some policies may provide limited coverage for business property, most exclude liability claims and other losses related to business activities.
For example, if a customer becomes ill after eating one of your products or sues your business for damages, your homeowners policy will likely not provide coverage. Likewise, damage to business equipment, inventory, or supplies wouldn't be fully covered.
If you use your personal vehicle to deliver baked goods, attend events, or transport products to customers, your personal auto policy typically won't cover business-related accidents. Depending on your operations, you may need commercial auto insurance or hired and non-owned auto (HNOA) coverage.
Why do home bakeries need product liability insurance?
Product liability insurance helps protect your bakery if a customer claims one of your products caused bodily injury or illness. Common examples include allegations of food poisoning, allergic reactions, contamination, or mislabeled ingredients.
Even if a claim is unfounded, legal defense costs can be expensive, and product liability coverage can help pay for attorney fees, settlements, and judgments related to covered claims.
Many home bakers often receive product liability protection through their general liability insurance policy. Home bakers who cater events or provide custom cakes, cookies, and other baked goods for weddings, parties, and special events may also benefit from products-completed operations coverage, which can help cover claims that arise after a product has been delivered or served.
What other types of insurance does a home baker need?
Depending on your operations, additional insurance policies may help protect your home-based baking business from financial losses, such as:
- Commercial property insurance: Covers bakery equipment, furniture, inventory, and other business property from covered losses. Home-based bakeries without a dedicated commercial location should consider business personal property (BPP) coverage to help protect business assets.
- Business interruption insurance: Also called business income coverage, this policy helps replace lost wages and pay ongoing expenses if your home bakery must temporarily close due to a covered property claim.
- Tools and equipment coverage: Protects portable equipment used while transporting goods to catering jobs, food festivals, markets, and off-site events. This coverage is also called inland marine insurance.
- Food spoilage coverage: Helps cover the cost of perishable inventory that spoils because of a covered event, such as a power outage or equipment failure.
- Food contamination coverage: Helps with expenses related to contaminated products, including disposal costs and certain business recovery expenses.
- Professional liability insurance: Sometimes called errors and omissions insurance or E&O, this insurance covers claims involving professional mistakes, such as errors with custom orders, ingredient specifications, or contractual obligations.
There are many steps you can take to get cheap business insurance for home cake and cookie bakers, and other home bakeries.
Start by comparing free business insurance quotes from leading insurance companies through Insureon’s online application. If you're unsure what types of home business insurance policies you need, our licensed insurance agents can help make sure you get the right, affordable coverage for your insurance needs and peace of mind.
You may also be able to reduce your insurance costs by:
- Implementing food safety and sanitation best practices
- Maintaining equipment and refrigeration systems
- Training employees on food handling procedures
- Bundling policies
- Maintaining a claims-free history
Working with an insurance marketplace like Insureon allows home bakers to compare coverage options from multiple top-rated carriers and find a policy that fits their budget and risk profile.
Most home bakers can get a certificate of insurance (COI) within 24 hours after submitting an application, offering instant peace of mind.
The average costs on this page were derived from our data on small business owners in the home baking field who purchased policies through Insureon. Most of our customers have less than five employees, annual revenue ranging from around $50,000 to more than $200,000, and five years or less in business.