Business Insurance?

Business By summer85 Updated 8 Apr 2011 , 1:21pm by ilovesprinkles

summer85 Posted 6 Apr 2011 , 2:49pm
post #1 of 12

I have been doing cakes from home for friends, and am always urged to open up a shop. I have a 3 year old and a part time job, so I have always said I couldn't do it. Well, my boss is about to sell his company, and I am about to be out a job. I didn't know what I was going to do. I don't have to work, but it helps and its nice to have the extra money. And then an opportunity fell into my lap. A small diner closed down in a well known shopping center, and the owner is leasing it with a fully equiped commercial kitchen and chairs and tables... everything is included for $650 a month, one year lease. Soo.... I want to atleast give this a chance and get all my information together on paper and see if this is feasible to be profitable. The health inspector frequented the previous diner often, and will come check it out for me before I rent. I have a grandmother that used to decorate professionally, and she has alot that I would need to get started, and I know I will have some start up costs for supplies. I also know I need to consider insurance, but I was wondering what that runs a month? I live in a small town in Alabama. Can anyone tell me what other expenses I need to consider?

11 replies
jason_kraft Posted 6 Apr 2011 , 3:15pm
post #2 of 12

If you don't have a business background you'll probably want to sit down with someone who does to put together a business plan, to make sure that you'll be able to make a profit (especially considering you live in a small town) and you have your product assortment and pricing in order.

Business liability insurance typically runs about $500/year, you'll also need to budget for utilities, LLC fees if you structure your business as an LLC, and an accountant unless you will be taking care of your own bookkeeping.

mombabytiger Posted 6 Apr 2011 , 10:12pm
post #3 of 12

Jason helped me with this question a few weeks ago. If you are signing a lease, there will probably be a minimum amount (mine is $1,000,000) that you HAVE to have in liability insurance. Mine is going to be $600/year. You also need insurance on contents, which will depend on the value of the contents.

pbhobby Posted 6 Apr 2011 , 10:39pm
post #4 of 12

Someone else here on CC recommended this website to me:
You should check it out. It has tons of information if you are starting a business.

leah_s Posted 6 Apr 2011 , 11:23pm
post #5 of 12

I have a $1 million policy, but not a storefront. My insuracne is $250 a year.

CakeDiva101 Posted 6 Apr 2011 , 11:30pm
post #6 of 12
Originally Posted by leah_s

I have a $1 million policy, but not a storefront. My insuracne is $250 a year.

Do you mind me ask what company do you use for your insurance? Is it a national one? I'm looking for one icon_smile.gif

Thank You

indydebi Posted 7 Apr 2011 , 1:02am
post #7 of 12

You need to talk to an insurance agent who deals with business coverage. Its not just liability insurance that you need. You will need:

- Liability insurance
- Loss of income insurance
- Commercial vehicle insurance
- property insurance (on your equipment)
- tenant's insurance (usually required by a landlord)

My annual insurance bill was around $3700 a year (I remember, because I broke it down, once, to know that I had to put aside $10 every single day to cover the insurance overhead. If I made one cake a day, $10 of that cake went toward the insurance bill.)

I also had an agent who was one of the very few who represented a company that specialized in the food industry, particularly baking!!! I accepted a challenge from another insurance friend who swore he could beat any insurance rate. I handed him my policies .... he came back and said he couldn't even come close.

That's the benefit of dealing with an independent agent. He was able to shop my business and place me with the best compnay for what I needed. Insurance is contract law and there's a reason agents have to be licensed to sell it. It's too complex for the average man-on-the-street consumer.

Talk to an agent. An independent agent.

brian964 Posted 7 Apr 2011 , 9:09am
post #8 of 12

In my experience it is cheaper getting quotes online. Some of the bigger companies offer discounts when ordering online, because it is less work for them. But to be safe you could compare quotes online, pick the best offer and try a local agency to see if they can match it or do better.

I recommend this site for online comparing:

indydebi Posted 7 Apr 2011 , 6:43pm
post #9 of 12
Originally Posted by brian964

In my experience it is cheaper getting quotes online.

Be sure you know what you are looking for. As I said, insurance is a complex animial; it's contract law. having been a licensed agent AND spent 15 years at one of the largest companies, I know that its the little things that will hang you up. I pretty much know what I'm doing and I would NEVER attempt to buy business insurances on my own ... I would always use a well informed, educated, licensed agent, even for the shopping part. There's just too much at risk for me to do otherwise.

Just my personal preference ........ icon_smile.gif

Oh .... add to my list workers' comp. It differs by each state. Some dont' require it under so many employees; some require the biz use the state provided workers comp; some require the biz to buy their own. do you know which rule(s) your state operates by?

scp1127 Posted 8 Apr 2011 , 2:53am
post #10 of 12

Just remember, if your state doesn't require WC, your employee can still sue you.

leah_s Posted 8 Apr 2011 , 6:44am
post #11 of 12

State Farm has a policy for home bakers.
I dont' need Loss of Income or Tenant or Property insurance. I'm willing to "self insure."

ilovesprinkles Posted 8 Apr 2011 , 1:21pm
post #12 of 12
Originally Posted by leah_s

I have a $1 million policy, but not a storefront. My insuracne is $250 a year.

Wow, I'm envious! I just insured my residential kitchen for 1 mil as well, but mine cost $475 a year. icon_sad.gif I got tons of quotes too, and they were all around this range.

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