Liability Insurance

Business By ctucker Updated 25 Jun 2012 , 7:24pm by Pearl645

ctucker Posted 25 Jun 2012 , 12:15pm
post #1 of 13

I know that this is going to vary widely depending on countless factors (location, size of business, annual income, etc.) but I was hoping for some insight anyway.

I am just in the planning phase of writing my business plan and I am trying to get an idea of how much liability insurance will cost me. I will obviously call an insurance agent for more exact figures later, but as of now the business is not even registered yet and I am just doing the rough work the try and understand some of the costs.

This is what I am doing:

I have a separate kitchen in my home (or will when I buy it) that I plan to cut it off from my kids and pets and use just for my business. The kitchen will not be licensed and is not required to be where I live (I am working to verify this with the health department). I will be making cakes and cupcakes hopefully about once a week, mostly for weddings and events but I may sell some at farmer's markets.

Pretty low-key but I just want to be covered. I live in Canada and have never ever heard of somebody suing their cake decorator and to be honest, most people here do not sue for even the craziest of things, but I do want to be covered for the peace of mind that it is.

If you have any insight on a range of how much this will cost me, I would greatly appreciate it. Again, I know that it will range widely but any insight is a starting point because as of now I have no clue.

12 replies
Evoir Posted 25 Jun 2012 , 12:28pm
post #2 of 13

I'm in Australia, but here you can join a guild or association of cake decorators, and providing you do not sell over a certain $ amount in product per annum, your premium for full public liability coverage is $45 per year. The CDA and guilds obviously buy a group insurance deal that you can participate in and benefit from, when you become a member.

Just something you might like to look into if you are running a small operation from home. HTH!

MimiFix Posted 25 Jun 2012 , 2:02pm
post #3 of 13

Insurance policies will only cover a legal business so the first thing you need to do is find out if it's allowed in your municipality. It costs nothing to speak with an insurance agent and explain to them what you posted here. In the U.S. you would be looking at $400-$800. Evoir is lucky to have access to such low-cost insurance. Good luck!

ctucker Posted 25 Jun 2012 , 2:10pm
post #4 of 13

$400-$800 per year or per month?

I understand the business needs to be legal and from what I can find out so far, it shouldn't be a problem. I am waiting to get written confirmation from our local health dept to the effect. After which I will contact the respective insurance companies. The reason I am I trying to get a general idea is because I am only planning a small operation and if things like insurance are going to cost a fortune, it will not be worth pursuing. I am taking things step by step, I just like to know what to expect. icon_smile.gif

ctucker Posted 25 Jun 2012 , 2:22pm
post #5 of 13

I actually just found this question asked in another thread with lots of responses. Sorry I am bad at searching and couldn't find this sooner. Thanks for the help!

leah_s Posted 25 Jun 2012 , 2:24pm
post #6 of 13

I pay about $300 per year.

Chellescakes Posted 25 Jun 2012 , 2:30pm
post #7 of 13

ours covers us for baking, and also teaching, any displays that we may do .
The State I live in only charges $40 a year through our State Association.
I guess we are very lucky here in Australia.

MimiFix Posted 25 Jun 2012 , 2:45pm
post #8 of 13

$400-600 per year where I live. Rates also depend upon the kinds of products you want to make. Nonhazardous baked goods (not needing refrigeration) are very low risk. Most farmers' markets require their vendors to have insurance; but I know of several home-based bakers (cookies, brownies, and quick breads, only) who decided not to have insurance. They sell wholesale to businesses such as delis and mid-sized markets and those stores do not require their vendors to carry insurance.

Insurance rates are also based on zipcodes in relationship to how much money they have paid out. For a while there were so many frivolous lawsuits in parts of NYC that certain zipcodes could not purchase insurance.

Quote:
Originally Posted by ctucker

I am waiting to get written confirmation from our local health dept to the effect.



Excellent! Getting it in writing is perfect. In NY there's been trouble with inspectors who sometimes give personal opinions (and contradict each other). That leaves the business owner in a bad situation. HTH.

Pearl645 Posted 25 Jun 2012 , 2:52pm
post #9 of 13

Holy smoke. Not one of the cake decorators in my country has liability insurance for their home-based business. We don't even know what this is. To us, only commercial store-fronts need this. Sadly this is news to me for a home-based business. Is this is to cover accidents at home like a kitchen fire? I swear I wish my country had better laws...

ctucker Posted 25 Jun 2012 , 3:25pm
post #10 of 13

Pearl... You can get insurance for fires etc but the insurance I am concerned more with is in regards to my product. For example, if I make a cake and somebody gets very sick from it because of something I was negligent about, and they sue me, this will cover the claim, the lawsuit etc so that I do not end up losing my business, my house, etc.

Paperfishies Posted 25 Jun 2012 , 3:30pm
post #11 of 13

I have $2 million dollars in coverage and pay about $300 a year.

jason_kraft Posted 25 Jun 2012 , 3:47pm
post #12 of 13
Quote:
Originally Posted by ctucker

Pearl... You can get insurance for fires etc but the insurance I am concerned more with is in regards to my product. For example, if I make a cake and somebody gets very sick from it because of something I was negligent about, and they sue me, this will cover the claim, the lawsuit etc so that I do not end up losing my business, my house, etc.



Commercial liability for a home-based business also covers people getting injured at your home if they are there for business reasons. For example, if a customer comes to your home for a cake tasting and they trip and break their ankle, you could be on the hook for their medical costs since a regular homeowner's policy would probably deny the claim because you were conducting business.

Pearl645 Posted 25 Jun 2012 , 7:24pm
post #13 of 13

Wow. Well this is now important. So weird how no one in my country has. Then again, I live on an island in the Caribbean and there are almost no laws pertaining to running a food-based business from home. No one even comes to inspect. You listen to a one hour lecture at a health office and pay like $5 for a health badge for the year and that's it! You're now on your way to having your cake or food business selling from home. *womp womp* Really wish our govt had laws in place. Thanks yal for posting all this info though.

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