What insurance do I need for a home baking business?

By Nathaniel Dalby on Small Business UK - Advice and Ideas for UK Small Businesses and SMEs

Why do you need home baking insurance?

As a home baking business, there’s always a risk of accidents and damage in the kitchen. But as a customer-facing business that serves food to the public, you’ll also need to be covered for public and product liability should your products or services cause an injury or damage someone’s property.

Home baking insurance coverage

Home baking businesses usually take out one or all of these types of cover:

• Employers’ liability insurance – Covers you if an employee becomes ill or injured while working. This is a legal requirement if you employ one or more people.
• Product liability insurance – Covers you if someone becomes ill or injured by a product you have supplied e.g. food and drink.
• Public liability insurance – This covers you in case your product or service causes injury or damage to a customer or someone who isn’t an employee.
• Business contents insurance – Covers any business equipment and tools you have against theft, fire or damage. Check your provider to see if this covers perishable stock such as food and ingredients.
• Legal expenses insurance – In case you need to pay legal costs associated with your business.
• Personal accident insurance – This protects you (or anyone you name in the policy) in the case of an accident, and covers you both in and out of working hours.

How could home baking insurance protect your business?

Here are a few scenarios where having home baking insurance coverage could come in handy:

• A customer getting an allergic reaction to food you’ve served
• Your kitchen being broken into and equipment stolen
• A client refusing to pay for a wedding cake, causing you to raise a legal case

Choosing a home baking insurance policy

When choosing home baking insurance policies, it’s good to ask yourself:

• What types of workers do I employ?  You’ll need to have employers’ liability insurance no matter the type of employees you have, including full/part time, contractors or permanent staff.
• Will my business grow in the future?  It’s good to plan for your business growing by getting flexible cover that can grow with you.
• Which liability cover limit should I choose?  Make sure you take into consideration the maximum amount your business could lose in terms of public liability and choose a policy that reflects it.

FAQs

• What insurance do I need to run my business from home? – If you’re running your business from home, you’ll still need many of the same types of insurance. Business contents insurance, for example, guarantees your equipment, stock and tools are covered beyond your standard home insurance.
• Should I get standalone policies or a bundled insurance package? This will depend on the types of insurance you need for your business. Insurance bundles can be helpful in getting the full coverage, and can often be tailored to your needs. However, if you’re already covered for one aspect of your business, you might only need a standalone policy. Always compare policies to make sure you’re getting the best value.
• What information do I need to apply for a policy? – When applying to for business insurance, you’ll need to provide some basic information about your business. This often includes:
  • your name
  • your address
  • the size of your business
  • your annual turnover
  • how many employees you have
  • any previous claims made against your business

See also:

What insurance do I need for a bakery? – If you’re expanding your baking business to a fully fledged bakery, here’s what you need to know when it comes to insurance.

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