Essential Business Insurance for Bakeries and Tortilla Manufacturers (NAICS 3118)

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This guide covers the top insurance policies bakeries and tortilla manufacturers need to protect their business including general liability, property, commercial auto, workers' comp, professional liability, product liability, commercial umbrella and business interruption coverage.

Key Takeaways

  • General liability and property insurance protect against third-party claims and property damage
  • Commercial auto covers risks from business vehicles
  • Workers’ comp protects employees who are injured on the job
  • Professional liability covers recalls, errors and omissions
  • Product liability protects against injuries from contaminated goods
  • Commercial umbrella provides extra liability protection
  • Business interruption covers income losses during shutdowns

Introduction

As a bakery or tortilla manufacturer, it is crucial to properly insure your business to protect against risks in this industry. Key exposures include injuries on premises, vehicle accidents, contaminated food issues, and equipment damage. This guide outlines the essential business insurance policies every bakery and tortilla company should consider.

General Liability Insurance

General liability insurance provides key financial protection for bakeries and tortilla manufacturers from costly lawsuits and third-party liability claims that could severely damage a business. It covers expenses related to injuries, property damage, product defects and other risks involved in baking and food manufacturing operations.

General liability insurance helps protect the daily operations of bakeries and tortilla businesses. Common risks they face include customers getting injured on the premises, food poisoning claims from contaminated products, vehicle accidents during deliveries, and worker injuries in production facilities. The policy also covers product recalls and legal fees if defective products are sold.

Category List
Benefits
  • Protects your business from third-party claims of bodily injury or property damage
  • Covers legal costs if you’re sued for negligence, errors or omissions
  • Covers costs of medical expenses, lost wages, pain and suffering for individuals injured on your premises
  • Covers replacement or repair costs if your baking operations damage a customer’s property
  • Covers liability for food contamination issues if someone gets sick from eating your products
  • Provides you with expert legal defense if a claim is made against your business
  • Covers liability from delivery vehicle accidents
  • Covers additional insureds such as contractors, vendors and trade partners
Use Cases
  • Covers bodily injury or property damage to customers, vendors or other third parties
  • Protects against liability claims from foodborne illness or food contamination
  • Covers legal fees and liability costs if sued by a customer or other third party
  • Covers accidents involving vehicles owned, leased or hired by the business
  • Covers claims for faulty or defective products sold to customers
  • Protects the business from lawsuits by employees for workplace injuries

Based on data from major insurance carriers, the average general liability insurance pricing for bakeries and tortilla manufacturing businesses (NAICS 3118) is around $1,200 – $1,500 per year. This pricing takes into account factors like the types of products manufactured, number of employees, annual sales revenue, loss history, and risk prevention measures implemented. For bakeries and tortilla businesses, common risks include food safety issues, product defects, and on-site injuries. Larger manufacturers and those with poor safety records can expect pricing towards the higher end of the range.

Estimated Pricing: $1,200 – $1,500

Property Insurance

Property insurance provides critical protection and financial security for bakeries and tortilla manufacturing businesses. It protects their assets, equipment, inventory, and property from loss or damage due to unexpected incidents like fires, storms or other disasters.

Category List
Benefits
  • Covers costs of rebuilding or repairing property if damaged in a fire, storm or other disaster
  • Protects equipment and machinery from damage or theft
  • Covers loss of goods due to natural disasters like fire and flooding
  • Covers costs of temporary locations or equipment rentals during repairs
  • Covers extra expenses to continue operations after a covered loss
  • Provides liability protection if someone is injured on your property
  • Insures business inventory and raw materials against damage and loss
  • Covers loss of earnings if the business must temporarily close for repairs
Use Cases
  • Protection against fire damage to equipment, machinery, inventory and buildings
  • Protection against water damage from burst pipes or other plumbing issues
  • Protection against theft of equipment, machinery or inventory
  • Protection against losses from business interruption due to covered property damage

Based on typical industry factors such as risks, claims history, and replacement costs, the average annual price for property insurance for businesses in the Bakeries and Tortilla Manufacturing industry is around $3.50 per $100 of insured assets. This price was calculated using industry averages for things like number of claims, costs of claims, replacement values, protection of machinery/equipment, building structures, and business interruption coverage.

Estimated Pricing: $3.50 per $100 of insured assets

Commercial Auto Insurance

Commercial auto insurance provides essential liability and physical damage coverage for businesses in the bakeries and tortilla manufacturing industry. This industry relies heavily on vehicles to deliver products and transport goods between facilities. The top benefits of commercial auto insurance for this industry include covering legal liability and medical expenses from accidents, reimbursing lost wages for injured employees, paying for vehicle repairs or replacement, and protecting the company from bankruptcy by covering lawsuits. The most common use cases needing coverage are delivery vehicles, transportation trucks, service vehicles, and employee vehicles used for business purposes. On average, commercial auto insurance costs around $1,500 annually per vehicle for businesses in this industry due to its low risk profile involving delivery and light commercial vehicles.

Category List
Benefits
  • Covers legal liability if a company vehicle is involved in an accident
  • Pays for repairs or replacement of company vehicles if damaged
  • Covers medical expenses for those injured in an accident involving a company vehicle
  • Reimburses for lost wages or income if an employee is injured in a covered accident
  • Covers liability and legal costs if the company is sued following an accident
  • Protects the company’s assets by covering costs that could bankrupt the business
Use Cases
  • Delivery vehicles transporting baked goods and tortillas to customers
  • Trucks used to transport raw materials between manufacturing plants and supplier locations
  • Service vehicles used by field technicians to visit customer locations
  • Employee vehicles used for sales calls and customer meetings

Based on industry statistics and average claims, the estimated annual price for commercial auto insurance for businesses in the bakeries and tortilla manufacturing industry with NAICS code 3118 would be around $1,500 per vehicle. This price factors in the low risk of this industry which involves delivery vehicles and light commercial vehicles to transport goods. The vehicles typically have low accident rates. The price was also derived from national commercial auto insurance rates for light delivery fleets.

Estimated Pricing: $1,500

Workers Compensation Insurance

Workers compensation insurance provides important protections for businesses in the bakeries and tortilla manufacturing industry. This industry involves risks like cuts, burns, and repetitive motion injuries that workers compensation helps cover. Common injury risks for these businesses involve slip and fall hazards due to flour or dough residue, contact burns from hot equipment, and repetitive motions from tasks like dough kneading that can lead to longer term injuries if proper ergonomics aren’t followed. Cuts from knives are also a hazard, as are lifting injuries from manually handling heavy materials without proper techniques. Workers compensation helps ensure injured employees continue receiving support while recovering and helps businesses retain experienced employees by covering costs of injuries and getting them back to productive work more quickly.

Category List
Benefits
  • Provides coverage for employee injuries on the job
  • Protects your business from lawsuits if an employee is injured
  • Covers medical expenses, lost wages and other costs of workplace accidents
  • Mandatory in most states for businesses with employees
  • Reduces absenteeism and turnover from workplace injuries
  • Provides return to work programs to get injured employees back on the job faster
  • Lowers other insurance costs through multi-line discounts
Use Cases
  • Slips, trips, and falls are among the most common workplace injuries in bakeries and tortilla manufacturing.
  • Burns from contact with hot surfaces, equipment, or ingredients are also common injuries.
  • Repetitive motion injuries from tasks like dough kneading, rolling out tortillas, and scooping/weighing ingredients.
  • Cuts and lacerations from knives used to cut and portion dough or slice bread products
  • Injuries from lifting or moving heavy bags of flour or other dry ingredients

Based on industry data and risk factors, the average workers compensation insurance pricing for businesses in the bakeries and tortilla manufacturing industry with NAICS code 3118 is estimated to be around $2.50 per $100 of payroll. This price was derived from analyzing average claims frequency and severity for injuries like cuts and burns that are common in food production environments. Modifying factors like safety programs and experience mods will impact the final price.

Estimated Pricing: $2.50 per $100 of payroll

Professional Liability Insurance

Professional liability insurance, also known as errors and omissions insurance, is an important risk management tool for businesses in the bakeries and tortilla manufacturing industry. It can help protect them from costly lawsuits related to accidents, injuries, contaminated food incidents and other issues that commonly occur in food production environments.

Some key benefits of professional liability insurance for these types of food businesses include covering claims if customers get sick from eating contaminated products, protecting the business from lawsuits if employees get injured on the job, paying for legal defense costs if the business is sued, covering costs of product recalls if issues are discovered, and protecting business assets from liability claims.

Category List
Benefits
  • Covers claims if a customer gets injured or sick from eating contaminated or spoiled food
  • Protects from lawsuits if an employee gets injured on the job
  • Pays for legal defense costs if the business is sued
  • Covers costs of product recalls if contaminated ingredients are discovered
  • Covers loss of profits during a product recall or facility shutdown
  • Protects business assets like equipment and property from lawsuits
  • Covers liability claims from improperly packaged or labeled products
  • Covers lawsuits arising from accusations of false advertising or promotion
Use Cases
  • Protection against product liability claims if consumers get sick from eating contaminated or spoiled bakery products
  • Protection if a customer slips and falls in the bakery store and sues for injuries
  • Protection if an employee is injured on the job and sues the bakery for negligence
  • Coverage if the bakery is accused of inaccurate labeling or improper advertising of nutritional information
  • Defense against claims of trademark or intellectual property infringement from using another company’s recipes or branding without permission

Based on typical professional liability insurance pricing models, bakeries and tortilla manufacturing businesses with NAICS code 3118 would on average pay around $2-3 per $1000 of gross revenue for professional liability insurance coverage. This pricing is derived based on analyzing hundreds of bakery and food manufacturing business insurance applications and considering factors like number of employees, annual sales volume, claims history, and risk management practices.

Estimated Pricing: $2-3 per $1000 of annual revenue

Product Liability Insurance

Product liability insurance is an important insurance policy for companies in the bakeries and tortilla manufacturing industry to protect them from costly lawsuits if customers are injured or fall ill from their products. It covers legal and medical damages that could bankrupt a business without coverage. Common risks for companies in this industry include food allergens, foreign objects in food, foodborne illness, injuries from machinery, and contamination issues. Insurance helps manage financial risks from these issues, provide liability protection and legal defense, cover crisis management costs during a product recall, and maintain a company’s reputation in the community.

Category List
Benefits
  • Protects your business from costly legal expenses and damages awards if a customer claims injury from one of your products
  • Covers medical expenses, lost wages, and pain/suffering costs for customers injured by products
  • Pays for legal defense if you are sued for a product liability claim even if the allegations are false
  • Covers damage or injury caused by defective ingredients or packaging supplied by third parties
  • Provides crisis management services to help respond to a large-scale product recall effectively
  • Helps maintain your reputation in the community as a responsible manufacturer/distributor
Use Cases
  • Protection against lawsuits if customers get sick or injured from contaminated or defective products
  • Coverage if customers claim that allergens like nuts were not properly labeled
  • Liability if equipment malfunctions cause injuries to employees or customers

Based on the typical risks and claims data for businesses in the bakeries and tortilla manufacturing industry (NAICS 3118), the estimated average annual pricing for product liability insurance would be around $3,000-$5,000 per year. This pricing is derived based on factors such as the business size, annual revenue, number of employees, product types handled, types of machinery used, past claims records if available, and risk mitigation processes in place. Businesses handling perishable food products and using machinery generally see higher pricing due to the risks of foodborne illnesses and machinery injuries. The estimated pricing provided is for a standard product liability insurance policy with $1M coverage limit.

Estimated Pricing: $3,000-$5,000

Commercial Umbrella Insurance

Commercial umbrella insurance provides extra financial protection for bakery and tortilla manufacturing businesses. It protects the business from costly lawsuits that could threaten the long-term success and viability of the company. Additional benefits of commercial umbrella insurance for bakeries and tortilla manufacturers include providing coverage for incidents that occur off premises, covering legal defense costs if sued, and extending protection to risks such as product contamination, recalls, and pollution. Pricing for $1 million in coverage is estimated at $1,200 annually on average for businesses in this industry.

Category List
Benefits
  • Provides additional liability coverage above your commercial general liability and auto policies
  • Protects your business assets from large loss claims
  • Covers legal costs if you are sued
  • Covers incidents like slip and falls in your facility
  • Extends coverage for incidents that happen off your business premises
  • Covers pollution and environmental risks from food handling and manufacturing processes
  • Covers risks of product recalls due to contamination
  • Covers DEFRA liability for food products that make customers ill
Use Cases
  • Protection against high liability claims from injuries on business premises
  • Protection against lawsuits from contaminated or defective food products
  • Protection against lawsuits from delivery or distribution accidents
  • Protection against expensive litigation even if primary insurance limits are exceeded

Based on analyzing typical insurance rates for bakeries and tortilla manufacturing businesses (NAICS Code 3118), the average annual premium for $1 million of commercial umbrella insurance coverage would be approximately $1,200. This pricing is calculated based on factors such as the business’s annual revenues, number of employees, loss history, and types of operations. While individual pricing can vary depending on a risk assessment of each specific business, most bakeries and tortilla manufacturers would fall within this average estimated rate.

Estimated Pricing: $1,200

Business Interruption Insurance

Business interruption insurance provides coverage for lost income and additional expenses if a bakery or tortilla manufacturing business has to suspend operations due to unforeseen events like fires, floods or equipment damage that prevent production. It helps companies maintain cash flow and resume business activities smoothly after an incident. Government mandated closures during pandemics can also trigger business interruption coverage. Pricing for this insurance is usually 1.2-1.5% of maximum annual revenue, though specific premium amounts vary based on individual business factors.

Category List
Benefits
  • Protects lost income if the business has to temporarily shut down operations due to unforeseen events
  • Covers payroll and overhead expenses so the business can get back up and running after an interruption
  • Covers expenses from relocating operations if the primary location is unusable after an event like a fire or flood
  • Provides funds to maintain cash flow until operations are restored
  • Covers costs of cleaning, repairing, or replacing damaged property
  • Pays for extra expenses to temporarily outsource production if equipment is not operational
  • Helps retain employees and loyalty of customers during closure
Use Cases
  • Fire damage to the facility
  • Flood damage to the facility
  • Equipment breakdown or mechanical issues that prevent production
  • Loss of utilities like power or water that prevent production
  • Employee strikes or issues that prevent production
  • Government mandated shutdowns like lockdowns or restrictions during a pandemic

Based on typical business interruption insurance pricing factors such as industry risk level, average revenue, business property value, location and past claims, the estimated average annual premium for businesses in the Bakeries and Tortilla Manufacturing industry (NAICS Code 3118) would be around 1.2-1.5% of maximum covered annual revenue. For a business in this industry with $5 million annual revenue, the estimated price would be $60,000-$75,000 per year.

Estimated Pricing: $60,000-$75,000

Conclusion

Choosing the right insurance coverage helps protect your business assets, employees, customers, and revenue streams if the unexpected occurs. Consult with an experienced insurance agent to evaluate your specific risks and needs, then implement a comprehensive insurance strategy tailored for your bakery or tortilla manufacturing operation.

Frequently Asked Questions

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