What insurance does a bakery need in Australia?

Many bakeries in Australia start with public liability insurance and products liability insurance. Bakeries with premises, equipment or stock, including those that bake on site, commonly add cover for them, often together in a business pack. Workers' compensation insurance is required by law once you employ staff.

Cover depends on the policy and insurer you choose. Check the policy wording and its terms and conditions for what is and isn't included.

What insurance does a bakery need, and what does each cover?

A business pack can bring several of these into one policy. Each cover is subject to the policy terms, conditions and exclusions.

How much does bakery insurance cost?

The cost of bakery insurance depends on the cover you arrange and the details you give the insurer. For a bakery, the factors include:

• the activities on your schedule, such as baking on site, wholesale supply or dine-in service
• your turnover and staff numbers
• your location
• your claims history
• the limits and excess you choose (the excess is the amount you contribute to a claim)
• the sums insured for your premises, equipment and stock, if you insure them
• any options you add, such as machinery breakdown or goods in transit

An upcover team member or an insurance broker can talk through these factors, or you can get a quote for your bakery.

Does a home, market or wholesale bakery need different insurance?

A policy is designed to respond to the activities described on your policy schedule. That is why naming each activity in your activities section matters, particularly where you have the certificates and training to offer it as an added service you charge for.

If a customer makes a claim about an activity your schedule leaves out, the insurer may consider declining it if they were not aware of the activity and would not have accepted it as covered under the insurance policy.

Is bakery insurance compulsory in Australia?

Workers' compensation insurance is compulsory for employers, and each state and territory runs its own scheme (Safe Work Australia). If your bakery uses vehicles, business.gov.au lists third party personal injury insurance among the insurances you may need by law. It is commonly called compulsory third party (CTP) insurance and is often part of the vehicle registration fee.

Public and products liability insurance is not a general legal requirement for bakeries in Australia (business.gov.au). Landlords, market organisers and councils may set their own insurance conditions. For example, Inner West Council requires event stallholders to hold public liability insurance of at least $20 million.

Does bakery insurance cover a broken fridge and spoiled stock?

A broken fridge can mean three separate losses, and a policy may treat each one differently.

• The fridge: machinery breakdown may respond to sudden breakdown of insured machinery, where the business pack includes it.
• The spoiled stock: cover for stock spoiled in a breakdown varies between policy wordings, so always check with your insurance broker or the team at upcover.
• The lost trading: business interruption, commonly part of a business pack, is designed to help cover lost income or ongoing costs when an insured event stops you trading. Closures without an insured event may fall outside cover.

The cause matters too. Gradual wear and tear is commonly excluded. A fridge that fails after months of running hot may be treated as a maintenance issue rather than a sudden breakdown.

What happens if a bakery has to recall a product?

Wheat is a core bakery ingredient and a declarable allergen. The Food Standards Code requires wheat, and the gluten it contains, to be declared using their required names. Unpackaged food needs the information displayed with it or provided on request (FSANZ).

Allergen and recall rules can create costs for the business:

• Undeclared allergens (South Australia): SA Health says a packaged food with an undeclared allergen will require a recall or withdrawal at the expense of the business. Fines can also apply under the Food Act 2001 (SA Health).
• Cross contamination: FSANZ says food manufacturers and retailers are responsible for managing the unintentional presence of allergens through cross contamination (FSANZ).
• Recall plans: a food business engaged in the wholesale supply, manufacture or importation of food must have a written system to recall unsafe food (FSANZ). Food retail businesses need one only if they are also engaged in wholesale supply, manufacture or importation (FSANZ recall protocol).

Public and products liability policies commonly include a product recall exclusion, which removes cover for the cost of recalling, repairing or replacing faulty products.

Products liability insurance may respond to a customer's injury claim, subject to the policy terms. The cost of pulling products from sale commonly sits outside products liability insurance. Whether product recall cover is available for your bakery varies between policy wordings, so always check with your insurance broker or the team at upcover.

What do claims look like for bakeries?

The claims examples below come from upcover's bakery page. All three are claims on the bakery's own policies, such as a business pack, where the bakery itself suffers the loss.

Important: These claims are examples only. Cover is subject to policy terms, conditions and exclusions. Policy wordings vary between insurers. Always refer to the policy wording and its terms and conditions for details. If you have questions about a particular possible claim or would like assistance about whether a certain claim might be covered it is always best to speak to an upcover team member or your insurance broker.

If you're concerned about a particular customer service or experience, you can always consider telling your insurer as soon as you become aware of an incident, complaint or circumstance that could lead to a claim. You don't need to wait for a formal demand. Also keep in mind that notifying of a claim late may affect your claim.

You can start a claim through the make a claim page. Admitting liability, incurring costs or agreeing to a settlement before you notify your insurer may affect your claim. Starting a claim does not confirm that your claim is covered; your insurer assesses it under the policy terms, conditions, exclusions and limits.

What does bakery insurance usually not cover?

Exclusions commonly include, but are not limited to:

• gradual issues such as wear and tear, rust, mould, vermin and depreciation
• the cost of recalling, repairing or replacing faulty products (product recall exclusion)
• dishonest, fraudulent or deliberate acts by you, your family or anyone acting with your consent. Dishonesty by an employee may sit under an employee dishonesty section of a business pack, where you select one
• cyber incidents and data loss, unless cyber insurance is added
• liability arising from using a registered motor vehicle. Some public liability policies include cover, with limits, for injury or damage while loading or unloading goods from a registered vehicle. Injury to other people caused by the vehicle generally sits with compulsory third party (CTP) insurance. Damage to other people's property may sit with commercial motor insurance, depending on the cover arranged

Important: This list is not exhaustive. Exclusions vary between insurers. Always refer to the policy wording and its terms and conditions for the exclusions that apply to you, and if you have questions you should speak to your insurance broker or the upcover team.

How upcover can help

upcover arranges public and products liability insurance and business pack insurance for bakeries and patisseries. upcover works with 80+ insurance partners and can arrange quotes from a range of insurers.

• 70,000+ businesses covered across Australia
• 4.9/5 customer rating
• 80+ insurance partners

Get a quote for your bakery, or read our guide to public liability versus products liability insurance.

Frequently asked questions

Does a landlord's insurance cover a bakery's equipment and stock?

A landlord's building insurance is generally arranged for the landlord's interest in the building. A bakery's fit-out, ovens and stock are commonly insured under the bakery's own business pack, and the lease usually sets out who insures what.

Does a bakery need products liability insurance if it only resells?

Products liability insurance is designed to cover claims that a product you made, sold or supplied caused injury or damage after it left your hands. A customer may still claim against the business that sold the product. Whether a policy responds to products made by someone else varies between policy wordings, so always check with your insurance broker or the team at upcover.

Does a shared commercial kitchen's insurance cover a bakery business?

A shared kitchen operator's policy is generally arranged for the operator's own business. Kitchen agreements may ask each hirer to hold public and products liability insurance and show evidence of it. You may need to consider obtaining your own insurance even if you work from a shared kitchen.

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_{Written by upcover's editorial team.}

_{This article provides general information only and does not take into account your objectives, financial situation or needs. It is not legal advice. Food safety, allergen labelling and workers' compensation requirements are set by regulators, vary between states and territories and can change, so confirm what applies with your local council and the relevant regulator. Insurance availability, cover and price are subject to underwriting and the terms, conditions, limits and exclusions of the relevant policy. Read the policy wording and its terms and conditions before deciding. For commercial motor vehicle insurance, also read the Product Disclosure Statement (PDS), Target Market Determination (TMD) and Financial Services Guide (FSG). upcover arranges insurance products with selected insurers and underwriters and does not compare all general insurers or insurance products available in the market.}