From the oven to the customer.
Property and equipment, product liability including allergen claims, spoilage, general liability and workers' comp for retail, wholesale and cafe bakeries.
By Sam Alishahi · CA Insurance License #4348151 · Reviewed November 2026 · How this page is researched
Ovens, ingredients and allergens
Bakeries carry fire risk from ovens, product risk from allergens and foodborne illness, and equipment that's expensive to replace. Wholesale bakeries also face requirements from the stores they supply.
A bakery package combines property, equipment breakdown and spoilage with product and general liability.
- PropertyBuilding, ovens and fixtures.
- Product liabilityAllergen and illness claims.
- Equipment breakdownOvens, mixers and refrigeration.
- SpoilageIngredients and products lost.
What underwriters will ask
Having these ready means I can go to market on the first call. The quote form asks for the same things, and anything you don’t know yet can wait.
- Bakery: type and address.
- Customers: retail, wholesale or both.
- Equipment: ovens and their values.
- Deliveries: vehicles used.
- Revenue and payroll: annual figures.
- History: current policies and claims.
Allergen labels, sesame and may contain
FDA lists nine major food allergens: milk, eggs, fish, Crustacean shellfish, tree nuts, peanuts, wheat, soybeans and sesame. The Food Allergen Labeling and Consumer Protection Act of 2004 (FALCPA) named the first eight. The FASTER Act, signed April 23, 2021, made sesame the ninth, effective January 1, 2023. If you use tahini, sesame seed toppings or sesame oil, sesame now gets the same label treatment as wheat or milk.
Under 21 U.S.C. 343(w), a food that contains a major allergen must name the allergen's food source in one of two ways:
- A "Contains" statement printed immediately after or adjacent to the ingredient list, in type no smaller than the ingredient list (FDA's example: "Contains wheat, milk, and soy").
- The food source in parentheses after the ingredient's name in the list, such as "flour (wheat)" or "whey (milk)."
Two details catch bakeries. Tree nuts must be named by the specific type of nut, such as almonds or pecans. And the statute applies the same rule to a flavoring, coloring or incidental additive that contains a major allergen, so read the spec sheets on glazes, sprinkles and flavor bases.
"May contain" and "produced in a facility that also uses" lines are different. FDA says such advisory statements are not required by law, should not be used as a substitute for adhering to current good manufacturing practices, and must be truthful and not misleading. For facilities covered by its CGMP and preventive controls rule (21 CFR part 117), FDA requires written procedures to control allergen cross-contact, which it defines as the inadvertent introduction of a major food allergen into a product. When I submit a bakery, a written allergen procedure and a sample label are two of the most useful things to attach.
Home bakery or storefront: the cottage food line
A lot of bakeries start in a home kitchen. California Health and Safety Code 113758 defines a cottage food operation as one run within the registered or permitted area of a private home where the operator lives, with no more than one full-time equivalent employee, not counting a family or household member of the operator. It sets two classes:
- Class A may engage only in direct sales to consumers. The statute caps it at $75,000 in verifiable gross annual sales. Under Section 114365, it must register with the local enforcement agency and submit a self-certification checklist, and it is not subject to initial or routine inspections (complaint-based access is allowed).
- Class B may make direct and indirect sales, including through a third-party retailer that holds a valid permit. The statute caps it at $150,000 in verifiable gross annual sales. It needs a permit, issued after an initial inspection, and is not subject to more than one inspection a year apart from complaints.
Section 113758 says both sales amounts are adjusted annually for inflation based on the California Consumer Price Index, so confirm the current figure with your county. A registration or permit must be renewed annually. Section 114365.5 lists baked goods without cream, custard or meat fillings, such as breads, biscuits, churros, cookies, pastries and tortillas, plus fruit pies. Section 114365.2 requires "Made in a Home Kitchen" in 12-point type on the primary display panel, the operation's name, its registration or permit number and issuing county, and a state-approved food processor course within three months of registering and every three years after.
A bakery past the sales cap no longer fits the definition. See insurance to sell cottage food. Other states set their own home-baking rules.
Bakery insurance, answered
Are allergen claims covered?
Product liability covers claims from products you sell, subject to the policy terms. Labeling matters.
Is spoilage covered after a power outage?
With spoilage coverage, often yes.
Do wholesale customers require insurance?
Grocery and restaurant customers often require product liability and additional insured status.
Is a home bakery covered?
Cottage food businesses usually need their own policy, not a homeowners policy.
Do allergen labeling rules apply to pastries boxed at the counter after a customer orders?
FDA says FALCPA's labeling requirements do not apply to foods placed in a wrapper or container, such as paper or a box, following a customer's order at the point of purchase. They do extend to retail and food-service establishments that package, label and offer products for human consumption.
Can a California cottage bakery registered in one county sell in another?
Yes. Health and Safety Code 114365 says a registration or permit from one county is sufficient to operate throughout the state, and both classes may sell throughout the state within their sales types. The registration or permit must be renewed annually and kept onsite at the time of sale.
Do you offer bakery insurance outside California?
Yes. Clients across the country send the same quote form. Sam Alishahi is licensed in all 50 states and Washington, DC and places policies there directly. The shopping across carriers works the same way. Rules, minimums and markets differ by state — see insurance requirements by state.
Official sources
- FDA: Food Allergies (major allergens, FASTER Act, labeling, advisory statements)
- 21 U.S.C. 343 (Cornell LII), subsection (w) major food allergen labeling
- Cal. Health & Safety Code 114089: prepackaged food labels
- Cal. Health & Safety Code 113758: cottage food operation, Class A and Class B
- Cal. Health & Safety Code 114365: cottage food registration, permits and inspections
- Cal. Health & Safety Code 114365.2: cottage food labels and training
- Cal. Health & Safety Code 114365.5: approved cottage food products
- OSHA: Combustible Dust: An Explosion Hazard
- Cal/OSHA Title 8, Section 4542: Mixers
Send your bakery details. I'll shop it.
Type, revenue and equipment value are enough to start.
Alishahi Insurance · Saman Alishahi, independent insurance broker, California License #4348151. General information, not a quote or a promise of coverage; coverage depends on underwriting and the terms, conditions and exclusions of the policy actually issued.
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