Sofia runs a wholesale bakery in Bellingham that supplies bread and pastries to twenty grocery stores and cafés in Whatcom and Skagit counties. Production runs overnight. A deck oven, two proofers, a spiral mixer, and a walk-in cooler run almost constantly, and two delivery vans leave at five every morning.
She reached out after a grocery chain's new supplier agreement asked for proof of product recall coverage, and she wanted everything else checked while we were at it.
What she asked for
A review of the bakery's commercial property coverage and the new supplier requirements.
What the review found
The policy covered fire, not failure. Her equipment was insured against fire, theft, and water damage. A cracked heating element, a burned-out mixer motor, or a compressor failure in the walk-in is a mechanical breakdown, which standard property forms exclude. For a bakery, a single failed oven stops production.
Spoilage had no coverage. A cooler failure overnight means a full day's ingredients and product thrown out.
Business income only responded to physical damage from covered causes. Since breakdown was excluded, so was the lost income from it.
Delivery vans were on the wrong policy. One van was on a commercial auto policy; the other, bought used last year, was insured on Sofia's personal policy under her name. It was used exclusively for deliveries.
Stop-gap was missing. The bakery's twelve employees were covered by L&I. Stop-gap employers liability was not in place, and the grocery chain's agreement required it.
What we put in place
We added equipment breakdown coverage to the property policy, covering the ovens, proofers, mixers, refrigeration, and electrical systems, including repair or replacement, spoilage of ingredients and finished goods, and the business income lost while production is down. We added utility service interruption coverage for off-site power failures, since a regional outage would have the same effect.
We updated equipment values at replacement cost based on current prices for new commercial ovens.
The second van moved to the commercial auto policy, and we confirmed both drivers' records.
We added stop-gap employers liability and a product contamination and recall policy sized for the grocery agreement, with the grocery chain named as required.
Why it mattered
Two days before Thanksgiving, the deck oven's control board failed mid-bake. Equipment breakdown covered an emergency repair, the rental of time in a nearby commercial kitchen, and the lost income for the orders she could not fill. Under the old policy, that week would have been a total loss.
If you run a food production business
- Standard property coverage excludes mechanical breakdown; add it
- Cover spoilage, including from off-site power outages
- Every vehicle used for deliveries belongs on the commercial auto policy
- Supplier agreements often require recall coverage; read them carefully
More on restaurants and food businesses, or get a free policy review.