A cottage food business allows you to showcase your individual style and tastes in your creations. While it might start as a hobby, it could quickly grow into a business that works with food vendors ultimately camouflages into an income stream.
Often, similar to a food trailer business, you find that the cottage food business will not be structured as a corporation or a limited liability company. In such a case, if you were tied up in a lawsuit, you would lose your personal assets when covering liabilities. Further, your personal savings and other financial investments are at risk if your business is not sufficiently covered.
Get cottage food insurance to protect yourself. Cottage food insurance covers the unexpected costs of fire, theft, car accidents, or employee injuries.
It even goes a step further to protect you in the event that when selling food products in farmers markets, you expose your customers to foodborne illnesses.
Further, in the event of a lawsuit, having insurance for cottage food business ensures that you can cover legal expenses.
You’re eligible for cottage food insurance if you manufacture any of the following products at home and sell them:
Loaf bread and biscuits
Dried herbs, seasonings, and mixtures
Jams
Fruit pies
Dried fruits
Candies
Preserves
Jellies
Confections
Cottage food liability insurance will include, among others, general liability insurance. General liability insurance provides a shield if someone sues your cottage food business for personal injuries or property damage.
This business insurance helps your cottage food business by:
Covering the medical expenses of the person who filed a personal injury claim against your cottage food business
Reimbursing the losses of the person who filed a property damage claim against your cottage food business
Paying for legal defense costs such as attorney fees, administrative costs, judgments, and other related expenses
Having general liability insurance for cottage food business is very important because there are many situations where injuries or property damage can happen such as :
Poorly maintained business premises that contribute to slip and fall accidents
Your cottage food business’s building catches fire and damages surrounding buildings
Vendor or visitor getting hurt by equipment while in the premises of your cottage food business
Insurance companies allow you to add optional coverages to general liability insurance, so that it doesn’t only cover claims for bodily injury or property damage. These are:
Advertising injury coverage-Advertising injury coverage takes care of settlements, attorney fees, administrative costs, and other related expenses if someone holds your cottage food business liable for slander, libel, and copyright infringement
Rented premises liability coverage-You can add this to general liability insurance if your cottage food business is renting a space. When the space gets damaged by fire, rented premises liability coverage will reimburse the losses of the owner
General liability insurance has a $1 million-$2 million per occurrence limit with an aggregate of $2 million. However, for cottage food businesses, the policy provides a $1 million-$4 million per occurrence limit with an aggregate of $3 million-$4 million.
Note that you can only use cottage food liability insurance to cover claims filed by customers, vendors, visitors, and other third parties. Employees and co-owners are excluded.
Product liability insurance is an essential coverage for your cottage food business, since most probable lawsuits will be filed with respect to the products that you’re manufacturing and selling.
This cottage food business insurance provides $1 million-$2 million coverage for each claim, which you can use to cover settlements and legal defense costs when a customer or any other third party files a claim because of:
Food poisoning
Allergic reaction to the food of your cottage food business
Foreign materials found in the food you manufactured
Improper labeling and packaging
Manufacturing defects
Product liability insurance can be added as an additional coverage to general liability insurance. Remember that it doesn’t cover claims filed by employees, co-owners, and other individuals who are part of your cottage food business’s workforce.
Consider a situation where a client filed a lawsuit because you were tasked to deliver a specific amount of goods and failed to meet your end of the bargain. In this situation, professional liability insurance can help.
Professional liability insurance can be claimed if your cottage food business committed or allegedly committed any of the following while providing a service:
Misrepresentation
Violation of good faith
Breach of confidentiality
Misrepresentation
Missed deadlines
Inaccurate advice
Insurance companies sell professional liability insurance as a claims-made policy or occurrence policy. We suggest you get an occurrence professional liability insurance because it provides long-term protection.
Note that any damage or loss of properties used for cottage food business operations isn’t covered by your homeowner’s or renters insurance. And so, you must purchase commercial property insurance.
A house, apartment, condo, or any other residential property used for cottage food business activities can be considered a commercial property. And so, commercial property insurance will:
Reimburse losses if the structure of the house, condo, or apartment you’re using for cottage food business activities sustains damage
Reimburse losses if the house, condo, or apartment you’re using for cottage food operations is destroyed
Contents coverage is always included in commercial property insurance. By having contents coverage, commercial property insurance will:
Reimburse your financial losses if the stoves, oven, food processors, and other cooking equipment become lost or damaged
Recover the cost of raw and finished food products that become lost or damaged
The house, condo, apartment, equipment, and stocks of your cottage food business must have been damaged or destroyed by any of the following for coverage to apply:
Theft
Lightning
Fire
Vandalism
Malicious mischief
Sprinkler leakage
Volcanic action
Sinkhole collapse
Aircraft
Vehicle
Snow
Hail
Winds
Civil commotion
Riot
Commercial property insurance doesn’t cover your losses if the perishable products of your cottage food become lost or damaged due to spoilage.
To solve this problem, you need to introduce food spoilage coverage to commercial property insurance. Food spoilage coverage will recover financial losses if the perishable goods of your business spoil due to:
Equipment breakdown (e.g., the refrigerator has leaks)
Power outage
Mishandling and employee error
How much money can you get from commercial property insurance anyway? Commercial property insurance for cottage food business has a $5,000-$10,000 starting limit.
Nonetheless, most insurance companies allow you to get custom limits. And so, it’s possible to get $25,000-$50,000 coverage from the policy.
Your cottage food business can run with only you doing all of the tasks. But you’ll surely employ one or two workers as the business picks its pace.
Speaking of employees, you need to purchase workers' compensation insurance in case they sustain the following due to work:
Burns
Cuts
Lacerations
Eye injuries
Punctures
Repetitive strain injuries
Muscle overuse injuries
Workers compensation insurance gives funds that you can use to cover the following expenses on behalf of an injured employee of your cottage food business:
Ambulance and emergency treatment-If an accident happens and an employee sustains injuries, your cottage food business can use workers compensation insurance to cover ambulance fees and emergency room fees
Hospitalization-Workers compensation insurance covers bills if your employee needs to stay in the hospital after sustaining an injury
Medication-Your cottage food business’s employee can use the funds of workers' compensation insurance to buy prescription medicines
Rehabilitation-Workers compensation insurance covers therapist fees and rehab equipment if the employee of your cottage food business sustains an injury that affects bodily functions permanently or temporarily
Lost wages-Your cottage food business can use workers' compensation insurance to reimburse the lost wages of an injured employee. Coverage for lost wages is a weekly allowance equal to two-thirds or 67% of the average weekly wage.
Death benefits-Workers compensation insurance allows your cottage food business to cover funeral expenses and give an allowance to dependents if an employee dies due to a work-related injury
In most cases, workers' compensation insurance only covers costs if an employee sustains an injury due to work. But note that the policy also covers costs if the employee of your cottage food business sustained a disease that’s proven to be work-related.
Workers' compensation insurance is expensive. However, its cost isn’t as problematic as the fines your cottage food business will pay if it's not covered. Look at the bullet below, which shows the workers comp penalty of the best states for starting a cottage food business:
Alaska-Cottage food businesses without workers comp are issued a stop-work order. They will also face a $1,000 fine per day for each employee not covered by workers' compensation insurance
Arizona-Authorities impose a one-year imprisonment if an owner of a cottage food business deliberately refuses to get workers' compensation insurance for employees. Violators also face a $1,000-$10,000 fine
Arkansas-Cottage food business without workers compensation insurance faces a $10,000 fine. The legal protection provided by the Arkansas Workers Compensation Commission will be revoked
Colorado-Failure to get workers' compensation insurance will result in a $500 fine for each day of being uncovered
Commercial auto insurance provides protection against the exposures associated with using a vehicle for business activities such as:
Delivering food to customers
Hauling goods and supplies
Depending on which carrier is underwriting it, this business insurance is already included in a cottage food insurance program or can be purchased as an optional protection
Commercial auto insurance for cottage food businesses offers the following:
Auto liability coverage-If your commercial vehicle causes an accident while delivering products or hauling goods to be sold at a flea market, auto liability coverage will cover the medical treatment, funeral expenses, or losses of third parties who sustained injuries or property damage. This will also cover legal defense costs if aggrieved parties decide to sue
Physical damage coverage-Physical damage coverage takes care of your commercial vehicle’s parts repair or replacement. This is available as a collision policy or comprehensive policy. Comprehensive physical damage coverage will take care of expenses if your cottage food business’s vehicle was damaged by fire, theft, vandalism, hail, and other covered perils. On the other hand, collision physical damage coverage will only help if the commercial vehicle sustained damage after crashing to another vehicle or an object
Uninsured/underinsured motorist coverage-A driver who's at fault for an accident is liable to cover medical treatment, lost wages, and losses. But if this can’t be done because he or she isn’t insured or doesn’t have enough insurance, uninsured/underinsured motorist coverage will cover costs instead
Medical payments coverage-Medical payments coverage will cover the medical treatment and funeral expenses of the driver and passengers if your commercial vehicle caused an accident or got involved in one. This is available in “fault” states
Personal injury protection-Personal injury protection can be added to commercial auto insurance if your cottage food business is in a “no-fault state”. It covers lost wages, medical expenses, and rehabilitation if the commercial vehicle got involved in an accident or caused one resulting in injuries to the driver and passengers
You must switch to commercial auto insurance if you’re using your personal auto for business operations. Continuing to use personal auto insurance will result in expensive premiums, policy cancellation, and other problems.
The auto liability coverage for the commercial vehicle must conform with the minimum limits of the state where your cottage food business is located. Say if your cottage food business is in California, its commercial vehicle must have an auto liability coverage having $15,000 per person, $30,000 per injury, and $5,000 per property damage limit.
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Business interruption insurance kicks in if your cottage food business is temporarily closed due to economic crisis, relocation, or renovation. You can use this insurance to pay for the following without using reserved funds:
Tax
Loan
Mortgage
Payroll
In addition, business interruption insurance will also reimburse the income your cottage food business would’ve earned if it didn’t close.
Note that business interruption insurance doesn’t provide help if your cottage food business needs to close because a supplier, distributor, or any other partner is experiencing a crisis.
In case your cottage food business highly depends on the operations of another business and will be severely crippled if something happens to it, purchase contingent business interruption insurance.
Cyber liability insurance is useful if your cottage food business collects and handles customer information through a website and an online digital payment channel.
Your business is liable if the sensitive information of customers is breached and exposed. Cyber liability insurance will cover the resulting costs in such an event. Particular expenses the policy takes care of are:
Settlements
Defense costs
Public relations
Professional services for reversing or containing the breach
The limits of cyber liability insurance start at $1 per occurrence and a $1 million aggregate limit. But note that your cottage food business can get up to $5 million coverage from the policy.
Employer’s liability insurance will help when an employee sustains an injury and sue your cottage food business for negligence. With this insurance, you can cover settlements, attorney fees, judgments, and administrative costs.
Note that depending on which company you choose, employer’s liability insurance is offered as a stand-alone policy, a coverage of general liability insurance, or as an optional policy in workers compensation insurance.
When running a cottage food business, you are creating and selling delicious products out of your home.
While your business might be relatively small and fly under the radar for some time, the more products you create and sell out, the more likely the state would require compliance with the food code.
The latter is what's referred to as cottage food laws. Every state will have a standard set of rules that require compliance. Note that while some states are strict on said codes, some would be a bit relaxed.
Now suppose the state where you run your business strictly administers cottage food laws. If you find yourself on the wrong side of the authorities, cottage food law insurance can help.
Cottage food law insurance is a specialized insurance plan from the Food Liability Insurance Program, which protects you from the legal costs that will arise in the ensuing lawsuits.
Further, if you were to be legally mandated to pay out some amount as a settlement or fine, the cottage food law insurance meets these obligations. Overall, this insurance policy ensures you don’t incur losses when covering costs.
Expect to pay $33 per month or $396 per year for a $1 million general liability coverage. Your cottage food liability insurance cost will depend mainly on your location, revenue, number of employees, and range of operations.
On an additional note, here's a breakdown of the insurance costs from some of the best cottage food insurance companies in the market today.
| Cost per Month | Cost per Year | Average Cost | |
|---|---|---|---|
| FLIP | $24.91 | $299 | Immediate coverage once the first premium is paid |
| NEXT | $25 | $300 | Best overall; Fastest general liability insurance for cottage food businesses |
| CoverWallet | $27 | $324 | Cottage food insurance quotes comparison online |
| Tivly | $28.50 | $342 | Comparing cottage food insurance quotes over the phone |
| Hiscox | $29.16 | $349.92 | Cottage food businesses with less than ten employees |
| Thimble | $32 | $384 | Short-term general liability insurance for cottage food businesses |
| Progressive | $189 | $2,268 | Providing coverage for cottage food businesses that take their products on the road |
Compare quotes to get a better grasp of your rates. Start by clicking the “Get Quotes” button on this page.
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While you concentrate on making your delicious treats from your home, you want the peace of mind of knowing that someone else has your business covered. That's where cottage food insurance companies come in.
Here's a list of the best cottage food insurance companies in the market today, including their pros, cons, and rate for a $1 million general liability insurance.
Best overall
Get an online proof of insurance and send as a text message, email, or social media post
Fastest general liability insurance
Great customer service and reputation
Outstanding value for money
Bundle two or more policies and get a 10% discount
Doesn’t sell commercial auto insurance for cottage food businesses
NEXT doesn’t underwrite a cottage food insurance program. But you can get covered through its specialized insurance for specialty food businesses, which is available as a business owner’s policy.
Since it’s a business owner’s policy, you enjoy the protection of commercial property and general liability policies in one insurance plan. For more protection, you can decide to get workers compensation insurance at a fixed $30 per month.
NEXT’s general liability insurance has a $1 million limit. You can decide to add terrorism coverage and professional liability insurance to its terms.
Your commercial property insurance from NEXT has food spoilage and contamination coverage, key lock and replacement coverage, equipment breakdown, and employee dishonesty coverage. Its minimum limit is $10,000.
Note that if your home is made up of sturdy and fire-resistant materials, NEXT will give a safe business discount.
Best for: Best overall; Fastest general liability insurance for cottage food businesses
Average cost: $25 per month
Our rating: 10/10
Compare quotes online
Unlimited certificates of insurance
Sells terrorism coverage
Cancel your policy anytime
Sells more than 10 types of business insurance policies
Not an insurance company but an insurance broker
CoverWallet doesn’t underwrite a cottage food insurance program. However, it has a generalized insurance plan for all types of home-based food businesses
Policies you can avail from it are general liability insurance, workers compensation insurance, food spoilage coverage, commercial auto, and cyber liability insurance.
Work with CoverWallet because of your general liability policy from this company as products and completed operations coverage. You can decide to add rented premises and terrorism coverage to its terms.
Also, this company has an online quotes comparison platform you can use to find carriers selling specialized coverage for cottage food businesses.
Best for: Cottage food insurance quotes comparison online
Average cost: $27 per month
Our rating: 10/10
Call and compare quotes over the phone
Connects you to its partners so you don’t spend a lot of time searching
You can request a quote online but you can’t receive an instant copy
Tivly (formerly CommercialInsurance.NET) covers cottage food businesses that manufacture spices, baked goods, and dried consumer products.
This company encourages you to build your cottage food insurance from the ground up. That said, there’s no pre-made insurance plan. You get to choose which policies your cottage food insurance will have.
Also, if you think that it’s not a good fit, Tivly will connect you to partners whose cottage food insurance will suit your needs.
Call Tivly now to compare quotes over the phone.
Best for: Comparing cottage food insurance quotes over the phone
Average cost: $28.50 per month
Our rating: 10/10
Customers can get quotes, embark on policy management, and file claims, all done online
Hiscox offers a mobile app available both on Google Play and App Store
General liability coverage of between $300,000 and $2,000,000
Claims processing can be done over the phone, online, or by mail
Cottage food business owners in Alaska are exempted from coverage
Insurance only available for cottage food businesses selling and manufacturing bread, cakes, and pastries
Hiscox specializes in micro-businesses such as cottage food businesses, food trucks, food carts, etc.
Your cottage food business will be getting a robust general liability policy with coverage limit options of between $300,000 and $2 million.
The lower end of the policy will cost you a starting fee of at least $350 per year. Since a cottage food business always operates at home, you also get a 5% discount. Suppose you decide on adding $5,000 coverage for your business property and equipment. This will only add $90 to your yearly premiums.
Best for: Cottage food businesses with less than ten employees
Average cost: $29.16 per month
Our rating: 9/10
High-quality protection as FLIP has an A+ rating
You can create a high-quality, customized insurance policy to fit your business needs
Low-cost coverage starting at $299 a year for $2 million in coverage for general and product liability and $10,000 in equipment coverage
Unlimited additional insured
No quote process
Convenient online purchase
24/7 access to policy documents
FLIP doesn't offer a refund when you cancel their cottage food insurance
No mobile app to manage their policies
No information on their official website regarding how claims are handled
Policies are underwritten by Great American Insurance Company
The Food Liability Insurance Program (FLIP) is a specialty insurance provider that caters to businesses and entrepreneurs that serve and prepare food.
To offer its customers the best possible insurance products, the FLIP partnered with Great American Insurance Group. Great American Insurance Group underwrites the policies and assures cottage food business owners superior financial strength.
The cottage food insurance coverage from FLIP features:
A general liability aggregate limit of $2,000,000
Products-completed operations aggregate limit of $2,000,000
Zero liability deductible
$300,000 paid out if there are damages to rented premises
$5,000 inland marine limit
What stands out with the cottage food insurance policy from FLIP is that it offers a cyber liability policy of $100,000 which protects your cottage food business in the event of a cyber security breach.
This would come in handy, especially if you were to store information pertaining to your business or store online, on a computer, or a mobile device.
A neat element with FLIP is that they are pretty forthcoming with how much premiums you will pay.
Note that monthly and annual rates are subject to your cottage food business's annual gross sales. If your annual sales are below $50,000, you will be required to pay $299 per year for FLIP's basic general liability policy.
Additionally, the cost will be also determined by the number of add-ons and the types of coverage purchased.
Best for: Immediate coverage once the first premium is paid
Average cost: $24.91 per month
Our rating: 8/10
Long-term or short-term general liability insurance with no deductibles
Fast to process policy cancellation requests
Unlimited ACORD 25 certificate of insurance
Coverage is provided or not depending on your cottage food business’s profile
Thimble can cover your cottage food business through its specialized insurance for packaged and processed food wholesalers, which comes in the form of a business owner’s policy.
Understand that even if you can get a quote, Thimble doesn’t guarantee coverage. In case your business profile doesn’t pass, the company will refer you to its partner, Tivly.
In case you’re making and selling cottage food products as a side hustle, Thimble’s short-term general liability policy is a great option. It provides $1 million-$2 million coverage with no deductibles. Coverage lasts for hours, days, weeks, or months depending on your preference.
Best for: Short-term general liability insurance for cottage food businesses
Average cost: $32 per month
Our rating: 8/10
Get a quote and purchase it online
24/7 claims handling
Seasonal rate adjustment offered to customers
Strong financial standing
A mobile application available both on Google Play and App Store
The cottage food business policy is outsourced to an online broker
Some of the features listed on the application might vary from what you will typically find on the policy document
Progressive is best known for its auto insurance policies, but it has opened up its business to offer additional coverage options, including cottage food policies. Still, the company's commercial auto policies take the highest precedence when it comes to direct premiums written.
To cater to the needs of cottage food businesses, Progressive offers the Progressive Advantage Business Program that will cost a policyholder an average of $189 per month, or $2,268 per year.
Best for: Providing coverage for cottage food businesses that take their products on the road
Average cost: $189 per month
Our rating: 7/10
1 / 5
Use anyone except Employers. Period. They are non-transparent and shameful. After I complained long enough to warrant a call from a supervisor, the supervisor called back from a PRIVATE NUMBER (no caller ID), left a message that they are not reversing their decision (without any communication with me), and failed to leave a phone number for me to call back. She was hiding! They also fact find via email and phone calls, which is terrific for speed and communication. However, after setting a precedence of email or phone calls, they send time sensitive information via email, without any heads up... they are hoping you miss it and forfeit via expiration. Evil policies. Go elsewhere.
1 / 5
This place is an absolute joke of a company and should be ashamed of the way they conduct business. I was hurt on the job at the end of July and it took them just shy of 7 weeks to issue out a paycheck to me. Yes the amount was back dated but still. Not many have the luxury of not receiving a paycheck for almost 2 months. To top it all off, the original adjuster marked me down for the wrong state which caused a problem from the get go, I've had 3 different adjusters now since each one can't seem to figure out the simplicity of my claim. All my paperwork which includes, my job, house, and drs visits all are from the same state and city but yet some how I have been filed under a completely different state 1500 miles away. They do not answer your phone calls or emails no matter how many you leave. I've had to escalate my frustrations to the supervisors of each of these individuals in order to even get some kind of response. I've had more communication and information given to me about my claim from the customer service representatives then the actual adjusters.......... please tell me how that works?! A serious overhaul needs to happen here in order to serve your clients the way they deserve to be taken care of. 10/10 do not recommend this company to a single soul on earth
1 / 5
I have never had the displeasure of working with a more incompetent and disrespectful person in my life. I’m an injured worker and the adjuster that was assigned to my case was named Carrie Furgeson. In the past 6 weeks that I’ve been injured and out of work I have only been able to get ahold of her twice, not for lack of trying. I have left countless voicemails, countless emails, and she ignores them all. When I am finally able to get ahold of her I’m greeted with terrible customer service. She is rude, she talks over me and I’m hardly able to get a word in edgewise. She spelled my name wrong on my documents even after I spelled it for her properly countless times, this caused a whole new issue with my bank. I have bill collectors from the hospital calling me demanding payment and Carrie Furgeson won’t do a single thing to help, or to get them paid. All of my documentation is in Colorado, my job is in Colorado, my address is in Colorado, all my Dr offices and appointments have been in Colorado and Carrie still managed to hold my claim because she wasn’t sure what state she needed to file it under. It’s been 6 weeks since my Injury and my company still hasn’t received the wage paperwork to fill out so they can get me my correct wages. When she’s not ignoring me she’s answering my questions with “I don’t know” well I don’t know how she got this job, because apparently she doesn’t know anything about it. She is a disgusting morose individual inside and out and I genuinely wish her the worst in all of her future endeavors. I highly recommend you don’t use this company. Please if you are a business owner and your looking into this company please don’t use them. I’m sure they have the cheapest payment and that’s why companies use them in the first place, but you will be doing your employees a grave disservice by forcing them to venture into this absolute dumpster fire of a company. I would rate 0/5 if possible but 1 was the lowest I was allowed.
5 / 5
Their general liability insurance purchase process is simply the best online experience I've ever had in my life!
5 / 5
As long as they cover your line of business, you're literally covered! best rates, best coverage, best online experience, best professionals, can't be happier that I chose them!
Not all those who wander are lost.
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