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Cottage Food Insurance: Cost & Quotes From $11/month

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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 ultimately camouflages into an income stream. 

Often, 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 in producing and selling food products, 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. 


Also read:

Who Can Avail Cottage Food Insurance?

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


Also read:

 

Liability Insurance for Cottage Food Business 

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 for Cottage Food Business 

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. 


Professional Liability Insurance for Cottage Food Business

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. 


Commercial Property Insurance for Cottage Food Business

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. 


Cottage Food Business Workers Compensation Insurance

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 


Cottage Food Commercial Auto Insurance

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 for Cottage Food Business 

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 for Cottage Food Business

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. 


Cottage Food Business Employer’s Liability Insurance 

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. 


Cottage Food Law 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.

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Cottage Food Liability Insurance Cost 

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 MonthCost per YearAverage Cost
FLIP$24.91$299
Immediate coverage once the first premium is paid
NEXT$25$300Best overall; Fastest general liability insurance for cottage food businesses
CoverWallet$27$324Cottage food insurance quotes comparison online
CommercialInsurance.Net$28.50$342Comparing cottage food insurance quotes over the phone
Hiscox$29.16$349.92Cottage food businesses with less than ten employees
Thimble$32$384Short-term general liability insurance for cottage food businesses
Progressive$189$2,268Providing 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. 

 


Compare Cheap Cottage Food Insurance Online

Get all the best quotes from leading providers in a click of a button!

Best Cottage Food Insurance Companies 

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. 

 

NEXT Cottage Food Insurance

Pros

  • Best overall

  • Get an online proof of insurance and send as a text message, email, or social medial post

  • Fat general liability insurance

  • Great customer service and reputation

  • Outstanding value for money

  • Bundle two or more policies and get a 10% discount 

Cons

  • 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


CoverWallet Cottage Food Insurance

Pros

  • Compare quotes online

  • Unlimited certificates of insurance

  • Sells terrorism coverage

  • Cancel your policy anytime

  • Sells more than 10 types of business insurance policies

Cons

  • 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

 

CommercialInsurance.Net Cottage Food Insurance

Pros

  • Call and compare quotes over the phone

  • Connects you to its partners so you don’t spend a lot of time searching

Cons

  • You can request a quote online but you can’t receive an instant copy 

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, CommercialInsurance.Net will connect you to partners whose cottage food insurance will suit your needs. 

CallCommercialInsurance.Net 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


Hiscox Cottage Food Insurance

Pros

  • 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 

Cons

  • 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       


FLIP Cottage Food Insurance

Pros

  • 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 

Cons

  • 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 


Thimble Cottage Food Insurance

Pros

  • Long-term or short-term general liability insurance with no deductibles

  • Fast to process policy cancellation requests

  • Unlimited ACORD 25 certificate of insurance

Cons

  • 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 CommercialInsurance.Net. 

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


Progressive Cottage Food Insurance

Pros

  • 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 

Cons

  • 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


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