The specifics of the situation were that with only a few days to go before a multi-tiered, expensive cake was to be delivered, the home-based decorator found a shard of plastic inside one of the tiers. To make matters worse, there were a few additional pieces of plastic from a piece of her equipment, missing. While the likelihood of the missing plastic shards being inside the cake was small, the risk was still significant.
Imagine the stress of delivering a cake, knowing a sharp piece of plastic could still be inside. The risk to anyone consuming the cake is damage to teeth, or worse yet, choking or internal damage. Statistic show that one of top reasons for food-related lawsuits is tooth breakage due to a foreign body.
Of course, if the cake decorator knowingly served a potentially harmful cake, she would be liable for any damage and any insurance policy would not pay a liability claim. In this instance, the decorator made an effort to reduce the risk, but still planned to serve the cake. Her reasoning was that not delivering the cake would be a huge blow to her reputation. Moreover, she would have to refund the contract payment — over $1,000. Fortunately, in the end, there was no harm to her clients’ guests, but these are the situations for which we should all be prepared, and discuss with our insurance agent.
While liability insurance will protect you if you make a mistake in good faith, knowingly serving a potentially harmful protect and counting on your insurance to back you up, will result in a denied claim. Worse yet, your reputation would be ruined. I recommend talking with your insurance agent on a regular basis, rather than hoping you’re covered when a problem arrises.
More about General Coverage:
Liability insurance has several parts, all designed to protect you from loss when catastrophe strikes. The types of liability insurance you need to consider include coverage for property damage, loss of use, personal injury, and special insurance that protects you against claims arising from raw materials you use in the creation of your products.
You want to be protected from the unthinkable. Imagine your worst nightmare come true about your business, and you will understand the importance of liability insurance.
Consult with your attorney to determine the type of coverage you need and don’t be afraid to shop around. One warning: the cheapest insurance coverage is not always the best choice. You want coverage that comes with real protection, great service in case you have to file a claim, and an agent who can help you navigate the insurance industry successfully.
The standard liability coverage for a cake business ranges from $1,000,000 to $5,000,000, depending on the size and scope of your business. Coverage should include product liability protection. For example, you use cherries as an ingredient in your cakes and the cherries are recalled. Even though your supplier and the manufacturer of the cherries are likely liable, a customer who gets sick eating your product can still sue or try to sue you, so having protection for product liability is critical.