In the warm, aromatic world of Canadian bakeries, your products are more than just bread and butter, they're your brand, your livelihood and often, your legacy.
Whether you're crafting gluten-free sourdoughs, vegan croissants or traditional family-recipe butter tarts, each item is the result of innovation, quality control and consumer trust. But what happens when something goes wrong?
The hidden risk behind every batch
Despite rigorous quality assurance processes, even the most reputable bakeries can face unexpected product issues. Contaminated ingredients, mislabeled allergens or supply chain slip-ups can result in costly product recalls. And with more than 4 million Canadians affected by foodborne illness each year,1 consumer sensitivity around food safety is only increasing.
While many variables determine the cost of a recall to a small business, the price tag can run into the millions when you take into account the retail value of the recalled product, legal fees, regulatory fines, loss of future sales, damage to brand reputation and other costs.2 Without insurance, it can be difficult for a small business to recover.
Product Liability and Recall insurance: Why it matters
Product liability insurance and recall coverage are essential for bakeries aiming to grow sustainably while minimizing risk. This specialized insurance goes beyond general liability; it's designed to address the complex realities of food production.
What product liability insurance and recall insurance cover:
- Claims related to bodily injury or illness caused by your product
- Mislabeling or allergen cross-contamination incidents
- Recall expenses, including disposal, shipping and communication
- Legal defense and settlements
- Crisis communication and brand rehabilitation services
With tailored insurance, you're not just buying a policy, you're gaining a safety net that allows you to focus on growth, not damage control.
Innovation shouldn't be a liability
Launching new products is key to staying competitive. But with innovation comes new risks.
Take the case of a bakery in Vancouver that launched a line of cannabidiol (CBD)-infused cookies. Due to shifting regulations and unclear labeling, they faced a temporary halt in sales and product seizure. Thanks to their insurance policy, they were covered for regulatory consulting, legal defense and re-launch marketing.
As the baking industry continues to embrace trends such as plant-based, keto and culturally inspired desserts, ensuring you're insured for evolving product categories is critical.
Recall ready: Are you prepared?
When it comes to product recalls, the best offense is a strong defense. Not having a formal recall plan in place is a recipe for disaster.
An effective recall response plan includes:
- Batch tracking and traceability
- Clear communication templates
- Legal and regulatory consultation
- Insurance coverage for direct and indirect costs
Without insurance, a recall can quickly spiral into a financial and public relations nightmare.
Your products are the heart of your bakery. Protecting them with product liability and recall coverage is more than a smart move, it's a business necessity. At Gallagher, we help Canadian bakeries of all sizes design tailored insurance solutions that safeguard their recipes, innovation and reputation.
Because in baking and in business, every detail matters.
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Sources
1"Yearly Food-Borne Illness Estimates for Canada," Government of Canada, updated 5 Jul 2026.
2Philpott, Amy. "How Much Does a Food Recall Really Cost?" Quality Assurance and Food Safety, updated 20 June 2025.