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Learn about California's business requirements
Which insurance policies are recommended for California businesses?
California small businesses most often buy these insurance products.
General liability insurance
A commercial general liability policy covers common risks for CA businesses, including customer property damage and injuries. Most commercial leases require this coverage.
BEST FOR
- Customer injuries at your business
- Damaged customer property
- Libel and slander lawsuits
Workers’ compensation insurance
Workers’ comp covers medical bills and provides disability benefits to injured employees. It also protects sole proprietors from work-related medical bills that health insurance may deny.
BEST FOR
- Employee medical expenses
- Disability benefits
- Lawsuits from employee injuries
Commercial auto insurance
This policy covers bodily injuries, property damage, and legal costs if your business-owned vehicle is involved in an accident. You can buy physical damage coverage as well.
BEST FOR
- Accidents involving business vehicles
- Theft of a business-owned vehicle
- Damage to a company vehicle
Business owner’s policy
This policy bundles commercial property insurance and general liability in one plan. It's often the most cost-effective business insurance policy for a small business.
BEST FOR
- Third-party injuries and property damage
- Business property damage or loss
- Business interruption coverage
Professional liability insurance
This business liability insurance helps pay for legal defense costs related to mistakes and oversights. It's also called errors and omissions insurance (E&O).
BEST FOR
- Work mistakes and oversights
- Accusations of negligence
- Late or undelivered professional services
Errors and omissions insurance
E&O, also called professional liability insurance, protects California businesses that provide professional services. It can cover the cost of lawsuits related to your work performance.
BEST FOR
- Missed deadlines
- Accusations of negligence
- Errors and oversights
Cyber insurance
This insurance coverage helps California businesses survive costly data breaches and cyberattacks by paying for client notification costs, incident investigations, and other related expenses.
BEST FOR
- Data breach investigations
- Client notification expenses
- Fraud monitoring costs
Commercial umbrella insurance
Umbrella insurance boosts coverage on your general liability insurance, commercial auto insurance, and employer's liability insurance when the underlying policy reaches its limit.
BEST FOR
- Customer lawsuits
- Auto accident lawsuits
- Employee injury lawsuits
Commercial property insurance
This policy covers the value of a business's physical structure and its contents, such as inventory, equipment, and furniture. Bundle it with general liability coverage in a BOP for savings.
BEST FOR
- Fire
- Theft and vandalism
- Weather damage
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Which business insurance policies are required in California?
State laws can affect which types of business insurance you might need. These policies are required everywhere in California, from San Francisco to Los Angeles.
Workers' compensation insurance
California state law requires businesses with any employees, full-time or part-time, to carry workers’ comp insurance.
Additionally, all licensed contractors are required by law to have workers' comp starting in January 2028, even if they don’t employ anyone else. Contractors who already need this coverage include roof contractors, tree service technicians, and HVAC contractors.
Workers' comp covers medical bills for work-related injuries and illnesses. It also provides disability benefits for injured California workers.
Commercial auto insurance
All business-owned vehicles in California must be covered by commercial auto insurance.
California's minimum requirements for auto insurance are:
- $30,000 bodily injury liability per person
- $60,000 bodily injury liability per accident
- $15,000 property damage liability per accident
Trucking companies may need additional coverage to comply with regulations.
Though it's not required, personal vehicles driven for work purposes should be covered by hired and non-owned auto insurance (HNOA), as personal auto policies usually exclude business use. It can be added to general liability insurance or a business owner's policy (BOP).
How much does small business insurance cost in CA?
Commercial insurance can be affordable for small business owners. Based on policy data from Insureon customers in California, the average costs are:
General liability: $42 per month
Workers' comp: $63 per month
Professional liability/E&O: $94 per month
Factors that influence business insurance costs include:
- Your industry and risks
- Business operations
- Number of employees
- Location, such as Sacramento or San Diego
- Policy limits and deductibles
Top professions we insure
FAQs about California business insurance
Review answers to frequently asked questions about California business insurance coverage.
How do I get a certificate of insurance for my business?
Insureon's licensed agents can help you find policies that fulfill California's requirements and protect against financial loss. Once you've purchased insurance with us, you can download a certificate of insurance (COI) by logging into your account.
Can my company be held liable for a data security breach?
Yes—that's why cyber insurance is so crucial. Small businesses are a common target of cyberattacks since they often have fewer security measures in place.
California's data breach laws require businesses to report security breaches to affected residents, and the costs can escalate quickly. Cyber liability insurance lessens the financial impact by paying for notification costs, legal fees, and fines.
Does my industry affect state insurance requirements?
Yes, your state may have special requirements for business insurance and bonds for your industry. You may also need a license depending on the work you do.
Contractors often need to carry contractor general liability insurance, workers' comp, or surety bonds to perform certain types of work. Having the right insurance and bonds helps you comply with state licensing requirements.
Real estate agents and brokers and other professionals who offer advice or services sometimes need errors and omissions insurance (E&O, also known as professional liability insurance) to get licensed in their state.
State law requires that physicians carry professional liability insurance if they perform outpatient surgery.
California cannabis businesses need to carry general liability insurance with a $2 million aggregate limit and a $1 million per occurrence limit and a $5,000 surety bond to operate legally.
Note that cities and counties may have their own laws, in addition to state laws.
How can I save money on California business insurance?
As with any purchase, shopping around is one of the best ways to find an affordable option. With Insureon, you can compare quotes from top-rated insurance carriers by filling out a free online application.
Other ways to save include bundling policies for a discount, and choosing less expensive coverage options, such as lower limits or a higher deductible. Learn more about how to find cheap business insurance.
The average costs on this page were derived from our data on small business owners in California who purchased policies through Insureon. Most of our customers have fewer than five employees, annual revenue ranging from less than $50,000 to more than $200,000, and have been in business for five years or less.