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Are you a California business owner scouring the internet for business insurance information? Well, you’ve come to the right place.
You can learn all about getting a business insurance policy in California here. The best part? You don’t have to wade through confusing insurance jargon. We have all the details — in plain English — right here.
At Simply Business, we do more than just write about small business topics; we’re also a top online business insurance platform. This means we’re experts in getting California business insurance, and we’re prepared to walk you through the process.
Whether you’ve owned your business for a while, or you’re just getting started, we can help you learn how to get the coverage you need.
If you’re a small business owner, you’ve probably heard of general liability insurance. But just in case, let’s talk about what this coverage is and why it’s important for most small businesses to have.
General liability insurance (also known as GL insurance) protects against common risks to your business, such as:
When you fill out the paperwork for a general liability policy, or if you’re talking to a licensed insurance agent, you may hear these terms: premises liability, products liability, and completed operations.
These are the three main areas that most California general liability insurance policies cover. Now, here’s what they mean.
Premises liability: This coverage helps pay for the costs of an injury to another person or damage to another person’s property that happens on your premises. It’s designed to cover you if the incident occurs when you’re still in the middle of your project or job.
Products liability: If you manufacture, sell, or distribute goods, this coverage is relevant to you. Products liability insurance can cover the cost of bodily injury or property damage that’s caused directly by your goods. Yep, this helps protect you if you’re sued as a result of your product hurting someone.
Completed operations: Lastly, this area of general liability insurance kicks in if your work is finished, but you still need coverage. This may happen if an accident or injury occurs after you’ve signed off on the job and gone home for the day.
Most business owners in California should get general liability insurance. Here’s why: It can financially protect your business if you should face one of these common and costly claims. And when we say “costly,” we really mean it. Customer injury or damage, for example, can cost a business an average of $30,000 or more!
Here’s the good news. If you have California general liability insurance, and a customer gets injured or if there’s property damage, you don’t have to cover all of the costs. You just need to pay up to your policy’s deductible and the policy will pay for covered claims up to the policy limits.
Whew! Now that’s a sigh of relief.
Next, let’s talk about how general liability insurance policy works in real life. Here are a few examples of a GL policy in action:
You’re a contractor performing roof repairs for a client. While on the second story, a pile of shingles slips off and falls on your client. If the client has to go to the hospital, your general liability insurance could pay for the medical bills and even the cost of a lawsuit, up to the policy limits.
You run a cleaning business, and one of your employees inadvertently uses the wrong cleaner on a client’s expensive oak table. Your client calls you asking for reimbursement for the table. Fortunately, California general liability insurance can help cover the costs. A high-quality table can cost $3,000 or more!
A relationship with a client turns sour, and suddenly you’re accused of slander. Even if you’re completely innocent, you’re still on the hook to pay for a lawyer to defend you. General liability insurance may help cover the legal fees and more.
Business owners beware: In California, companies aren’t required to carry general liability insurance.
But this doesn’t mean you should skip getting a policy.
In fact, most businesses purchase general liability insurance to protect themselves. It’s especially wise if you work in an industry where you’re more likely to experience accidents or damage to property. Take construction, for example. Most general contractors in California protect themselves with a general liability insurance policy — and they should secure a contractor’s license too.
Calling all marketing consultants, financial planners, accountants, and other professionals. Do you provide a consulting service and give advice to clients? We’re talking to you.
If your profession offers advisory services, you may want to purchase a professional liability insurance (PL) policy.
Just like GL insurance, professional liability insurance can help protect you financially against costly claims — but the types of claims are different. California professional liability insurance usually helps cover lawsuits related to your negligence, libel, or slander. It can help protect you if you’re accused of negligence, even if it’s not your fault.
Here’s an example. Let’s say you’re an accountant, and you overlook a number on a client’s tax return. As a result, the client is audited by the IRS and sues you for the costs of the audit. Or you create a marketing plan that results in a client losing a large amount of money. If you end up facing a civil lawsuit, your policy may cover some or all of the legal fees.
It’s important for certain business owners in California to carry professional liability insurance, including:
That’s because people who work in these professions may be at a greater risk for lawsuits related to negligence, libel, and even slander.
In California, professional liability insurance isn’t required by law.
But this doesn’t mean you don’t need a policy.
If you provide professional advice or a service to clients, it’s a good idea to protect your business with a California professional liability insurance policy.
Look, mistakes can happen to anyone. You also can get into a situation where you commit libel or slander without even realizing it — especially if you’re a journalist or have a business social media account. California professional liability insurance can help protect you and give you peace of mind.
Here’s a policy that generally is required in California — workers compensation insurance. Even if you have just one employee, you need to purchase a California workers compensation insurance policy.
Here’s why. Workers compensation insurance can help protect you from having to pay out of pocket if an employee gets injured or sick on the job. For business owners with employees, this can really add up if you don’t have workers comp insurance.
We’ll explain more about how California workers compensation insurance works a bit later on. Stick with us.
Do you have a business car or truck? Even if you just drive it occasionally to job sites, you may need a commercial auto policy. California requires all business vehicles to be covered by commercial auto insurance, which is different from a personal auto policy.
Simply put, if you have an accident while driving your personal vehicle to a job site, your personal auto insurance may not cover you. It’s important to have special insurance coverage for business travel.
Instead of getting two separate policies, you can purchase a Business Auto Policy (BAP). This type of coverage is designed to protect you if you’re using a vehicle for work and personal reasons. Here’s how a BAP works:
Vehicles are classified by their weight (light, medium, heavy, and extra heavy), and by their use (private passenger, service, or commercial vehicles).
Instead of separating bodily injury and property damage limits, there’s a combined single limit (CSL) that’s usually a bit higher. CSLs typically provide $500,000 or $1,000,000 coverage limits.
The bottom line: Commercial auto coverage may be required by law in California if you use a vehicle for business, regardless if you have a personal car that you use for work-related travel or if you have a dedicated “business vehicle.”
This is because motor vehicle accidents are one of the most expensive business insurance claims that happen. In fact, the average vehicle accident claim is a whopping $45,000! You don’t want to get caught paying for that damage out of pocket.
Let’s say you get California business insurance, but you think you need even more coverage. Or maybe there’s a gap in your policy that you need to cover. A commercial umbrella insurance policy can help. This type of coverage is designed to pay for expenses that go above your policy’s limit.
For example, let’s say you have $500,000 in coverage, but you’re hit with a $1 million claim. Your umbrella insurance may be able to kick in and help pay for some of the remaining $500,000 in damage. Typically with umbrella insurance, you need to pay the first part of the costs, called “self-insured retention (SIR).” You pay the first $10,000, and then your policy will pay the remainder.
You can usually add umbrella insurance to:
It’s just another way you can ensure that your business is fully protected.
Commercial Property: If you rent or own a building, it’s important to protect it — and what’s inside. Commercial property insurance can cover the costs of damage to your building, furniture, equipment, and more. Imagine if there were a fire, explosion, windstorm, or other major event. What would you do if you don’t have coverage? Could you rebuild your business?
Inland Marine: No, we’re not talking about boating insurance. Inland marine policies can cover the cost of property that’s damaged or lost while in transport, whether it’s your property or someone else’s. Think about the damage that could happen when products are shipped to your store, for example.
Boiler and Machinery: If a boiler or another type of machinery (e.g., heating, ventilation, and air conditioning system) breaks, you’ll want insurance. Boiler and machinery insurance can help cover replacing parts and repairing the damage. Imagine that one of your large machines used to produce goods breaks down. You could lose money on the machine itself and on the goods you’re not able to produce.
Crime: Let’s hope you’re never robbed or a victim of another crime. But it can happen to anyone. Crime insurance can help reimburse you if you face robbery, burglary, larceny, forgery, or embezzlement losses. Not only will you need to replace what was taken, but you also may have to hire a lawyer if you are involved with a criminal case.
Are you ready to learn more about California business insurance policies?
Check out Simply Business’s online quote tool to get free business insurance quotes from the nation’s leading insurers. In just 10 minutes or less, you can see what’s available in California and buy an affordable policy. If you have questions, call one of our licensed insurance agents at (855) 440-0081. They’re there to help.
Do you have employees? Even just one? Then you may need to purchase California workers compensation insurance. In the Golden State, it’s the law.
And there’s a good reason why. Workers compensation is designed to protect you and your employees if there’s an accident or injury that happens on the job. For example, in 2017, the average cost of a workers compensation claim from a motor vehicle injury was $78,466.
As you can see, you don’t want to get caught having to pay thousands of dollars in medical bills and for time off work if an employee gets injured.
Wondering what else can happen? The most expensive types of claims are caused by motor vehicle accidents, burns, falls, and even strains or cuts. Head, neck, and hip injuries require the most medical care and can cost employers the most in medical bills.
Fortunately, workers compensation can help cover the costs of:
Without workers compensation insurance, you may have to pay for those benefits out of your own pocket. Trust us, they can be incredibly expensive. The law is designed to protect you financially and ensure that your employees are cared for if they’re unable to work as a result of an accident.
Roofers take note: If you’re a roofer, you may need to get California workers compensation insurance too — whether you have employees or not. It can help protect you if you have a major fall or other accident.
Want to learn more? You can check out more details about California workers compensation insurance here.
Unfortunately, there isn’t a one-size-fits-all answer to this question. The cost of California business insurance can vary, depending on the type of coverage you purchase and your policy’s limit.
For example, adding umbrella coverage to a California general liability insurance policy can increase your premium. On the other hand, if you choose a lower limit with less coverage, you’ll pay less.
At Simply Business, we’re here to help you find a policy that protects your business and its employees — and is affordable as well. In fact, if you use our free quote tool, you may see general liability insurance premiums as low as $22.50/month*.
If you’re under a tight budget, it’s best to compare quotes from a few different insurers. If you use our online quote tool, you can see quotes from the nation’s top insurers in just 10 minutes or less. It’s easy to look at what coverage you can get and compare the costs of policies.
If you have questions or need advice, you can always talk to one of our licensed insurance agents. They can help you choose the policy that’s best for your business.
We just covered a ton of information, but don’t feel overwhelmed.
With Simply Business, it’s actually easy to get a solid California business insurance policy. Our online marketplace is designed to make shopping for business insurance hassle-free. If you’re a business owner, it’s exactly what you need.
Before you check out our online quote tool, here are a few quick tips that can help you find the right policy:
Write down a few of the biggest risks your business may face. For example, do you think accidents and injuries may be more likely to happen? Or accidental negligence by writing down an incorrect number?
Ask other business owners in your industry which business insurance they’ve purchased. Yes, this may be a good time to reach out to your competitors and keep things friendly.
Find out what you’re legally required to buy. In California, you’re likely required by law to carry workers compensation insurance, even if you have just one employee. And, if you’re a roofer, you need coverage if you work solo.
Use an online marketplace (like the one offered at Simply Business) to compare policies from a few different insurers. You want to get great coverage, at a great price, so it pays to shop around.
If you’re confused about what something means, don’t be afraid to reach out and ask. We have licensed insurance agents who are here to help explain policies to you. No question is a bad one.
Look at your business’s budget and decide if you’d like to pay annual or monthly premiums. There are pros and cons with both.
Request a Certificate of Insurance (COI) once you get your policy. This is proof that your business is insured — and you never know when you may need it.
Have more questions? Check out our quick guide on securing small business insurance the easy way.
Once you’ve signed off on your policy and set it into action, you can check “getting business insurance” off your to-do list.
Now, if you face an unexpected incident, you’re financially prepared to best recover from the setback and keep your business going as usual. It’s an outcome that’s well worth the price of getting business insurance ahead of time.
Next up, come back to Simply U for more helpful entrepreneurship advice. We cover everything from starting a new business to growing your business for years to come. Don’t miss out on all of our great content. There’s something new all the time.
*Monthly payment calculations (i) do not include initial premium down payment and (ii) may vary by state, insurance provider, and nature of your business. Averages based on January - December 2020 data of 10% of our total policies sold.
This content is intended to be used for informational purposes only. It is not intended to provide legal, tax, accounting, investment, or any other form of professional advice.
*Harborway Insurance policies are underwritten by Spinnaker Insurance Company and reinsured by Munich Re, an A+ (Superior) rated insurance carrier by AM Best. Harborway Insurance is a brand name of Harborway Insurance Agency, LLC, a licensed insurance producer in all 50 states and the District of Columbia. California license #6004217.