Small Business Insurance in California
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California Small Businesses
California has millions of small businesses, and each faces different insurance requirements depending on the industry, workforce size, and type of work involved. While some policies are mandated by state law, others may be required by the commercial leases and client contracts you sign.
The state is home to some of the most diverse small businesses in the country, spanning tech, construction, hospitality, and agriculture. Each industry carries different risks, and insurance requirements can vary, based on where you operate and the risks you face.
Whether you’ve owned your small business in California for a while or you’re just getting started, we can help you learn how to get the coverage you need.
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Is Business Insurance Required in California?
California requires workers’ compensation insurance for any business with at least one employee, and certain licensed professionals must carry professional liability coverage. The state also has minimum liability insurance requirements for all private and commercial vehicles, which commercial auto insurance may cover.
Other types of commercial insurance in California, such as general liability insurance, might not be mandated by the state, depending on the type of business you own. However, many commercial leases, client contracts, and licensing boards require proof of coverage before you start work.
What Are the Key Insurance Policies for California Businesses?
California requires some types of small business insurance by law, and others may be needed, depending on your contracts and where you operate. Here’s what to know about each policy.
Workers’ Compensation Insurance in California
California law requires workers’ compensation insurance for any business with at least one employee. In some instances, specific contractors must carry coverage even if they don’t have employees.
Workers’ compensation can help cover medical bills, lost wages, retraining costs, return-to-work costs, and death benefits if an employee is injured or becomes ill on the job. The National Safety Council estimates that a typical work-related injury with medical care can cost tens of thousands of dollars when factoring in medical bills, lost wages, and other expenses.
According to updated California’s Contractors State Licensing Board (CSLB) rules, contractors and businesses in California that carry the following licenses generally must carry workers’ compensation insurance, even if they don’t have employees:
- Roofing contractors
- Tree service workers
- Concrete contractors
- HVAC contractors
- Asbestos abatement contractors
General Liability Insurance in California
California might not require general liability insurance by state law, depending on your business, but many commercial leases, client contracts, and licensing boards require proof of GL coverage before you can operate.
General liability insurance (also known as GL insurance) protects against common risks to your business, such as third-party accidents, damage to third-party property, caused by you or your work, bodily injury, and reputational harm to others.
Customer injury or damage can cost a business an average of $45,000 or more nationwide. If you have California general liability insurance and a customer gets injured or there’s property damage, you must pay up to your policy’s deductible, and the policy covers claims up to the policy limits.
Business Owner’s Policy in California
A business owner’s policy (BOP) bundles general liability and commercial property coverage into a single policy. It’s not required in the state, but it can be a practical way for small business owners in California to protect their assets. If a fire, theft, or covered disaster damages your property, a BOP can help cover the cost of repairs or replacement.
Professional Liability Insurance in California
Although professional liability is nota state-level statutory requirement, certain licensed professionals in California may be required by their licensing boards, firms, or clients to carry professional liability coverage. For example, many accountants, photographers, real estate agents, and tax preparation specialists are required by their firms or contracts to carry this insurance coverage. Even if your profession doesn’t require it by law, many client contracts will require proof of coverage before you can begin working.
Professional liability insurance can help protect you financially against costly claims related to your errors, omissions, or negligence in professional services. It can help protect you if you’re accused of negligence, even if it’s not your fault.
Commercial Auto Insurance in California
If you use a vehicle for business purposes in California, you may need commercial auto insurance that meets the state’s minimum liability insurance requirements.
Simply Business doesn’t currently offer commercial auto insurance, but our licensed insurance agents can help you find providers that do.
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How Much Does Business Insurance Cost in California?
Here are some median monthly costs1 for common small business insurance policies in California:
Median Monthly Costs1
| General liability | $35 |
| Professional liability | $33 |
| Workers’ compensation | $108 |
| Business owner’s policy | $48 |
1Data from Simply Business customers located in CA, who purchased at least one or a combination of BOP, general liability, professional liability, and workers’ compensation policies from July 1, 2025 to December 31, 2025. The median costs shown are for illustrative purposes only; actual premiums vary by state, coverage limits, and individual business risk.
The cost of business insurance in California depends on several factors, and pricing can vary significantly from one business to the next.
How does your industry affect insurance costs?
Your industry and the specific risks associated with your daily work heavily influence your insurance premium. Jobs that are higher-risk, such as construction or roofing, often have higher insurance needs and costs than low-risk desk jobs, such as consulting or accounting.
Does the number of employees change my premium?
Yes, your business insurance might cost more if you have a team of employees compared to operating as a sole proprietor. Businesses with more employees and higher payroll typically pay more for workers’ compensation coverage.
How does location impact insurance rates?
Where you operate your business in California does matters. Operating in a major metro area such as Los Angeles or San Francisco can increase your premium compared to a smaller city or rural area.
Do claims history matter?
Yes. If your business has filed claims in the past, insurers consider this higher risk and may charge a higher rate.
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Who Needs California Small Business Insurance?
State-Specific Risks for Businesses in California
California businesses face risks unique to the state, and the right insurance coverage can help protect against them.
Wildfires
California experiences some of the most destructive wildfires in the country. In 2025, insurers paid over $22 billion on 42,000 claims across homes and businesses. Businesses located in or near wildfire-prone areas may face property damage, forced closures, and inventory losses.
Commercial property insurance can help cover the cost of rebuilding, replacing equipment, and lost income during a closure.
Best California Business Insurance for Your Industry
California businesses face risks unique to the state, and the right insurance coverage can help protect against them.
Construction Insurance in California
Construction is one of the highest-risk industries for insurance in California. Most general contractors carry general liability insurance to cover on-site injuries and property damage, and workers’ compensation is required for any contractor with employees.
However, most California contractors think they’re “fully covered” with general liability and workers’ comp insurance coverage. They usually aren’t.
In addition to professional liability and commercial auto coverage, listed above, contractors should consider adding on inland marine insurance for their tools and equipment. Inland marine insurance, also known as “tools and equipment coverage”, can help cover costs if your business property or equipment is damaged or stolen. That means you might not have to pay out-of-pocket to repair or replace your property and can get back to work quickly.
Restaurant Insurance in California
Restaurants face a unique set of risks, from customer injuries to foodborne illness claims. General liability and workers’ compensation are the foundation, but restaurants that serve alcohol have an additional layer of exposure.
In California, you need a license from the Department of Alcoholic Beverage Control (ABC) to serve alcohol. Liquor liability insurance can help protect your business if a customer causes harm to themselves or others after being served alcohol in your establishment.
This coverage is typically available to businesses that sell or serve alcohol under a valid liquor license, and some insurers only add it when you confirm that you have an active license and operate in an eligible state.
Tech Start-up Insurance in California
Tech companies and start-ups in California face risks that are less about physical injuries and more about data breaches, intellectual property theft, and professional errors. California’s Consumer Privacy Act (CCPA) is one of the most strict data privacy laws in the country.
Professional liability (E&O) insurance can help cover claims related to software failures, missed deadlines, or consulting advice that leads to a client’s financial loss. Cyber liability insurance can help cover the cost of a data breach, including notification requirements, legal fees, and regulatory fines.
How to Get a Certificate of Insurance in California
A Certificate of Insurance (COI) is proof that your business carries active coverage, and you may need one more often than you think you need. Landlords, clients, and general contractors in California frequently require a COI before you can sign a lease, begin a project, or get hired as a subcontractor.
With Simply Business, you can request a COI directly through your online account when your policy is active. If you need to add an additional insured to your certificate, you can do that online as well.
FAQs About California Business Insurance
What insurance is required for small businesses in California?
California requires workers’ compensation insurance for any business with at least one employee. Certain licensed professionals, including accountants and real estate agents, are often required to carry professional liability insurance. General liability insurance isn’t typically required by state law, but many leases, contracts, and licensing boards require proof of coverage.
How much is workers’ compensation in California?
The median monthly cost for workers’ compensation in California is $108, according to purchases by our customers from July 1, 2025 and December 31, 2025. Workers’ compensation costs in California vary, based on your industry classification, number of employees, and payroll. Higher-risk industries like construction and roofing typically pay more than lower-risk businesses such as consulting or IT services.
Do sole proprietors need insurance in California?
California generally doesn’t require sole proprietors without employees to carry workers’ compensation insurance, with some exceptions, such as roofing. General liability and professional liability insurance aren’t required by state law for sole proprietors either, but many client contracts and commercial leases will require proof of coverage before you can begin working.
Does California require general liability insurance?
General liability insurance generally isn’t required by California state law. But it’s one of the most commonly purchased policies, since many clients, landlords, and general contractors require it as a condition of doing business. It’s always best to check the specific requirements related to your business.
Can I manage my policy and get proof of coverage online?
Yes, you can manage your insurance policy 24/7 via your online account. With Simply Business, you can get a quote, purchase your policy, and download your digital certificates of insurance within minutes.
What information do I need to get an online quote?
To compare small business insurance quotes online, you will need to first answer a few questions about your business including, your industry, estimated annual revenue, number of employees, and the physical address of your business operations. You’ll then be able to compare quotes side-by-side from top-rated insurers and customize your coverage.
Who regulates business insurance in California?
The California Department of Insurance (CDI) regulates the insurance industry in the state. The CDI oversees insurance companies, licenses agents and brokers, and handles consumer complaints. You can verify an insurer or agent’s license through the CDI website.
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Additional Information and State Resources for California Small Business Owners
California Department of Insurance
State of California: Department of Industrial Relations
California Department of Alcoholic Beverage Control
California Department of Consumer Affairs: Contractor’s State License Board
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*The displayed price for each product is a monthly estimate calculated from the 10th percentile of relevant policies sold by Simply Business (e.g., General Liability data is used for General Liability estimates). This estimate uses data from relevant policy sales between July–December 2025. Final price and payment terms, which may include an initial down payment, are subject to change based on your state, selected insurance provider, and specific business details.