California Business Insurance: What You Need to Know

California Business Insurance: What You Need to Know

California Business Insurance: What You Need to Know
Charles Munyi
Jun 1, 2022
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Unexpected events happen. 

An employee working on a client’s lawn can break a window, making you liable for property damage. A defective electric blanket you manufacture or sell might injure a customer. 

Such cases might lead to lawsuits against your business. California business insurance can protect your company against liability claims. Let’s explore the types of insurance available.

What is California Business Insurance?

California business insurance is a comprehensive range of insurance solutions that cover the unanticipated costs of running your business. You pay a premium for protection when accidents or mistakes happen. Business insurance protects your company from financial losses, like lawsuits, theft, loss of income, injury, and property damage.

Unexpected losses can strain your business, but if your company has the appropriate insurance, it can overcome these unexpected incidents with minimal financial losses. Insurance may protect against property damage, employee injury, theft, professional mistakes, and auto accidents that drain your business's finances.


Carrying business insurance also helps with state compliance. California law requires some specific types of insurance. For instance, if you have employees, you must have workers' compensation insurance.

Who Needs General Liability Insurance?

Most businesses need general liability insurance. Business owners are liable for third-party claims related to property damage and personal injury. Contractors are responsible for property damage on client sites and bodily harm to third parties during operations. Contractors may also be found liable for faulty workmanship or construction defects. Manufacturers may be liable for damage caused by defective products.

Owners must protect their business assets from accidents, thefts, and natural calamities to prepare for third-party risks. Moreover, businesses need to help their employees during workplace accidents, including paying for medical bills, lost wages, and death benefits.

General liability insurance covers three broad categories of risks:

  • Premises Liability: It covers property damage and third-party injury during business activities or due to a condition on your premises.
  • Personal & Advertising Injury: Protects against libel, slander employee misconduct.
  • Product Liability: If you manufacture or distribute various products, defects in these products might cause property damage or personal harm. General liability insurance may pay for product liability claims.
  • Completed Operations: Contractors also need general liability insurance to compensate for injury and property damage due to flawed work.

Types of California Business Insurance

Beyond general liability insurance, your business may need other types of insurance to cover risks, such as auto accidents and employee accidents. California business insurance can offer these other coverages:

Commercial Property Insurance

This insurance protects your owned or rented business premises from windstorms, fires, and explosions. It helps pay for the costs of repairs to buildings and destroyed tools.

Business Income Insurance

Recovering from a disaster can be difficult, especially for small businesses. Damaged property and assets mean operations may cease. Insurance may compensate for the lost income in property damage cases due to fire and windstorms.

Commercial Auto Insurance

California business owners with company-owned vehicles are required to carry commercial automobile insurance, and it covers any damage to the car and liability arising from an accident. 

Workers’ Compensation Insurance

California Labor Code Section 3700 requires an employer to provide workers' compensation insurance from a licensed insurer, and it pays for employee injury that happens during work operations.

Inland Marine

This insurance covers destruction or damage to business property under your custody or care while in transportation. For instance, you can cover materials and tools you are transporting to a job site. Inland marine insurance covers property and document damage in transit due to fires, theft, windstorms, collision, derailment, vehicle overturning, and bridge collapse.

California Business Insurance Coverage and Requirements

Getting the right coverage helps your business face minimal financial disruption. Start by assessing your risk exposure to determine the proper coverage. California business insurance can cover the following:

  • Damage to business buildings, tools, and premises: Damage to business premises and property due to theft, vandalism, fires, and storms is covered. For instance, if strong winds blow off your roof during a storm, property insurance may cover the replacement.
  • Lost or damaged equipment in transit: Inland marine insurance covers lost equipment or damaged tools during transportation from one location to another.
  • Third-party property damage and injury: In the course of operations, you might damage the client's property or injure a third party. For example, falling debris injures a passerby.
  • Auto Accidents: If your company car causes an accident, commercial auto insurance will pay to repair or replace the other vehicle. It may also cover medical expenses and death benefits for the drivers or passengers involved.
  • Employee Injuries: Workers' compensation insurance pays for work-related injury expenses such as medical bills and lost wages.


Despite general liability insurance being comprehensive, it excludes intentional injury, pollution, and war from coverage. Also, earthquakes and floods have no loss protection in open perils coverage in property insurance.  

How Much Does California Business Insurance Cost?

The insurance costs for your business in California depend on your business's size, risk exposure, industry, and location. The sector is the primary determinant of insurance costs. For example, contractors are at higher risk than IT security professionals due to the physical nature of the work and might involve using power tools on a client’s property.

The deductible is also a key factor in determining premiums. The higher the deductible, the lower your monthly premium will be.

The average cost for insuring a small business in California is $30 to $40 per month. This amount increases depending on the property value and the number of staff. Expansive premises have a higher risk of accidents.

Most policies have two limits: the aggregate and per-occurrence limit. The aggregate limit specifies the maximum payout in a single year, while the per occurrence limit is the maximum payout on a single claim.

For general liability insurance on office space, the per-occurrence limit is $1 million, and the aggregate limit is $2 million. On the other hand, most business auto policies use a combined single limit range of $500,000 to $1,000,000.

Get California Business Insurance

Ensure your business in the Golden State is protected. Contact your insurance agent and ask them to get you a Pathpoint quote today.

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