Business Insurance for California Small Businesses

The right mix comes down to three questions: what you do, who works for you, and what you own. A bookkeeper in a spare bedroom and a remodeler with two trucks and four employees need very different policies.

The penalties are serious. According to the Department of Industrial Relations (opens in a new tab), operating without coverage is a misdemeanor, the state can issue a stop order barring the use of employee labor until you buy a policy, and penalties start at $1,500 per employee, plus up to $100,000 more after an uninsured injury claim.

Owners are treated differently. A sole proprietor with no employees generally doesn't have to cover themselves, while corporate officers must be included unless they own the whole corporation and opt out. Roofers, the DIR notes, need coverage even with no employees.

See workers' compensation insurance for how policies are priced, and contractor insurance for the extra CSLB rules licensed trades follow.

The California Department of Insurance describes a BOP as a package for small "main street" businesses, such as hardware stores, barbershops and accounting offices, that combines property, general liability and business interruption coverage. Carriers write BOPs under strict rules, such as a maximum square footage, so bigger or riskier operations usually buy separate policies.

Read what a business owners policy covers for the details, including the gaps it leaves.

A certificate is proof, not coverage. California Insurance Code section 384 requires certificates to say they are not an insurance policy and don't change the coverage of the policies they list. So when a lease says the landlord must be an additional insured, a certificate alone won't do it: the policy itself needs an endorsement that adds them.

What to send us when someone asks for a certificate

• The legal name and address of whoever is asking (the certificate holder)
• Whether they must be an additional insured, and their contract wording
• Any special language, such as "primary and non-contributory" or a waiver of subrogation
• Where to send it, and by when

NEXT policyholders can download their own certificates, including ones listing an additional insured, from NEXT's app or website. For other carriers, email us the request and we'll get it issued. Our general liability page explains additional insured endorsements.

NEXT is a digital carrier built for small businesses, so many of its policies can be quoted and issued quickly. Travelers sells a long list of business products, from BOPs to cyber, and California-based Mercury writes BOPs and business auto here. Each decides on its own whether to accept a business, so we usually quote more than one.

Professional liability, also called errors and omissions, answers a different kind of claim: a client says your work or advice cost them money. Picture a bookkeeper who misses a filing deadline, or a designer whose plans contain an expensive mistake. General liability is built for bodily injury and damaged property, so it usually won't respond.

Cyber insurance pays for the fallout of a hack or breach. California Civil Code section 1798.82 requires a business to notify California residents whose unencrypted personal information was taken, and to send a sample notice to the Attorney General (opens in a new tab) when a single breach reaches more than 500 residents. Some carriers add limited breach coverage to a BOP; others sell cyber as its own policy.

• Type of business: a roofer and an accountant are rated very differently for the same limits.
• Size: liability is often rated on revenue or payroll, and workers' comp on payroll by job classification.
• Location and building: construction, age, fire protection and, in parts of California, wildfire exposure.
• Vehicles and drivers: what the business drives and who's behind the wheel.
• Claims history: past claims usually push the price up.
• Limits and deductibles: higher limits cost more, and a higher deductible can lower the premium.

Requests that reach us on weekdays between 9 and 4 usually get a call back within the hour; later ones get a call the next business morning.

Valley owners can stop by our office in the Valencia Industrial Center (please call first); our Santa Clarita business insurance page covers local film permits and County licenses. We also insure businesses in Palmdale and Lancaster, Ventura, Bakersfield and Orange County. We're licensed in California only.