General Liability Insurance for California Businesses

Standard policies come in three parts. Coverage A handles bodily injury and property damage. Coverage B handles personal and advertising injury, such as libel, slander, false arrest or using someone's copyrighted material in an ad. Coverage C pays small medical bills for people hurt on your premises, with no lawsuit and no finding of fault required.

The California Department of Insurance (opens in a new tab) breaks the coverage into three working parts: premises liability for your location and operations, products liability for goods you make, sell or distribute, and completed operations for work you've finished. That last part matters to contractors, since problems can surface well after the final invoice.

• Employee injuries: that's workers' compensation, which California requires from your first employee.
• Vehicles: accidents in cars, vans and trucks belong on commercial auto insurance.
• Your own property: tools, equipment, inventory and buildings need property coverage, often through a business owner's policy.
• Professional mistakes: financial harm from advice or design errors needs professional liability.
• Your own work: the policy isn't there to pay for redoing faulty work. In the CSLB's words, general liability "is not intended to cover the work the contractor performs."
• Liquor, pollution and intentional harm: alcohol sellers need liquor liability, and pollution and deliberate injury are excluded in most forms.
• Employment practices: claims of harassment, discrimination or wrongful firing go to a separate employment practices policy.

Contractors have specific rules. The Contractors State License Board (opens in a new tab) requires contractors licensed as an LLC to carry liability insurance with a cumulative limit of at least $1 million when five or fewer people are listed on the license, plus $100,000 for each additional person, up to $5 million. Contractors building a single-family home for an owner who plans to live in it must also disclose in writing whether they carry commercial general liability.

For everyone else, the requirement shows up in paperwork: a commercial lease, a general contractor's subcontract, a property manager's vendor agreement or a city permit. Our contractor insurance page covers the rest of the CSLB picture.

The standard certificate form, often called an ACORD 25, lists your policies, policy numbers, dates and limits. Under California Insurance Code section 384, a certificate must state that it isn't an insurance policy and doesn't amend, extend or alter the coverage. That's why careful landlords and contractors want the endorsement, not just the certificate.

Contract wording you may run into

• Additional insured: the client or landlord is covered under your policy for claims arising from your work or your use of their space.
• Primary and non-contributory: your policy responds first and doesn't ask their insurer to share the loss.
• Waiver of subrogation: your insurer gives up its right to recover what it paid from them.
• Notice of cancellation: they want to hear about it if your policy is canceled.

Cities ask too. Santa Clarita's film office, for one, requires at least $1 million in general liability and an endorsement naming the City before it issues a permit; see business insurance in Santa Clarita.

NEXT customers can generate certificates themselves, additional insureds included, from NEXT's app or website. With other carriers, send us the contract language and we'll request the endorsement and certificate together.

When a contract asks for more than your policy carries, an umbrella or excess liability policy can stack extra limits on top.

• Business class: what you actually do, described accurately. The wrong class can mean a surprise at audit or a coverage dispute.
• Exposure: your projected revenue or payroll. Many policies are audited after the year ends and adjusted to the real numbers.
• Subcontractors: whether the subs you hire carry their own insurance.
• Claims history, limits and deductible.

We're at 25060 Avenue Stanford in Valencia and work with businesses across California by phone, email and e-signature. Reach us on a weekday between 9 and 4 and one of us usually calls back within the hour.