If you’re shopping for small business insurance in California, you’ll want to choose coverage based on your industry and the size of your business. The common types of small business insurance include general liability insurance, professional liability insurance and workers’ compensation insurance.
California General Liability Insurance
General liability insurance covers your small business against claims of accidental injuries to others or damage to someone else’s property. It also covers advertising injury, copyright infringement and reputational harm claims. General liability insurance pays for legal costs (such as attorney fees), judgments and settlements.
California Professional Liability Insurance
Professional liability insurance pays your legal costs for claims of mistakes in your professional services, even if the claim has no merit. For example, if a client claims your tax service caused them financial harm, your professional liability insurance will cover your legal costs, judgments and settlements.
This type of insurance is also known as errors and omissions (E&O) insurance.
California Workers Compensation Insurance
Workers’ compensation insurance covers your employees’ medical bills, lost wages, and other expenses if they get injured or ill due to work-related tasks. Workers compensation insurance in California is required if your business has one or more employees. Failure to have workers compensation insurance in California is a criminal offense.
Other Types of California Business Insurance
Every small business deals with its own set of unique risks. That’s why you’ll likely need additional types of small business insurance to cover industry-specific risks. For example, you’ll want coverage for your business property, such as your inventory and equipment.
Starting with a business owners policy (BOP) can help you establish a solid foundation. A BOP bundles general liability insurance with commercial property and business income insurance. Buying a BOP is usually cheaper than buying each coverage type separately. Here’s what they cover:
- Commercial property insurance: This covers your business’s physical property (such as your building and office equipment) against theft, fire and other damages. This type of insurance is also known as business property insurance.
- Business interruption insurance: If you cannot open your small business due to a problem covered by your policy (like a fire), business interruption insurance covers your lost income.
You can add more coverage types to your BOP as needed. Here are some to consider:
- Course of construction insurance: This type of insurance covers the building and materials during a construction project. It’s also known as builder’s risk insurance.
- Commercial auto insurance: This type of insurance covers the vehicles you use for work. Your personal auto insurance policy won’t cover vehicles used for business purposes. You’ll need commercial auto insurance to cover any company vehicles, such as delivery vans and work trucks.
- Commercial umbrella insurance: This type of insurance can cover the shortfall when your liability insurance reaches its coverage limits. For example, if you have $1 million in general liability coverage but face a $1.25 million lawsuit, commercial umbrella insurance can cover the remaining $250,000.
- Cyber liability insurance: If your company faces a network breach or your data is compromised, cyber liability coverage can pay for related costs, including legal fees, data recovery costs and credit monitoring services.
- Directors and officers (D&0) liability insurance: This insurance pays out if your company’s decision-makers make a choice that leads to a lawsuit. Directors and officers liability insurance covers legal fees, settlements and other costs related to these lawsuits.
- Inland marine insurance: If you transport goods or materials on land via train or a vehicle, inland marine insurance covers property if it gets lost, damaged or stolen.
- Product liability insurance: This insurance covers lawsuits relating to damages caused by a product you sell, manufacture or distribute. Product liability insurance covers costs such as legal fees or compensation for damages.
- Technology errors and omissions insurance: This type of insurance covers legal fees and other costs if a customer makes a claim against your small tech business. Professionals who need technology errors and omissions insurance include IT consultants, web developers and computer specialists.
