California Business Insurance

Business Insurance Basics for California Business Owners

(Find the right business insurance policy for you)

There are nearly 1.6 million businesses based in California as of 2019. Some are large multi-million dollar companies like Netflix and J.D. Power and Associates, while most are small privately owned businesses like Rasta Taco. To protect your investment in time and money, you should consider getting business insurance whether your company is a multinational firm with thousands of employees or a sole proprietorship with just a few employees. If you are on the fence about purchasing business insurance, compare commercial insurance quotes, weigh the costs against the many benefits, and then make an informed decision.

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Why Buy Commercial Insurance for Your Business?

If you take out a mortgage or a large loan to finance the startup of your company, your financial institution will likely require you to carry a business insurance policy. Otherwise, this coverage is generally optional, particularly for very small businesses.

Commercial insurance policies come in all sizes and customizations. Thus, they are suitable for both large multimillion dollar companies and small privately owned businesses. Whatever the size or nature of your business, if you are at risk for liability costs or excessive financial expenses as a result of a disaster, you should invest in business insurance to protect your company.

A business insurance policy can mean the difference between success and bankruptcy for your company. If you are still uncertain about whether you should get business insurance, it may benefit you to speak with a financial advisor or qualified independent insurance agent to learn more about how coverage can help you and to discover how affordable it can be.

California Business Statistics

  • In 2019, there were 1,600,000 businesses based in California, as follows:
    • 1,597,000 were businesses with 1 through 500 employees.
    • 3,000 were businesses with more than 500 employees.
    • Businesses with fewer than 500 employees are responsible for 14 million jobs in this state.

What Does Commercial Insurance Cover in California?

Business insurance policies offer several different coverage options. This enables business owners to purchase fully customized policies that meet their companies’ unique coverage needs. The main coverage categories are liability, property, and income coverage:

  • Liability coverage: There are many different types of liability coverage. Some are specific to certain industries, while others have more universal use. Liability coverage protects your company from financial loss due to lawsuits and includes coverage for your legal defense. The main liability coverage types purchased by business owners in California are the following:
    • General liability: This protects your company against claims due to third-party injuries or property damage that may occur at your place of business.
    • Professional liability: Also referred to as errors & omissions coverage, this option also includes medical malpractice insurance.
    • Product liability: If your company produces or sells defective products that cause injuries to others, this coverage can protect your business in the event of a lawsuit.
    • Liquor liability: If your business sells or serves alcoholic beverages, it could be liable for the actions of patrons who became intoxicated while in your establishment. Liquor liability insurance provides your business with coverage against such incidents.
    • Commercial vehicle liability: Insurance companies typically offer this coverage as a stand-alone policy, but some companies include this coverage as part of their business insurance policies.
    • For hired or non-owned vehicle coverage: If your employees use their personal vehicles to do work-related tasks, your business could be liable in the event of an accident. In such a case, this insurance coverage provides extra liability coverage to protect your business in the event of a lawsuit.
  • Property coverage: There are a number of ways that your business may suffer loss or damage to its materials, inventory, or other property. If a covered event such as theft, vandalism, fire, or storm damage is at fault for property loss, you may be able to receive compensation for your losses. Property coverage, also referred to as contents coverage, can cover the following:
    • The business structure, if you own the structure in which your business is housed
    • Merchandise, materials, supplies, and inventory
    • Computers and other electronics used in your place of business
    • Furniture, carpeting, and office décor
    • Signs, windows, and glass display cases (this coverage typically requires a special endorsement)
  • Continuation of income coverage: A major disaster such as a flood or a hurricane can force you to cease business operations temporarily while you complete repairs. This will typically result in a damaging loss of income for your business unless you have included continuation of income coverage as part of your business insurance policy. If the closure is the result of a covered event, this coverage will provide your business with sufficient income to enable to you to pay creditors and salaries until you are once again able to resume normal operations. 

Before you can receive accurate quotes for a policy, you will need to know which options you plan to purchase and how much coverage you wish to buy. Frequently, commercial insurance companies will offer industry-specific business insurance plans. For example, you may be able to find recording studio insurance or restaurant insurance. These policies will still be fully customizable, but a standard policy will come with all the coverage that a business in your industry would need.

You Must Purchase Flood and Earthquake Insurance Separately

It is important to keep in mind that nearly all business insurance policies exclude coverage for damage related to floods and earthquakes. For this reason, you will need to supplement your policy with separate flood insurance and earthquake insurance policies if you wish to have full coverage against all threats to your company’s financial well-being.

You can protect yourself against flood damage by purchasing up to $500,000 in structural coverage and $500,000 in contents coverage through the National Flood Insurance Program (NFIP). Earthquake insurance coverage may be available as a separate rider with your business insurance policy or as a stand-alone policy through one of the many participating providers in this state.

Learn More about Business Insurance in California

When putting together a suitable business insurance policy, be sure to consider all the possible risks that your California-based company may encounter. That way, you can properly shield it from any unnecessary financial losses. An independent insurance agent in the TrustedChoice.com® network can help. These agents can answer your insurance-related questions, offer advice about sufficient coverage amounts, and provide you with a selection of policies and quotes that you can review.

Contact a local agent to get more information and to start comparing commercial insurance quotes for your California business.

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TrustedChoice.com Article | Reviewed by Jeffrey Green

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