California Business Insurance: Guide To Business Liability Insurance In California

California Business Insurance: Guide To Business Liability Insurance In California

By In Uncategorized On April 22, 2020

The Golden State has the largest economy in the US, surpassing even nations like the UK in total GDP. This makes it ideal for entrepreneurs looking to strike it big and leave their mark on the world. Business owners should be aware of California’s regional laws and conditions that may put your business at risk if you don’t have adequate liability insurance. 

  • California business liability insurance will cover you in the event your business causes harm to other persons and it also allows you to fulfill license and contract obligations.

The small business is the backbone of the Californian economy and it employs nearly half the state’s private sector. If you want to insure your business to protect your employees and interest, the best way to do that is to purchase general liability insurance. 

California has high business regulations and liability insurance is mandatory for many small businesses to operate. As the most populous state in the US hosts the highest number of small businesses, you must meet the state’s minimum liability requirements if you want to operate as a business.

Small Business Insurance CA: Benefits

Businesses insurance in California is available in a popular “BOP” (Business Owner’s Policy) bundle which combines protections for business owners. This policy covers business property, equipment, medical expenses, and natural disasters. BOP is a popular all-around policy that covers entrepreneurs for all possible damages. 

Liability insurance is provided under BOP policies, however, it may not be as extensive as a General Liability Policy. If you operate a high-risk business you should consider taking out individual liability insurance. Every CA business is prone to liability. Here are some real-life examples of why your CA business needs BOP insurance:

  • Property Damage. The offices are burglarized and valuable business equipment and property are stolen. Property can include company vehicles, equipment, customer data, warehouse inventory, etc. Small business insurance CA can protect you from all possible damages.
  • Legal Responsibility. If a client enters a store and slips and breaks their leg, they can sue for medical expenses. Businesses must possess a basic liability coverage, which is included under every Business Insurance policy.
  • Contract Obligations. Many CA companies will refuse to work with you if you don’t have business insurance. Insurance is also required for rental properties if you want to expand your business by leasing a new space. The insurance coverage varies based on the square footage and profitability of the company.

Small Business Liability Insurance California

California is a difficult state to operate a business from a legal perspective. The courts in California have a reputation for handing out high liability lawsuits, which can bankrupt a company. While the state does not require commercial liability insurance, every business in the state has some form of liability insurance. 

Businesses with more than 2 employees should consider taking out a separate commercial insurance policy. The costs of liability insurance can be as little as $500 a year for small businesses. California State is not as business-friendly as other states – meaning one expects higher regulations, government restrictions, laws and other red tape associated with operating in the state. 

Why CA Businesses Must Be Insured

Fun Fact: California ranks among the top 5 most likely states where businesses risk a lawsuit. This is why your business has to be insured even beyond the minimum coverage necessary. Your business will be subject to state inspections and may have to comply with diversity quotas, fair employment practices, and anti-discrimination laws. This is why you must always be prepared or you may get your license revoked.

California has the highest rate of lawsuits in regards to employees suing employers – it’s not uncommon for an unsatisfied employee to file a frivolous lawsuit. The average business in California is entitled to basic defense payments by the state which amount to $100,000+ but the deductibles can surpass $35,000. 

This is why every small business should purchase at least $1M in commercial liability coverage to insure their business in the state of California. The premium cost for such coverage can be as little as $2000 a year. It will cover medical expenses, property damage, advertising injury, legal defenses and more.

California Business Liability Insurance: Protections

California business liability insurance (sometimes called “General Liability Insurance”) is a policy that protects California-based businesses from financial losses in the event they cause harm to a 3rd party. Even if your employee causes an accident, you will be held legally liable in the court of law. This is why the liability insurance policy covers you for all possible accidents. The following are the main benefits:

  • Medical Expenses. If your business causes bodily injury to a client or another employee at your establishment, this plan will cover their medical costs. For instance, if a client slips in your lobby or if an employee rear end’s a car and causes injury they will be covered.
  • Intellectual Property. In the high-tech industry in California, intellectual property and copyright infringement matters. If one of your employees steals a design without telling you, your company could be held liable.
  • Legal Defense. The costs to prepare lawsuits can amount to thousands of dollars to pay off the lawyers, filing fees and court duties. Even if you have proof you’re not at fault and you end up winning the case, you still need to prepare a legal defense that costs a lot of money. This policy covers your legal defense preparation.
  • Advertising Damages. If you cause damage to a competitor via advertising you could get sued for slander. Advertising campaigns that cause revenue loss make business owners legally liable.

California Business Liability Insurance: How Much Do You Need?

Small businesses in CA should take out $500K-1M in liability insurance coverage. If you own a medium-sized business with over 20 employees, consider taking out an insurance policy over $5M. This ‘expanded’ policy will provide additional coverage in case you end up with multiple lawsuits. 

The business can negotiate the total coverage and the maximum coverage per lawsuit. Example: A law firm with 20 employees may take out a policy for $10M with $1M limits per case. If your business interacts with the public it requires higher coverage.

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