The difficulty of starting and maintaining a business is challenging, and you have to consider fraud, lawsuits, and other financial risks in order to stay afloat. These problems can take a toll on a business, and that’s why having business insurance is important. We’ve evaluated the best business insurance providers based on coverage, financial stability, customer satisfaction, and overall quality.Â
Coverwallet began its journey in New York City in 2015 operating under the
Aon Insurance banner. At Coverwallet, you can access everything you need to
keep your company well-protected at an unbeatable price.
With a 100-year history of insuring businesses, Hiscox is well-known across
America and globally. With more than 500,000 small business customers,
Hiscox is fully aware and trained in the unique risks a business can face.
Thimble provides business insurance that can be tailored to your business by
the year, month, day, or even the job. At Thimble, the process to getting
the right business insurance is simple, scalable, and flexible.
What are the requirements for business insurance in California?
The basic requirements for business insurance in California is almost the same as for any other state:
If you have employees, workers’ compensation will be required. Workers comp covers employees if they get hurt on the job. It’s not just for people who work in dangerous conditions. Anyone can be injured at work, even in an office. In most states, you only need workers comp if you have employees — not independent contractors — but California requires it even if you’re a one-person shop.
If you have a car or truck used for business purposes, commercial auto insurance is required. This protects your vehicles and any people or property they come into contact with.
In some cases, general liability insurance is required by law even if you don’t have employees or vehicles.
If you sell products to customers and they take them away from your business (as opposed to delivering them), product liability insurance is required. Most businesses that sell products need this coverage anyway, and there are very few exceptions.Â
What are the types of business insurance in California?
There are various types of policies and each covers a specific category.
General liability insurance
General liability insurance is one of the most common types of business insurance policies. This type of policy covers the cost of legal fees if someone brings a claim against your company due to damage or personal injury. For example, if someone trips over an extension cord running across your office floor and injures themselves, this type of policy can help cover the cost of a lawsuit. General liability insurance also covers damage to property if an accident occurs on your premises or if an employee damages property off-site as part of their job duties.
There are some exclusions in your general liability insurance policy. These include:
Employee injury or damage to an employee’s property
Intentional acts
Professional errors, such as a doctor making a mistake during surgery or an architect creating faulty blueprints for a building
Vehicle accidents, unless the vehicle is being used for business purposes, such as delivering goods to customers
Criminal activity
Product liability insurance
Product liability insurance is another type of business insurance policy designed to protect companies from lawsuits. For example, a customer suffers an injury when using one of your products or if a product causes damage to their property.
Like any other insurance policy, this one also comes with some exclusions:
If the product is manufactured, sold, or distributed by an entity that is not named in the policy.
If the product is being sold by a vendor who has not paid their premium.Â
When the product is not covered under the liability policy (which means it has to be listed as per the terms of the contract).
If the product is not fit for use, or it has been inappropriately used by a consumer.
Damage caused due to war, embargo, invasion, or terrorism.
Business interruption insurance
Business interruption insurance helps replace lost income if your business has to be shut down for a period of time.
Here are some of the more common exclusions found in business interruption insurance policies:
Earth Movement – This includes earthquakes, floods, tsunamis, landslides, and mudslides
War and Military Action – This includes acts of war, hostile or warlike acts by a military force
Governmental Action – This includes any type of government action such as confiscation, seizing, or nationalizing of property.
Commercial property insurance
Commercial property insurance covers the loss or damage of physical assets owned by your business, from inventory and equipment to buildings and furniture.
The most common exclusions in commercial property insurance include:
Floods
Earthquakes
Wear and tear
Pollution
Governmental action (such as demolition of a building to prevent spread of disease)
Professional liability insurance
Also called errors & omissions (E&O) insurance, professional liability insurance protects you if you’re sued for negligence in performing your professional duties. If a client alleges that you didn’t provide services they paid for, or that you made errors in their work, this coverage can help pay legal fees and any settlements or judgments against you.
General exclusions
However, there are exclusions to every policy. Below are some of the most common exclusions to look out for.
Prior acts
Many policies will not include coverage for prior acts before the effective date of your policy. This means if you had a problem with another company prior to starting your policy, it would not be covered by your insurance company.
Intentional misrepresentation
Many professional liability policies will not cover intentional misrepresentation or other intentional misconduct. For example, if you lie on an application or knowingly sell an inferior product, it may not be covered by your policy.
Criminal acts
If you commit a criminal act with the intent to harm another party’s property or reputation, it is unlikely that your insurance company will cover any damages from the incident.
How much does business insurance cost in California?
Here are some of the key factors that determine the cost of business insurance in California:
Industry: Certain industries are more susceptible to risks and therefore might be more expensive to insure than others. For example, a painting company is not likely to be charged the same amount for insurance as a manufacturing company because they’re exposed to different types of risks.
Value of your property: Some policies require you to state the value of your property in order to calculate your premium. For instance, if you run a small retail store and you have stock worth $50,000 while your competitor has stock worth $200,000, your competitor will likely pay higher premiums than you do because they have more at stake. In addition, if you run a tech start-up with expensive equipment and computers worth thousands of dollars, you might pay more for insurance than a stationery supply company that only has desks and computers worth hundreds of dollars.
Claims history: If you’ve made claims on previous policies, this could affect your premium as it suggests that you’re more likely to make claims in the future.
Previous insurance: If you’ve had previous policies canceled for non-payment of premium or for other reasons, this could affect your premium or whether you can get coverage at all. Some insurers may ask if any previous policies have been canceled within the last three years.
How to choose the best business insurance in California
Here are some tips on how to choose the best business insurance policy in California for your needs:
Industry: Consider what type of business you operate and what kind of liability risks you face — then determine which insurance products you need. For example, if you work in an at-risk industry such as construction, you’ll likely need workers’ compensation and general liability insurance policies in addition to other coverage options.
Coverage amount: Decide how much coverage you need — and what your budget will allow. Some types of business policies are required by law, and others are strongly recommended by industry groups or liability experts. If you can’t afford to buy all of the insurance you need, consider which policies are essential and others are just highly desirable.
Revenue amount: Reassess your business insurance regularly — at least once a year or when a major change occurs. As your business grows, it’s possible that your existing policies aren’t enough to provide adequate coverage.
