California business insurance requirements

Before starting your business in California, make sure you're covered with the right types of business insurance. Use this guide to find out what's required and what's recommended.

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If you run a small business in California, there are a dozen things you have to worry about on a daily basis, whether it’s managing employees, marketing and growing the business, or serving your clients. To achieve success in a hyper-competitive business climate you need to be confident in the decisions you make. But it’s hard (if not impossible) to be self assured when you’re worried about legal liability and possible lawsuits.

This is why every California business owner needs to have business insurance, specifically general liability insurance. It protects you from the inherent liabilities of operating business. And when all it takes is one costly bodily injury claim to derail your business’ growth, it’s important to have safeguards in place.

But what is general liability insurance and what does it cover? Let’s review what general liability means as a business owner and the importance of having a general liability plan in place.

General liability insurance overview

General liability policies are one of the most important ways you can shield your business from the inherent risks of interacting with third parties (clients, customers, contractors, etc.). Common risks you are protected against include:

  • Bodily injury
  • Personal property damage
  • Personal and advertising injury

In a litigious world, all it takes is one lawsuit claiming you did negligent acts or had alleged violations to jeopardize your business’ good name and continued success. Put simply, the upfront cost of professional liability insurance is miniscule compared to the potential cost of a liability claim.

Who needs a general liability insurance policy?

Whatever your profession, if you regularly deal with clients face-to-face—whether at their home, their place of work, or your place of work—you need a liability coverage plan.

Common professions that can benefit from liability coverage include:

Events & entertainment

  • Musicians
  • Performers
  • Actors
  • Event staff (i.e. food caterers)
  • Event vendors
  • DJs

Freelancers & consultants

  • Web designers
  • Graphic designers
  • IT consultant
  • Freelance writers & editors


  • Creative directors
  • Photographers
  • Videographers
  • Crafters

Contractors & handymen

  • Carpenters
  • Electrical
  • Handymen
  • Masons
  • Plumbers


  • Landscaping
  • Lawn care & yard maintenance
  • Pesticide application
  • Tree trimming and pruning

Hair & beauty professionals

  • Barbers
  • Cosmetologists
  • Hair stylists
  • Nail artists

Fitness & personal trainers

  • Fitness instructor
  • Dance instructor
  • Personal trainer

Pet care professionals

  • Pet grooming
  • Pet sitting
  • Pet training
  • Dog walking

These are just a few professions that could greatly benefit from a California business insurance policy that includes general liability coverage. Keep in mind that if your business provides advice based services (i.e. consulting) you’ll also want professional liability insurance which protects against any errors or mistakes that cause your client financial loss.

What does a general liability insurance policy cover?

Broadly speaking, general liability in California (and nationwide) protects your business from damages or injuries it causes to third parties.

For example, let’s say you’re a contractor. In which case, a general liability policy is designed to protect you from situations like:

Bodily injury – Your jobsite has all kinds of potential hazards. Should a client slip and fall during a progress tour of construction, you could be held liable for their medical costs.

3rd-party property damage – You and your team work with heavy machinery. Should one of the heavy machines accidentally damage a neighbors’ property, this could result in a third-party property damage claim.

Defense costs – Despite taking all proper precautions, a client could easily get hurt while visiting your office. Should that occur, they could take you to court, asserting that you’re to blame for their injuries. If a claim is filed, you could be liable for all of the fees and settlements surrounding a court case (regardless of whether or not you’re actually guilty).

Medical coverage – A normal jobsite is filled with power tools. Should a client accidentally hurt themselves on a tool that’s lying around, you may be liable for their medical bills.

Personal & advertising Injury – You’re always trying to advertise your services. Should a competitor claim that your advertisement harmed their reputation, you could be liable for defamation.

General liability covers several critical facets of running your California small business, but it doesn’t cover everything. For example, it doesn’t cover workplace injuries sustained by your employees, nor does it cover business-owned vehicles (or the people operating them) if they’re involved in an accident.

What other types of insurance does a California business need?

In order to operate legally, almost every state in the U.S. mandates two different types of business insurance:

  1. Workers’ compensation
  2. Commercial auto insurance

Workers’ compensation

If you have at least one employee in California, the state requires that your business takes out workers’ compensation insurance. This type of policy protects both the business and the employee if a workplace injury occurs.

For instance, workers’ compensation covers:

  • Medical bills and treatment
  • Rehab
  • Disability
  • Ongoing care costs
  • Lost wages
  • Funeral expenses

Commercial auto insurance policy

Does your business own vehicles and use them for commercial purposes? If so, you’re legally required to have commercial auto coverage. Typically, a commercial auto insurance policy provides coverage for:

  • Collisions
  • Comprehensive coverage
  • Loading and unloading (equipment)
  • Medical payments
  • Uninsured motorists

California law requires that your business carries at least:

  • Bodily injury liability – $15,000 per person and $30,000 per accident
  • Property damage liability – $5,000 per accident
  • Uninsured motorist bodily injury coverage – $15,000 per person and $30,000 per accident.

In addition, while it may not be legally required, if you or your employees use a personal vehicle for work purposes, you should consider a hired and non-owned auto insurance coverage policy. Your personal auto insurance likely won’t cover work-related accidents.

California business insurance that works when you do

A general liability policy protects California businesses from third-party claims of property damage, bodily injury, personal injury, and advertising injury. As such, it’s often recommended that every California business purchases a policy.

Yet, sometimes the cost of liability coverage intimidates small business owners. They have to pay for year-round coverage although they’re operating on a project-to-project basis. They need insurance for when they’re on the job, not when they’re off.

That’s where Thimble comes in. We’ve revolutionized insurance by allowing you to pay for policies by the hour, day, or month, so you’re never spending a dime when you don’t need to.

It’s insurance on-the-hour for businesses on-the-go.

With Thimble, getting a general liability insurance policy takes less than 60 seconds. Enter some quick details about your business, we’ll generate a free quote, and you can purchase on the spot. Once that’s done, a Certificate of Insurance (COI) will be waiting for you in your email inbox.

If you need professional liability insurance in California, you can get it instantly.

The reality is that California does not mandate small businesses to take out general liability insurance. Unfortunately, life does. No matter what type of business you run, ensuring you’re protected from risk is mutually exclusive to investing in the future of your company.

With careful foresight, an understanding of insurance, and integrating the right safeguards, you set your business up to succeed. For that, we can help.

Do you really need general liability insurance in California?

The reality is that California does not mandate small businesses to take out general liability insurance. Unfortunately, life does. No matter what type of business you run, ensuring you’re protected from risk is mutually exclusive to investing in the future of your company.

With careful foresight, an understanding of insurance, and integrating the right safeguards, you set your business up to succeed. For that, we can help.

Our editorial content is intended for informational purposes only and is not written by a licensed insurance agent. Terms and conditions for rate and coverage may vary by class of business and state.

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