When purchasing small business insurance in California, you should choose coverage that fits your industry and the size of your business. Common types of small business insurance include general liability insurance, professional liability insurance, and workers’ compensation insurance.
General Liability Insurance in California
General liability insurance protects your small business from claims arising from accidental injury to others or damage to others’ property. It also covers claims for advertising damage, copyright infringement, and damage to reputation. General liability insurance pays for legal expenses (such as attorney fees), judgments, and settlements.
Professional liability insurance in California
Professional liability insurance will cover your legal costs for claims arising from errors in your professional services, even if the claim is unfounded. For example, if a client claims that 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 called errors and omissions insurance (E&O insurance).
Workers’ Compensation Insurance in California
Workers’ compensation insurance covers your employees’ medical bills, lost wages, and other expenses if they become injured or sick while performing job-related duties. Workers’ compensation insurance is required in California if your business has one or more employees. Not having workers’ compensation insurance is a crime in California.
Other Types of Business Insurance in California
Every small business faces its own unique risks, which is why you’ll likely need additional types of small business insurance to cover industry-specific risks. For example, you’ll want insurance for your company property, such as your inventory and equipment.
A business owners policy (BOP) can help you build a solid foundation. A BOP bundles general liability insurance with commercial property and business income insurance. Purchasing a BOP is usually less expensive than purchasing each type of insurance separately. It covers:
- Commercial property insurance: This insures your company’s physical assets (such as buildings and office equipment) against theft, fire and other damage. This type of insurance is also known as business property insurance.
- Business interruption insurance: If you are unable to open your small business due to a problem covered by your policy (such as a fire), business interruption insurance will cover your loss of income.
You can add additional types of coverage to your BOP if needed. Here are some to consider:
- Construction insurance process: This type of insurance covers the building and materials during a construction project. It is also known as construction performance insurance.
- Commercial Auto Insurance: This type of insurance covers the vehicles you use for work. Your personal auto insurance does not cover vehicles you use for business purposes. You need commercial auto insurance for all company vehicles, such as delivery vans and work trucks.
- Commercial liability 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 insurance but are facing a $1.25 million lawsuit, a commercial liability insurance policy can cover the remaining $250,000.
- Cyber liability insurance: If your business experiences a network breach or your data is compromised, cyber liability insurance can cover the associated costs, including legal fees, data recovery costs, and credit monitoring services.
- Directors & Officers (D&O) liability insurance: This insurance pays when your company’s decision makers make a decision that leads to litigation. Executive and officer liability insurance covers legal fees, settlements, and other costs associated with these litigations.
- Transport insurance for inland vessels: If you transport goods or materials over land by rail or vehicle, inland waterway transport insurance covers the property in the event of loss, damage or theft.
- Product liability insurance: This insurance covers lawsuits related to damages caused by a product you sell, manufacture or distribute. Product liability insurance covers costs such as legal fees or damages.
- Insurance against technical errors and omissions: This type of insurance covers legal fees and other costs if a customer makes a claim against your small technology business. Professionals who need insurance against technical errors and omissions include IT consultants, web developers and computer specialists.
