Running a business in California is typically more expensive than in most states. As a result, you also need to pay more to insure your business. The state requires companies with at least one employee to carry workers’ compensation insurance. You’ll also need commercial auto insurance if your company owns vehicles. Here’s a look at different types of insurance to consider for your business in California.
Commercial Auto Insurance for Your Business Vehicles
Every business in California has its own insurance needs. Mostly, this is based on the company’s size, activities, and several other factors. If you are a sole entrepreneur using your own vehicle, you may not need any coverage for your vehicle. Yet, it’s still wise to carry specific insurance that relates to your industry.
For a commercial vehicle, you’ll need to carry commercial auto insurance with the following coverage:
- $5,000 property damage liability per accident
- $15,000 bodily injury or death liability per person
- $30,000 bodily injury or death liability to more than one person
Additionally, personal vehicles used for work-related purposes can be covered by hired and non-owned auto insurance, although this is not a requirement. You can add this coverage to general liability insurance or a business owner’s policy (BOP).
Liability Insurance in CA
The majority of the small businesses in California can benefit from general liability insurance. This policy covers typical risks such as customer injuries. It is necessary to have this coverage, also referred to as “commercial general liability” (CGL), because no injuries are predictable even in the safest places. For example, if someone slips on your floor and ends up in the hospital, having sufficient liability limits in place will help avoid paying their medical bills from your pocket.
Liability insurance also covers legal costs if a customer takes you to court. People can sue you or your company for various reasons including, libel or slander. You might also face a lawsuit from a competitor who claims you have infringed upon their work. Even if you think the claims have no merit, you will still have to hire and pay an attorney, so it’s best to have liability insurance to cover it.
Your company needs liability insurance if you rent or own commercial space. Your landowner may even require such insurance. The most important reason to get this coverage is that it assures you of financial stability in the event of unforeseen liabilities.
Benefits of a Business Owner’s Policy (BOP)
A business owner’s policy bundles general liability and commercial property insurance together. Usually, bundling leads to lower costs than if you bought the policies separately. For companies such as retail stores, BOP is an effective coverage solution. In some industries, clients will only agree to do business with entities who have liability coverage, making BOP attractive for any company that works directly with the public.
BOP protects the value of your establishment if it burns down in a fire. In addition, it offers protection if your business property gets burglarized and expensive items or inventory is lost.
Why Workers’ Compensation Insurance Is Required
Unless you have no employees, your company will have to invest in some form of workers’ comp plan in California. Not only will you be able to avoid state government fines, but this plan will also pay for medical bills and lost income if an employee is injured or becomes ill at your workplace. Workers’ comp also includes death benefits for family members of the employee. This way, you won’t have to worry about paying for a costly lawsuit as well.
You will need to have this insurance in place the very moment you hire your first employee. It is much more expensive for any business to lack workers’ comp than to have it, considering how high medical and legal bills can get in the event of an unfortunate accident. Even when an employee tries to sue your company for negligence, your coverage will pay for attorney fees, court filings, settlements, or judgments.
Compliance with Minimum Business Insurance Requirements
Before you launch a start-up company, you should review the legal requirements in California to make sure your company is legitimate. You will not be required to have any insurance if you work for yourself at home.
If you have a staff, you will be required to choose a workers’ comp plan, and if you own commercial vehicles, you will be required to have commercial auto insurance. These are the main points to think about and how they apply to your business. Most of your insurance decisions will be subject to the amount of risk your company poses to others.
A manufacturing plant with high-powered machines has a higher risk of employee accidents than someone who works at a desk. Working in a lab with dangerous chemicals can lead to frequent hospital time, whereas sitting at a computer all day poses fewer risks. Therefore, you need to consider the long-term consequences of the type of work you offer and discuss it with an experienced insurer before settling on any amount of coverage.
Choosing the right business insurance policy is critical because you never know what can go wrong with a new or old enterprise. You can discuss your business model and goals with our experts to ensure all your needs are covered. Contact us at Burton A. Harris Insurance Agency to learn more about how we can customize a plan to cover all aspects of your valuable business.