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Small Business Insurance in the Golden State
With over 3.9 million small businesses employing more than 7 million people, small businesses represent a vital force in California’s economy. In fact, California’s small businesses make up 98.9% of the state’s businesses and employ nearly half of its total private workforce.
The strength and breadth of California’s small businesses clearly shows their viability in the Golden State. As the largest economy in the United States and the fifth largest in the world, California is ideal for budding entrepreneurs seeking to make their own mark. However, it’s imperative to be aware of regional laws and conditions that could put small businesses at risk and to secure proper liability protection.
Key California laws and conditions driving increased business liability rates
Even though small businesses in California continue to flourish, issues around tough government regulations, laws, and restrictions affect businesses throughout the state. California is fifth in the nation (after Washington, D.C.; Nevada; Delaware; and New Mexico) for states in which small business owners face the highest risk of being sued by their employees. Higher rates of employee lawsuits are partly due to strict state regulations around anti-discrimination and fair employment practices, which subject businesses to higher scrutiny from workers.
Defendants in one in five lawsuits in California are entitled to defense and settlement payments. As a result, small businesses in California bill an average of $125,000 in claims while absorbing roughly $35,000 in deductibles themselves. While each small business is unique, insurance carriers have recommended that small businesses in California carry at least $500,000–$1,000,000 in commercial liability insurance to cover bodily injury, personal injury, advertising injury, and legal defense and judgments.
California Workers Compensation laws
All employers in California are required to carry workers compensation coverage, even if they have just one employee. Workers compensation coverage helps pay the costs of benefits in the unfortunate event that an employee becomes sick or injured due to the work they perform. The benefits provided under workers compensation insurance can include medical care, temporary disability benefits, permanent disability benefits, supplemental job displacement benefits, death benefits, and a return-to-work supplement.
According to the National Federation of Independent Businesses (NFIB), executive officers and directors of businesses are required to be covered by workers compensation insurance, unless the business is fully owned by the directors and officers. Owners of businesses that do not have any employees can also opt out of coverage.
The majority of workplace injuries across all industries in California are one-time accidents (66% of all cases), repetitive motion injuries (28%), and work-related stress (6%). Of those injuries, 41% were due to slipping or falling, 15% were due to being struck by an object, 16% were a result of a car or machinery accident, 7% were from lifting injuries, and 21% were from other incidents.
The vast majority (72%) of injured workers in California hire a lawyer to represent them in workers compensation cases. Those lawyers are paid on a contingency fee basis, which means that the lawyer is paid a percentage of any awarded settlement rather than charging an hourly fee. This low fiscal barrier for litigation can lead to an increase in the number of employee lawsuits in the state.
Covered Industries in California
Hiscox covers businesses in all of California’s most prominent industries and offers plans that are tailored to the specific needs of each. Some of our most popular products in California include coverage for businesses providing photography, personal training, realtor, cleaning, and esthetician services.
Since professional photographers operate across fields, such as advertising, arts and entertainment, and technical design, they should consider a variety of insurance policies to cover everything from electronic data loss to equipment liability. Employees handling heavy photography equipment, in addition to using expensive business property, is a particularly heightened risk against which insurance can protect.
Policies for professional photographers include general liability insurance, commercial automobile insurance (when using a vehicle to transport themselves and their equipment from site to site), and property insurance. These types of insurance policies help protect them and their employees in the event of a car accident, theft, or site mishap that could adversely affect their business’s ability to generate income.
Personal Training Insurance
Insurance coverage, such as property insurance for equipment and workers compensation for employees , is necessary for professionals in the fitness industry. Personal trainers need both general and professional liability insurance to cover third-party claims in the event of bodily injury, medical payments, and legal costs from accidents that might occur during a training session.
Personal trainers in California are required to purchase workers compensation insurance if they employ trainers, assistants, accountants, or other fitness and health consultants. California also requires personal trainers to obtain commercial vehicle insurance if they use a car or truck to transport equipment between clients. If a personal trainer owns a gym or training space, they should consider property insurance for complete protection.
Real Estate Agent Insurance
If realtors showcasing homes travel in vehicles not owned by their business, hired/non-owned auto (HNOA) liability insurance is a must-have.
Realtors in California often acquire both general and professional liability insurance for their small businesses. Media and marketing coverage for marketing collateral, such as signs, brochures, business cards, billboards, and media storage, is beneficial for all realtors who advertise available homes on the market. The state of California requires real estate agency owners who employ multiple realtors to purchase workers compensation insurance.
Cleaning professionals should acquire insurance to safeguard their crews, maids, and other janitorial staff from lawsuits, property damage, and severe financial risks. Those who operate professional cleaning businesses know that training and experience goes a long way in this physically demanding industry, but nothing can protect their staff and their equipment the way proper insurance coverage can.
Since cleaning professionals often transport their own cleaning equipment, small business owners in this industry typically look to purchase insurance that covers equipment (vacuums, chemicals, and other industrial machinery) and commercial vehicles.
Commercial general liability insurance would certainly cover their business, and any cleaning service that employs a crew is required in California to purchase workers compensation insurance.
Esthetician coverage includes professional liability insurance, which is needed to mitigate claims in cases in which clients suffer bodily injury, property damage, or even copyright infringement in the form of advertising injury.
Property insurance is often required if an esthetician owns or rents a studio space that is visited by clientele. In California, estheticians who own their own firm and utilize a team of beauty and skin care professionals are required to purchase workers compensation insurance to cover their employees.
More professions we insure in California
California Small Business Insurance
If you’re a small business owner in California and you are looking for liability insurance for your business, you have to come to the right place. Hiscox does not offer a one-size-fits-all insurance plan, instead we tailor our small business insurance in California to meet your needs. Hiscox small business insurance products include:
General Liability Insurance for California
General liability insurance, known as Commercial General Liability (CGL), protects your business from another person or business’s claims of bodily injury, associated medical costs, and damage to property. Some examples of what could be covered are below:
- Bodily injury: A client falls over their personal trainer’s gym bag and the trainer is found legally liable for the injury. A general liability insurance policy could cover the personal trainer’s subsequent claim and related medical expenses up to policy limits of liability.
- Property damage and data loss: A consultant spills coffee on a client’s server causing damage and loss of data. The consultant’s general liability coverage could cover the subsequent claim, up to policy limits, and could pay for an attorney to defend the consultant if necessary.
- Personal injury: An employee of a public relations firm is at lunch. He talks to some of his fellow co-workers about a client in a false and unflattering way. The client learns of this discussion and sues for slander. General liability coverage could cover the subsequent claim, up to the policy's limits, and pay for an attorney if necessary.
Learn more about general liability insurance.
Professional Liability Insurance for California
Professional liability insurance, also known as errors and omissions insurance (E&O insurance), covers another person’s claims against businesses that provide professional and personal services. Some examples of what could be covered include:
- Protection even if you haven’t made a mistake: A human resources consultant advises a client to change some internal processes to increase productivity. The recommendations are not implemented. If the client decides to sue, a professional liability policy could pay for defense costs, up to policy limits.
- Negligent acts: A consultant advises a client to update their employment practices. Six months later, the client contacts the consultant, stating a part-time employee is suing the company. The consultant left out a key requirement on the amount of hours part-time employees are permitted to work. A professional liability policy could appoint an attorney to defend the consultant, if the client sues.
Learn more about professional liability insurance.
Business owners policy (BOP) is a combination of general liability and business property insurance. BOP is often used to provide balanced coverage for small businesses who also want to protect their own business equipment. Some examples of what could be covered are below:
- Office insurance for fire and business interruption
- Electronic data loss insurance
- Hired or non-owned vehicle liability insurance
- Commercial crime insurance to cover the dishonesty of your employees
Learn more about business owners insurance.
Hiscox now offers state mandated workers compensation insurance to ensure that injured workers receive prompt and fair compensation for job-related injuries and diseases. In most states, laws require you to pay for an injured worker’s medical care, lost wages, and death benefits. A Hiscox Workers Compensation Insurance policy must be purchased with another Hiscox business insurance policy. To get a free quote, call us at 1-855-743-2308 and speak to a licensed insurance agent, Mon-Fri 8am-10pm ET.
Learn more about workers compensation insurance.
How can Hiscox help your California business?
Hiscox does not provide one-size-fits-all coverage to its clients. Instead, we get to know industries in order to provide tailored and customized solutions that meet the specific needs of every small business with which we work. We offer:
- Flexible payment options. We offer monthly payment options (with no fees) to help you manage your cash flow.
- Tailored insurance. We custom-tailor our insurance plan to meet your needs and save you money.
- Claims responsiveness. When a covered claim is reported, we will immediately defend you — even if the claim has no basis — and, if necessary, appoint an attorney.
- Worldwide coverage. We understand business risks in California and protect you for work completed anywhere in the world, as long as the covered claim is filed in the United States, a US territory, or Canada.
Get a fast, free quote now and get that Hiscox confidence behind your California business. If you prefer, you can call us at 1-866-283-7545 and speak with a Hiscox licensed agent, Monday – Friday, 7am – 10pm ET.
Hiscox Customer Reviews
Eric, Redding, CA
“Very helpful and good pricing.”
Very helpful, and good pricing.
It was pain free. The people I spoke with followed up and took care of my needs quickly. I would recommend Hiscox to colleagues.
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Hiscox service was great! They were friendly, quick, and easy to work with. My business plans changed so I no longer needed commercial insurance, but I would buy from them again because of the ease of purchasing and canceling the insurance without questions or complications. I would recommend this company to anyone needing to purchase commercial insurance.
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My experience was good with your company. All my questions were answered and my policy was what I needed.
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Our products have been approved by the California Department of Insurance, and are underwritten by Hiscox Insurance Company Inc., and Illinois insurance company whose license number is 8754.
This information is provided to assist you in understanding the coverage we offer and does not modify the terms and conditions of any insurance policy, nor does it imply any claim is covered. Coverage is subject to underwriting and may not be available in all states.
Administered by Hiscox Inc., a Delaware corporations that is a licensed producer in all states and DC. 520 Madison Avenue, 32nd floor, New York, NY 10022. In California, Hiscox Inc. does business at Hiscox Insurance Agency (license no.: 0F09668).