California adds its own rules for workers’ comp, licensed contractors, and wildfire-exposed property. Here’s what’s different for small businesses here.
Quick answer: Most California small businesses start with a business owners policy for general liability, property, and business income. California also requires workers’ comp as soon as you have one employee, and contractors licensed by the CSLB have their own bond and insurance rules. A standard BOP doesn’t cover earthquake or flood.
California requires every employer, even one with a single employee, to carry workers’ comp. Penalties include stop-work orders and fines.
The CSLB requires a $25,000 contractor bond, and LLC contractors also need a $100,000 worker bond and liability insurance. Workers’ comp becomes required for every licensed contractor in 2028.
Businesses in higher-risk areas can find fewer property options, and the California FAIR Plan offers basic commercial property coverage as a fallback.
| Peril | Covered by standard policy? | How it's typically addressed |
|---|---|---|
| Earthquake | No | Separate commercial earthquake policy |
| Flood | No | Separate commercial flood policy |
| Employee injuries | No | Workers' compensation, required in California with one employee |
| Wildfire | Yes, if property coverage is available | FAIR Plan commercial property if standard insurers decline |
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Workers’ comp is, as soon as you have one employee, and vehicles need auto liability coverage. General liability isn’t required by state law for most businesses, but landlords, clients, and licensing rules often require it.
Right away if you have employees. High-risk trades like roofing, concrete, HVAC, and tree service already need it even without employees, and under current law every CSLB-licensed contractor will need workers’ comp starting January 1, 2028.
LLC contractors need liability insurance with a cumulative limit of at least $1 million when five or fewer people are listed on the license, rising with more personnel. They also need a $100,000 worker bond on top of the $25,000 contractor bond.
No. Earthquake is excluded from standard business owners policies. Separate commercial earthquake coverage is available and worth comparing, especially if you own your building or carry significant inventory.
Usually, though options may be fewer and prices higher. If standard insurers decline your property, the California FAIR Plan offers basic commercial property coverage, which you can pair with a separate liability policy.
One of our licensed agents compares business owners policies, general liability, and workers’ comp options for your business type and location.
