What Insurance Does My Business Need? A California Checklist

“What insurance does my business need?” is the question I hear more than any other, usually right after someone signs a lease, hires their first employee, or gets a contract that asks for a certificate of insurance they don’t have.

The honest answer is that it depends on a handful of facts about how your business operates. Not your industry label. Not what your competitor carries. The facts.

So instead of handing you a generic list of every policy that exists, this article works like a decision tool. You answer eight quick questions, match your answers to a master table, then read only the coverage sections that apply to you. At the end there is an industry quick-reference and a checklist you can print and bring to your broker.

I’m Shalom Samya, a licensed commercial insurance broker in Tarzana (CA DOI license #OK30674). I’ve worked in commercial insurance for 15+ years, and I help businesses across Los Angeles, the San Fernando Valley, California and 27+ other states build coverage that fits how they actually work.

Start Here: The 8-Question Business Insurance Self-Assessment

Grab a pen. Answer yes or no to each question below. Every “yes” points to at least one type of coverage you should be looking at.

Don’t overthink it. If the answer is “sometimes” or “soon,” mark it yes. Insurance is built for what could happen, not just what happens every day.

1. Do you have employees, even one?

That includes part-time help, family members on payroll, and people you pay as “contractors” who really work like employees. California looks at how the work is controlled, not what you call the person.

A yes here triggers workers’ compensation (legally required), and likely employment practices liability. Once you have a group of employees, group health becomes a real consideration too.

2. Do you or your employees drive for business?

This covers company-owned vehicles, leased trucks, and employees running errands in their own cars. Delivering food, driving to job sites, and picking up supplies all count.

A yes triggers commercial auto, and possibly hired and non-owned auto coverage.

3. Do you lease or rent a space?

Almost every commercial lease in Los Angeles has an insurance section. Most landlords require general liability with specific limits, and many require you to name them as additional insured.

A yes triggers general liability at minimum, plus property coverage for your own improvements and contents.

4. Do you sign contracts with clients, general contractors or vendors?

Contracts are where insurance requirements hide. Indemnity clauses, additional insured requirements, waivers of subrogation, and minimum limits are standard in construction, property management, logistics and corporate vendor agreements.

A yes means you need to read your contracts against your policies. It often triggers umbrella coverage and higher limits.

5. Do you store or handle client data?

Names, emails, credit card numbers, Social Security numbers, medical records, login credentials. If it lives on your laptop, your server, your POS system or a cloud app you control, it counts.

A yes triggers cyber liability.

6. Do you give professional advice or perform a professional service?

Consultants, accountants, designers, IT providers, engineers, architects, marketing agencies, real estate professionals and healthcare providers all fall here. So does anyone whose mistake could cost a client money even if nobody gets hurt.

A yes triggers professional liability, also called errors and omissions (E&O).

7. Do customers, vendors or the public come to your location?

Storefronts, restaurants, offices with client meetings, warehouses with pickup windows, medical offices. Foot traffic means slip-and-fall exposure.

A yes triggers general liability, and reinforces the need for adequate limits.

8. Do you own inventory, equipment or tools?

Retail stock, restaurant kitchen equipment, contractor tools, computers, specialized machinery. If it would cost real money to replace, it counts.

A yes triggers commercial property or a business owner’s policy, plus inland marine for equipment that moves between locations.

Master Table: Your Situation, the Coverage, and Whether It’s Required

Now match your “yes” answers to the table below. The last column tells you whether the coverage is required by California law, required by a third party (landlord, client, lender, licensing board), or recommended because the risk is real.

This is the core of any honest business insurance checklist. Keep it open while you read the rest.

If this is true for your business	Coverage to look at	Required or recommended?
You have one or more employees in California	Workers’ compensation	Required by law (CA Labor Code §3700)
You’re a licensed contractor with employees	Workers’ comp on file with CSLB, plus $25,000 contractor license bond	Required by CSLB
You own or lease vehicles used for business	Commercial auto	Required by law (liability minimums); higher limits often required by contract
Employees drive their own cars on company errands	Hired and non-owned auto	Strongly recommended
You haul freight interstate as a for-hire carrier	Commercial auto / trucking liability, cargo	Required by FMCSA (liability minimums start at $750,000); cargo often required by brokers and shippers
You lease commercial space	General liability, commercial property	Usually required by lease
Customers or the public visit your location	General liability	Strongly recommended; often required by landlord
You sign contracts with clients or GCs	General liability, umbrella, additional insured endorsements	Often required by contract
You give advice or perform professional services	Professional liability (E&O)	Often required by client contracts; recommended regardless
You have employees (especially 5+)	Employment practices liability (EPLI)	Recommended; rarely required, but CA employment claims are common and costly
You store customer, patient or payment data	Cyber liability	Recommended; increasingly required by client contracts
Your contracts or assets exceed your base policy limits	Umbrella / excess liability	Often required by contract; recommended for any business with meaningful assets
You want to offer health benefits to attract staff	Group health	Required under the ACA only for applicable large employers (generally 50+ full-time equivalents); otherwise recommended for recruiting
You handle client money or property, or bid public work	Fidelity bonds, surety bonds	Surety often required by public contracts and licensing; fidelity recommended
You own inventory, equipment or tools	Commercial property / BOP, inland marine	Required by lenders and some leases; recommended otherwise
You serve alcohol	Liquor liability	Often required by landlord or event venues; strongly recommended

Notice how short the “required by law” list is. That surprises people. For most small businesses, only workers’ comp and auto liability are actually mandated by California statute.

But in practice, the “required by contract” column is what drives most of your coverage. Your landlord, your biggest client or your general contractor will tell you what you need long before the state does.

What California Actually Requires by Law

Let’s be precise about business insurance requirements in California, because this is where people either overbuy out of fear or underbuy because they assume “nothing is required.”

Workers’ compensation

Under California Labor Code §3700, virtually every employer with even one employee must carry workers’ comp. There is no small-business exemption based on headcount.

Operating without it is a crime in California. The Labor Commissioner can issue stop orders that shut down your operation, plus penalties. If an uninsured employee gets hurt, you can be personally on the hook for the claim.

Auto liability

Any vehicle on California roads needs liability coverage. The private passenger minimum rose to 30/60/15 on January 1, 2025.

For business use, those minimums are rarely enough. Commercial vehicles, for-hire operations and trucking often need far higher limits, and most business contracts ask for $1 million combined single limit.

Contractor requirements

The Contractors State License Board requires contractors with employees to have workers’ comp on file. Every licensed contractor also needs a $25,000 contractor license bond, a figure that took effect January 1, 2023.

Everything else is “required” by someone else

General liability, professional liability, cyber, umbrella and EPLI are not mandated by California law for most businesses. That does not make them optional in real life.

Your lease, your client contracts, your lender and your licensing board are the ones who set those requirements. And a lawsuit doesn’t care whether coverage was mandatory.

If you want a deeper breakdown of how the California market works overall, my guide to commercial insurance in California covers it in detail.

Types of Business Insurance: What Each One Does and When You Need It

Here are the main types of business insurance, in the order I usually walk through them with a new client. For each one, I’ll tell you what it covers in plain English and give you a “you need it if” list you can check against your self-assessment.

Workers’ Compensation

Workers’ comp pays medical bills and lost wages when an employee is hurt on the job or gets sick from their work. In exchange, employees generally can’t sue you directly for those injuries.

In California, it’s priced per $100 of payroll based on the class code for the type of work. The WCIRB publishes advisory pure premium rates, and each carrier files its own rates on top of that. Once your premium passes certain eligibility thresholds, an experience modification factor based on your claims history kicks in and can push your price up or down.

You need it if:

• You have one or more employees, full-time or part-time
• You’re a licensed contractor with anyone on payroll
• You use workers you call “independent contractors” but who could be classified as employees
• A client or GC requires a certificate showing workers’ comp

The mistake I see most often is wrong class codes. A business gets coded as higher-risk work than it actually does, or clerical staff get lumped into a field class, and the owner overpays for years. Learn more on my California workers’ compensation page.

General Liability

General liability covers claims that your business caused bodily injury or property damage to someone else, plus certain advertising and personal injury claims. The classic example is a customer slipping in your store, but it also covers damage you cause at a client’s location.

It is the policy landlords and clients ask for first, and it’s the foundation most other coverage builds on.

You need it if:

• You lease commercial space
• Customers, vendors or anyone else visits your location
• You work at client sites or in customers’ homes
• You sell products that could injure someone or damage property
• Any contract asks for a certificate of insurance

Watch the details: additional insured endorsements, primary and non-contributory wording, and waiver of subrogation are common contract requirements that a basic policy may not include. See my general liability insurance page for how I review these.

Commercial Auto

Commercial auto covers liability and physical damage for vehicles your business owns or leases. Hired and non-owned auto coverage extends liability protection to rented vehicles and to employees driving their own cars for business.

Personal auto policies commonly exclude or limit business use. If an employee rear-ends someone while making a delivery in a company van, your personal policy is not the right answer.

You need it if:

• Your business owns, leases or finances any vehicle
• Employees drive to job sites, make deliveries or run errands
• You rent vehicles for business travel or projects
• You operate as a motor carrier, intrastate or interstate
• A contract requires $1M CSL or higher auto limits

For trucking and logistics, the requirements go further. FMCSA minimums for interstate carriers start at $750,000, and freight brokers and shippers commonly ask for more plus cargo coverage. Details are on my commercial auto insurance page.

Professional Liability (Errors and Omissions)

Professional liability covers claims that your advice, service or work product caused a client a financial loss. Missed deadlines, mistakes, negligence claims and “you didn’t deliver what you promised” disputes all live here.

General liability does not cover this. GL is about bodily injury and property damage. E&O is about money your client says they lost because of your professional work.

You need it if:

• You give advice clients rely on to make decisions
• You design, plan, consult, manage, or build software or systems
• You’re in real estate, accounting, IT, marketing, engineering or healthcare
• Client contracts ask for professional liability or E&O
• A mistake by you could cost a client more than you’d want to pay out of pocket

Most professional liability policies are claims-made, which means the policy in force when the claim is made matters, not when the work was done. Keeping continuous coverage and your retroactive date intact is important. My professional liability insurance page explains how that works.

Employment Practices Liability (EPLI)

EPLI covers claims from employees and job applicants alleging wrongful termination, discrimination, harassment, retaliation and related employment issues. It typically pays for defense costs, which can be significant even when you did nothing wrong.

California is a demanding environment for employers. Under FEHA, harassment protections apply to employers with even one employee, and most other employment protections apply once you have five or more. Employers with five or more employees must also provide sexual harassment prevention training.

You need it if:

• You have employees, and especially if you have five or more
• You’re hiring, firing or disciplining staff
• You have managers or supervisors making employment decisions
• You operate in a high-turnover industry like restaurants, retail or healthcare

In my experience, EPLI is the coverage small business owners skip most often and regret most often. Learn more about employment practices liability insurance.

Cyber Liability

Cyber liability covers the costs of a data breach, ransomware attack or other cyber incident. That can include forensic investigation, customer notification, credit monitoring, legal defense, regulatory response and in some cases business interruption and funds transfer fraud.

Small businesses are targets precisely because they tend to have weaker defenses. A phishing email that tricks your bookkeeper into wiring money can be just as damaging as a sophisticated hack.

You need it if:

• You store customer names, emails, addresses or payment information
• You handle medical, financial or Social Security data
• You take online payments or run an e-commerce store
• You wire money or pay vendors electronically
• Client contracts require cyber coverage

Cyber policies vary a lot between carriers, so it’s worth comparing what’s actually covered, not just the price. See my cyber liability insurance page.

Umbrella and Excess Liability

An umbrella policy sits on top of your general liability, auto and employer’s liability coverage and adds extra limits once those underlying policies are exhausted. It’s usually the most cost-effective way to get from $1 million to $5 million or more in protection.

A serious auto accident or injury lawsuit in Los Angeles can easily exceed a $1 million limit. Juries here are not known for small numbers.

You need it if:

• A contract requires total limits above $1 million
• You have vehicles on the road, especially trucks or vans
• You have significant business or personal assets to protect
• You work in construction, trucking, property management or hospitality

More on how umbrella coverage stacks on my umbrella insurance page.

Group Health Insurance

Group health lets you offer medical coverage to your employees through a single employer-sponsored plan. Under the ACA, applicable large employers (generally 50 or more full-time equivalent employees) face requirements to offer coverage. Smaller employers aren’t required to, but many do because good employees expect it.

You need it if:

• You have 50+ full-time equivalent employees
• You’re competing for skilled workers who have other offers
• You want to reduce turnover
• You want a tax-efficient way to provide health benefits for yourself and your team

See my group health insurance page for how small group plans work in California.

Surety and Fidelity Bonds

Bonds are different from insurance. A surety bond guarantees that you’ll fulfill an obligation, like completing a contract or following licensing rules. A fidelity bond protects against losses from employee theft or dishonesty.

You need it if:

• You’re a licensed California contractor ($25,000 license bond)
• You bid on public or large private projects that require bid, performance or payment bonds
• Your license or permit requires a bond
• Employees handle cash, client funds or client property
• You’re a janitorial, home service or property management company working in clients’ spaces

Learn more about surety and fidelity bonds.

Commercial Property, BOP and Inland Marine

Commercial property covers your building (if you own it), tenant improvements, furniture, equipment and inventory against fire, theft and other covered causes of loss. A business owner’s policy (BOP) bundles property and general liability together for eligible smaller businesses, often at a better price than buying them separately.

Inland marine, despite the name, covers equipment and tools that move from place to place, like a contractor’s tools or a photographer’s gear.

You need it if:

• You own inventory, equipment, tools or furniture that would be expensive to replace
• You’ve invested in tenant improvements to a leased space
• A lender or landlord requires property coverage
• You’d lose income if a fire or break-in shut you down (add business income coverage)

One important note for California: standard property policies generally exclude earthquake and flood. Those need separate coverage if you want them.

Not Sure Where You Land? Get a Free Coverage Review

If you answered yes to four or more of the self-assessment questions, your coverage decisions start to interact with each other, and that’s where gaps happen. I offer a free coverage review: I’ll look at your contracts, your current policies and how you operate, and tell you plainly what’s missing and what you’re overpaying for. Call me at (323) 999-6067 or request a review here.

Industry Quick-Reference: What Businesses Like Yours Usually Carry

Your industry doesn’t decide everything, but it’s a good shortcut. The table below shows the coverages I typically see as core for each industry I work with, and the ones that are commonly added depending on size and contracts.

Industry	Core coverage	Commonly added	Watch out for
Construction / contractors	Workers’ comp, general liability, commercial auto, CSLB license bond	Umbrella, inland marine (tools), performance and payment bonds	Additional insured and waiver requirements from GCs; correct class codes
Trucking / logistics	Commercial auto / trucking liability, cargo, workers’ comp	Umbrella, general liability, physical damage	FMCSA filings and minimums; broker and shipper contract limits
Restaurants / hospitality	Workers’ comp, general liability, property / BOP	Liquor liability, EPLI, hired and non-owned auto for delivery	High turnover drives employment claims; delivery drivers in personal cars
Retail / e-commerce	General liability (incl. products), property / inventory, workers’ comp	Cyber, EPLI, umbrella	Product liability for items you import or private-label; payment data
Healthcare providers	Professional liability, general liability, workers’ comp	Cyber, EPLI, group health	Patient data exposure; requirements tied to facilities and payer contracts
Professional services	Professional liability (E&O), general liability	Cyber, EPLI, workers’ comp once you hire	Client contracts requiring specific E&O limits; claims-made continuity
Tech / startups	Professional liability / tech E&O, cyber, general liability	EPLI, workers’ comp, group health	Enterprise client contracts and investor expectations
Real estate / property management	General liability, professional liability (E&O), property	Umbrella, fidelity bonds, workers’ comp, EPLI	Owner contracts naming them as additional insured; handling tenant funds

For more detail on how I approach each of these, visit my industries we serve page.

A quick note on the San Fernando Valley and greater LA

A lot of the businesses I work with in Tarzana, Encino, Van Nuys, Burbank and across LA share a few patterns. Small contractors doing residential remodels. Restaurants and food businesses with delivery drivers. Import and wholesale companies with warehouses. Professional firms in office buildings on Ventura Boulevard.

Each of these has a different “required” list. The contractor’s is driven by CSLB and general contractors. The restaurant’s is driven by the lease, payroll and alcohol. The importer’s is driven by product liability and cargo. The professional firm’s is driven by client contracts.

That’s why the self-assessment matters more than the industry label.

How to Turn This Into a Real Insurance Plan

Knowing which coverage you need is step one. Getting it right means getting the details right, too.

Read your contracts before you buy

Pull your lease, your top three client contracts and any subcontract agreements. Look for sections titled “Insurance,” “Indemnification” or “Certificates of Insurance.” Those sections will list required coverage types, minimum limits and endorsements.

I recommend sending these to your broker before you get quotes. It’s much easier to build the right policy upfront than to fix it after a client rejects your certificate.

Match limits to real exposure, not the minimum

The cheapest policy that meets the minimum is often the most expensive one in the long run. Think about the worst realistic claim your business could face, and whether your limits would cover it.

Check what the policy excludes

Two policies with the same name and the same limits can cover very different things. Exclusions for subcontractors, residential work, certain products, or prior acts can quietly remove the protection you think you have.

Review every year, and every time something changes

New employees, a new vehicle, a new location, a big new client or a new service line can all change what you need. Coverage that fit last year may not fit now.

Budget realistically

People always ask what all of this costs. The honest answer is that it varies widely by class of business, payroll, revenue, location, claims history and carrier, so I won’t throw out a single number. My article on how much business insurance costs walks through the pricing factors and broad ranges.

If you’re a smaller operation just getting started, my guide to small business insurance in California is a good next read.

The Printable Business Insurance Checklist

Here’s the checklist version. Print it, check the boxes that apply, and bring it to your broker. Every checked line is a coverage conversation you need to have.

Legal and licensing requirements

• I have at least one employee, so I need workers’ compensation
• I’m a licensed contractor, so I need a $25,000 CSLB license bond and workers’ comp on file if I have employees
• I have vehicles on the road, so I need auto liability that at least meets state minimums
• I operate as an interstate for-hire carrier, so I need FMCSA-compliant liability limits and filings
• I have 50+ full-time equivalent employees, so I need to review ACA group health obligations

Contract and lease requirements

• I’ve pulled my lease and noted required coverage, limits and additional insured wording
• I’ve reviewed my client contracts for insurance and indemnity requirements
• I’ve checked whether contracts require waiver of subrogation or primary and non-contributory wording
• I’ve confirmed whether any contract requires an umbrella or limits above $1 million
• I’ve checked whether my lender requires property coverage

Operational risks

• Customers or the public visit my location (general liability)
• I work at client sites or in homes (general liability)
• Employees drive their own cars for work (hired and non-owned auto)
• I give professional advice or services (professional liability / E&O)
• I store customer, patient or payment data (cyber liability)
• I have employees and make hiring and firing decisions (EPLI)
• Employees handle cash or client funds (fidelity bond)
• I own inventory, equipment or tools (property / BOP / inland marine)
• I serve alcohol (liquor liability)
• I want to offer health benefits (group health)

Policy details to confirm

• My workers’ comp class codes match the work my employees actually do
• My limits reflect my real worst-case exposure, not just the minimum
• I understand the main exclusions on each policy
• My claims-made policies have continuous coverage and a protected retroactive date
• I’ve considered earthquake and flood coverage separately
• I have a calendar reminder to review coverage at renewal and after major changes

Why I Built This as a Decision Tool

When I started in insurance, I didn’t like it. Then I realized what I didn’t like was how most people sell it. Most agents focus on policies. They lead with a product and work backward.

Business owners need something different. They need someone who understands how the business runs, fights for the right rate, and is available when something goes wrong.

That’s why I start every new client relationship with questions, not quotes. The self-assessment above is a simplified version of the conversation I have with every client. Many of my client relationships have lasted eight years or more, and I think that’s because the coverage was built around the business from the start.

I work with multiple carriers and shop the market for every client. I serve clients in English, Hebrew and Spanish. If you’d like help choosing someone to work with, my article on how to choose a commercial insurance broker explains what to look for, whether or not you work with me.

Frequently Asked Questions

What insurance is required for a business in California?

By state law, most businesses must carry workers’ compensation if they have even one employee, and auto liability for any vehicle on the road. Licensed contractors also need a $25,000 CSLB license bond. Most other required business insurance in California comes from leases, client contracts, lenders and licensing boards rather than statute.

Do I need business insurance if I’m a sole proprietor with no employees?

You may not be legally required to carry workers’ comp, but you likely still need general liability, and professional liability if you provide a service or advice. Your lease and client contracts will often require coverage regardless of your business structure.

What’s the difference between general liability and professional liability?

General liability covers bodily injury and property damage you cause to others. Professional liability covers financial losses a client claims because of your advice, errors or professional services. Many businesses need both.

Does my personal auto policy cover business driving?

Personal auto policies commonly exclude or limit business use, especially deliveries, hauling and commercial vehicles. If you or your employees drive for business, talk to your broker about commercial auto or hired and non-owned auto coverage.

Is a business owner’s policy (BOP) enough?

A BOP bundles general liability and property for eligible smaller businesses and is a solid foundation. It does not include workers’ comp, commercial auto, professional liability, EPLI or robust cyber coverage, so most businesses need more than a BOP alone.

How much business insurance do I need?

Start with the minimums your lease and contracts require, then consider your worst realistic claim and the assets you need to protect. Many businesses carry $1 million per occurrence in general liability and add an umbrella for higher total limits.

How often should I review my business insurance?

At least once a year at renewal, and any time you hire, add vehicles, move or add a location, sign a major contract, or start offering a new service.

Can one broker handle all of my business insurance?

Yes. An independent broker who works with multiple carriers can place workers’ comp, liability, auto, professional liability, cyber, bonds and group health, and coordinate them so limits and endorsements line up without gaps.

Get a Clear Answer for Your Business

If you’re still asking what insurance does my business need, the fastest way to a clear answer is a conversation. I’ll review your operations, your contracts and any current policies, and give you a straightforward plan with no pressure. Call me at (323) 999-6067 or schedule your free coverage review. My office is at 18757 Burbank Blvd, Suite 105, in Tarzana, and I work with businesses throughout Los Angeles and California.