Small businesses are a critical part of California’s economy. There are 4.2 million small businesses in the state, and they employ nearly 48% of the state’s workforce.
However, California is prone to serious natural disasters, including wildfires and earthquakes, presenting unique risks to business owners within the state. To properly protect your business, you’ll likely need to purchase some form of business insurance. We evaluated top insurance companies and identified the five best small business insurers in California to help you find the right coverage (view our full methodology):
The 5 best small business insurers in California for 2024
- Best Overall: Chubb
- Best for Commercial Auto Coverage: State Farm
- Best for Professional Liability Insurance: The Hartford
- Best for Short-Term Rental Insurance: American Family
- Best for Earthquake Insurance: ICW Group
*Last updated February 20, 2024.
Whether you run a transportation and warehousing business, or are part of California’s booming tourism industry, business insurance is a must. We narrowed down the list of insurance companies in the state and identified the five best small business insurers (we’ve also have’ve also identified the best insurance companies for small businesses across the entire country):
Best Overall: Chubb
About: Chubb is an international insurance company with operations in over 50 countries and territories. It has specialized insurance products designed for small businesses, with solutions available for companies with up to $30 million in revenue. Whether you need a basic business owners policy (BOP) or workers’ compensation insurance, Chubb can be a good choice.
- AM Best Rating: A++ (Superior)
- J.D. Power Customer Satisfaction Rating: 9th out of 13 insurers
- Number of Small Business Products: 7
- Customer support: Chubb allows you to get quotes for small business insurance online, but you can also work with a local agent or contact customer support via phone.
Our verdict
Chubb is an industry leader for business insurance. Although it’s usually thought of as an insurer for large corporations, it also has small business insurance options for microbusinesses and freelancers, including BOP, cyber liability coverage and commercial umbrella insurance. Chubb makes it easy to purchase insurance with a short quiz to help you identify what coverage you need, and Chubb allows you to customize your policy with add-ons.
Best for Commercial Auto Coverage: State Farm
About: State Farm is the largest property and casualty insurer in the country based on direct premiums written. It was founded in 1922, so it has a longstanding reputation, and it has thousands of agents throughout the country. Through State Farm, you can purchase several types of business insurance coverage, including BOP, workers’ compensation and commercial auto insurance.
- AM Best Rating: A++ (Superior)
- J.D. Power Customer Satisfaction Rating: 2 out of 13 insurers
- Number of Small Business Products: 14 small business insurance policies and add-ons
- Customer support: You can contact a local agent for questions — State Farm has over 19,000 — or you can reach out to customer support via chat or phone.
Our verdict
State Farm is best for businesses that need commercial auto insurance for their business vehicles. In California, transportation and warehousing are some of the biggest industries, but those industries face significant levels of risk. According to the Insurance Research Council, nearly 17% of drivers in California are uninsured — the 10th-worst level in the country — which can pose problems if you or your employees are in an accident while driving a company vehicle.
State Farm has robust coverage options for commercial car insurance, including liability, property and collision insurance. But it also offers uninsured/underinsured motorist protection, which could help you if you or your employees are in an accident with a person who doesn’t have coverage.
Best for Professional Liability Insurance: The Hartford
About: The Hartford is a major insurer that has been in operation since 1810. In 2022 — the last available data — The Hartford collected $4.6 billion in small commercial insurance premiums. It sells several business insurance products, including specialty insurance products for certain industries.
- AM Best Rating: A+ (Superior)
- J.D. Power Customer Satisfaction Rating: 10th out of 12 issuers
- Number of Small Business Products: 17
- Customer support The Hartford allows business owners to get quotes online, and you can contact customer support via phone or by reaching out to a local agent.
Our verdict
California has long been known for its role in the entertainment industry, so The Hartford is an excellent choice for the writers, graphic designers, animators and other artists in the state. Through The Hartford, both agency owners and independent contractors can purchase professional liability insurance.
The Hartford’s policies cover against liabilities related to mistakes or negligence, including issues like copyright infringement or failing to deliver a client’s order. Through The Hartford, coverage can be as little as $32 per month, and you can customize your policy and get quotes online.
Best for Short-Term Rental Insurance: American Family
About: American Family — often known simply as AmFam — has been in operation since 1927. It’s a leading provider of personal and business insurance coverage, and it has several products that may benefit California-based landlords or vacation rental property owners.
- AM Best Rating: A+ (Superior)
- J.D. Power Customer Satisfaction Rating: 7th out of 13 issuers
- Number of Small Business Products: 7
- Customer support American Family’s customer support team can be reached by phone, or you can contact a local agent. You can also request quotes for certain types of business insurance online.
Our verdict
California is a leading tourist destination, so American Family is a good fit for short-term rental owners — including those who list properties on services like Airbnb — and long-term landlords. It has options for both those who primarily use their property as an investment and those who rent it out occasionally.
- Short-term rentals: Through American Family, those who rent out their properties for 62 days or less per year can get coverage as an add-on to their homeowners policies; this option could potentially be a lower-cost solution compared to purchasing a separate landlord policy.
- Investment property rentals: Those who rent out their property longer or that work with long-term tenants can purchase a separate business landlord policy.
Best for Earthquake Coverage: ICW Group
About: ICW Group Insurance Companies is a group of privately-held insurance companies based in California. It provides commercial insurance to over 300,000 customers, and its headquarters is in San Diego, California. It sells a variety of commercial insurance products, including workers’ compensation, property, general liability and earthquake coverage.
- AM Best Rating: A (Excellent)
- J.D. Power Customer Satisfaction Rating: Not ranked
- Number of Small Business Products: 2 in California
- Customer support ICW Group doesn’t offer online quotes, but you can reach customer support by phone or by sending a secure message online. Its products are sold through a network of over 3,000 independent agencies.
Our verdict
ICW Group is best for those who have companies located in earthquake hazard areas and are at risk of building or property damage. Damages and losses related to earthquakes are usually excluded from standard business insurance policies, so you need to purchase a separate earthquake policy. Few insurers sell earthquake coverage; ICW is one of the few that does in California, and it has a higher-than-usual coverage maximum of $50 million.
What to know about Small Business Insurance in California
Regardless of your business’ size, you need some form of business insurance to adequately protect it (and yourself). Depending on the type of work you do and your customers, you may need one or more of these types of small business insurance:
- Liability: Liability insurance covers some or all of your legal expenses and damages related to lawsuits resulting from accidents, injuries or professional mistakes or negligence.
- Property: Property insurance protects your business from damages related to storms, fires or theft.
- Business owners policy (BOP): BOPs are packages of commonly-used insurance products for smaller businesses. In general, they include general liability and property insurance.
- Commercial auto: If your business owns vehicles for deliveries or transportation, you’ll need commercial auto coverage to protect against damages and injuries.
- Earthquake: Earthquakes do occur in California, and they can cause substantial damage. General business insurance policies exclude earthquake damage, so you may need a separate policy to protect your buildings, equipment and other property.
- Worker’s compensation: In California, workers’ compensation insurance is required for all companies that have employees. It compensates workers who are injured or become ill on the job.
How to choose a Small Business Insurance in California
In California, approximately 90 insurers offer property or casualty coverage, so finding the right insurer can be intimidating. When deciding which insurer to work with and what coverage to purchase, consider the following:
- Business risk: Think about the risks that your business faces in terms of potential liabilities and damages. For example, if your business is located in an area with a high earthquake hazard rating — meaning its near active faults that could produce intense shaking and cause damage — or an area prone to wildfires, you’ll need additional coverage.
- Industry: Some industries are riskier than others. For example, businesses involving shipping, transportation, or construction have higher rates of accidents and injuries than other industries. They typically need more robust insurance policies that are often more expensive.
- Employee: If you have employees, then you’ll need to at least have workers’ compensation insurance. But if you have workers, you may need other forms of coverage, such as commercial auto or employee liability protection.
- Operations: How your business operates affects the types of insurance you need. For example, a business owner who performs services without a physical retail location, such as a graphic designer or artist, may not need general liability insurance. But if you have a brick-and-mortar store or warehouse, you’ll likely need general liability insurance.
You can learn more about how to protect your company in our comprehensive guide to small business insurance.
Frequently asked questions
Is business insurance mandatory in California?
In California, the only kind of business insurance that is mandatory is workers’ compensation insurance for businesses that have employees.
Does business insurance cover earthquakes?
Generally, small business insurance policies do not cover damages or losses related to earthquakes. Instead, you need to purchase a separate commercial earthquake policy.
What is California’s auto insurance requirement for business owners?
Like most states, California requires all drivers operating or parking on the state’s roads to be insured. For most vehicles, the following state-minimum coverage is required:
- $15,000 of bodily injury liability coverage for one person
- $30,000 of bodily injury liability coverage for more than one person
- $5,000 of property damage liability insurance
Depending on your business’ assets and vehicle value, those coverage limits may not be adequate, and you may need additional commercial auto liability and property insurance.
How much does small business insurance cost in California?
Costs vary based on your location, company size, industry and the amount of coverage you need. In general, premiums for a BOP in California range from $1,000 to $2,000 per year.
Our methodology
We selected the five best small business insurance companies in California based on the following factors:
- Financial stability: AM Best, a credit rating agency that evaluates insurers, issues its opinions on companies’ financial strength. We looked for companies with a rating of A (Excellent) or better.
- Customer satisfaction: Companies that scored better than the industry average in the J.D. Power Small Commercial Insurance Study were given additional consideration.
- Availability: The California insurance industry is complex, so we focused on companies with products and add-ons specifically for California’s unique needs.
- Potential discounts: Insurers with discount programs for small business owners were given preference.
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