If you use a car for work in California—whether you’re a contractor with a pickup, a realtor visiting clients, a bakery delivering cakes, or a rideshare driver—car insurance with business use isn’t just a nice-to-have. It’s part of staying legal, protecting your income, and keeping your business moving. As of January 1, 2025, California raised the state’s minimum auto liability limits, and there are special rules for app-based driving, too. Here’s a clear guide to what that means for you, written in plain language and packed with practical examples.
Why This Matters in California
California runs on small businesses and solo owners. The state has over 4.3 million small businesses, the most in the country—so a lot of people rely on cars and vans to earn a living. If an accident shuts your vehicle down, it can also shut your business down. Having the right insurance (and enough of it) helps you bounce back faster and avoid out-of-pocket lawsuits.
The Baseline Law You Must Know
California minimum auto liability limits (as of 2025):
- $30,000 for injury or death to one person
- $60,000 for injury or death to more than one person
- $15,000 for property damage
You must also carry proof of insurance and show it at a traffic stop, collision, or registration renewal. These rules apply to personal and business vehicles alike.
What’s next: the minimums increase again on January 1, 2035, to $50,000/$100,000/$25,000, so planning for higher limits now is smart.
“Business Use” VS “Commercial Auto” (and where people get tripped up)
Business use simply means you’re using a vehicle for work tasks beyond normal commuting—things like carrying tools to a job site, visiting properties, or dropping off orders. Many personal auto policies exclude these activities or cover them only with a special business-use endorsement. If your work depends on a vehicle (or you put company branding on it, carry equipment, or have employees driving), insurers often require a Business Auto Policy (BAP) instead.
A BAP can be tailored to cover:
- Owned autos (vehicles titled to your business)
- Hired autos (short-term rentals)
- Non-owned autos (an employee’s personal car used for your errands)
BAPs commonly use a combined single limit (CSL)—often $500,000 or $1,000,000—because lawsuits can get expensive. That higher single limit is a practical fit for business risks.
If you don’t own business vehicles but staff sometimes drive their own cars to the bank, supplier, or client site, ask about Hired & Non-Owned Auto (HNOA) liability. It protects the business when there’s an at-fault crash in a vehicle the business doesn’t own. (It’s not the same as the driver’s personal insurance.)
Special Rules for Rideshare (Uber/Lyft) in California
California has extra protections for rideshare trips. Insurance is split into “periods”:
- Period 1 (app on, no ride accepted): Primary liability must be $50,000 per person / $100,000 per accident / $30,000 property damage, plus $200,000 excess coverage.
- Periods 2 & 3 (match accepted / passenger in car): Primary commercial liability of $1,000,000. During Period 3, there must also be $1,000,000 in UM/UIM (uninsured/underinsured motorist) coverage.
These rules help close gaps between personal policies and app driving. If you rideshare, understand which policy responds in each period before you hit “go online.”
What about Food Delivery and Errands?
Many personal policies exclude deliveries for pay. If you (or your employees) deliver food or goods, talk to an agent about a BAP or HNOA so your business—not just the driver—is protected when a crash happens mid-delivery. (Some apps offer contingent coverage; don’t assume it replaces your own business protection.)
What Coverage Should You Consider?
At a minimum, you must meet California’s liability limits. But most businesses go higher because a single severe crash can exceed 30/60/15 quickly. Build a package that fits how you drive:
- Liability (higher than minimums): Protects you if you injure someone or damage their property. Businesses often choose a $500k–$1M CSL.
- Collision & Comprehensive: Fix or replace your vehicle after a crash, theft, fire, or storm. (Not required by law, but often required by lenders.)
- Uninsured/Underinsured Motorist (UM/UIM): Pays you and your passengers when the other driver doesn’t have enough insurance. Strongly recommended given rising costs.
- Medical Payments: Quick medical help for you and passengers regardless of fault; useful add-on.
- Hired & Non-Owned Auto (HNOA): If employees sometimes drive their cars or you rent cars for work.
- Umbrella/Excess liability: Extra layer above your auto and general liability limits if you have higher risk or contracts that require it.
How Much Does “Car Insurance with Business” Cost?
Prices vary by vehicle, city, driving records, miles driven, and limits. Recent benchmarks:
- In California, small businesses average about $113/month for commercial auto (typical policy with modest limits; your price may differ).
- Nationally, small businesses pay around $147/month on average; some carriers report medians near $212–$219/month for common business auto classes.
- Across the broader market, auto rates rose again in 2025 (after big increases in 2023–24), reflecting parts, repair, and claim costs—another reason to compare quotes.
Tip: California’s Shop & Compare tool from the Department of Insurance lets you compare sample premiums across companies before you call an agent. It’s free and useful for both personal and commercial shoppers.
Real-World Examples
- Contractor with a pickup: You carry tools and visit job sites daily. A BAP with a $1M CSL and HNOA (for when a helper uses their own car) makes sense. Without HNOA, your business could be sued if that helper rear-ends someone while buying materials for you.
- Bakery delivering cakes: You start deliveries twice a week. Your personal policy probably won’t cover this. Move the vehicle to a BAP or add the right endorsement, and consider higher comp/collision if the van wraps are costly to replace.
- Realtor driving clients: Lots of client visits = business use. If the car is personally titled, ask about a business-use endorsement or a BAP (some carriers require a BAP when usage is frequent). Add medical payments and UM/UIM for client safety.
- Uber/Lyft driver: Coverage changes by period. Know how your personal policy and the app’s policy interact so you don’t end up in a coverage gap—especially in Period 1 before a ride is accepted.
Common California Pitfalls (and how to avoid them)
- Thinking “minimum” is enough. Medical bills and vehicle repairs add up fast. Consider limits above 30/60/15 (or a single $500k–$1M CSL) to protect your business assets.
- Using the Low-Cost Auto program for work. California’s Low-Cost Auto Insurance (CLCA) helps low-income drivers meet minimum requirements, but vehicles used for commercial purposes are not eligible. Don’t rely on CLCA if you deliver or do business driving.
- No proof of insurance in the car. California requires you to carry it and show it on request (paper or electronic).
How to Buy Smart (and save)
- Match the policy to the job. Be honest about business miles, who drives, and what you haul. That’s how you avoid claim denials later.
- Bundle and compare. Use the state’s comparison tool, then ask a broker to match coverage and limits across carriers. Consider telematics/driver-safety programs and higher deductibles to lower premiums.
- Add HNOA if anyone runs errands for work in their own car. It’s a simple way to protect the business from lawsuits.
Bottomline
For Californians, car insurance with business use is more than checking a box—it’s how you stay legal, protect your cash flow, and keep serving customers. Know the state minimums (now 30/60/15), understand when you need a BAP or HNOA, and make sure rideshare or delivery activity is covered in the right period. Then shop smart for price and service. Do that, and your wheels—and your work—are far safer on California roads.