If you run your own small business in California—whether you’re a freelance designer, gardener, tutor, or repair person—you are a sole proprietor. As a sole proprietor, your personal assets (like your home, car, or savings) are exposed if someone sues your business. That’s where general liability insurance for sole proprietor comes in: it helps protect you from legal costs, medical bills, or property damage claims.
Why California Matters
California law does not require sole proprietors to carry general liability insurance. But California also has no cap on lawsuit award amounts—which means a slip‑and‑fall in your workshop or damage while working at a client’s house could lead to large legal and medical bills far beyond what you can afford. California clients and contractors often require proof of liability insurance before hiring you.
What Does It Cover?
A commercial general liability (CGL) policy typically provides:
- Bodily injury to others (like a customer who trips in your office)
- Property damage you may cause (e.g. you accidentally break a client’s window while on the job)
- Advertising injury (such as accusations of slander or copyright infringement in your ads)
- Legal defense costs, even if the claim is groundless
For a sole proprietor, this is essential—legal defenses and court costs can be even more expensive than judgments.
How Much Does It Cost in California?
- Typical cost: In California, small businesses often pay around $30–$60 per month, about $500 per year for general liability coverage.
- MoneyGeek’s data shows sole proprietors generally pay about $61 per month (≈ $730 per year) for general liability policies.
- Insurers like Hiscox offer plans starting as low as $30/month in California.
Compare policies from at least three different insurers to find the best rates and terms
What Limits Should You Pick?
Your policy will have two basic limits:
- Per-occurrence limit: Maximum paid for a single claim (a common minimum is $1 million).
- Aggregate limit: The total the insurer will pay during a policy year.
Many California contracts or city vendor rules (like those in Beverly Hills) require minimum $2 million per occurrence limits. Even if you’re not working with the city, aiming for at least $1 million/$2 million aggregate is a smart safety net.
Do You Need a BOP or Just General Liability?
A Business Owner’s Policy (BOP) bundles general liability with property insurance and business interruption coverage—often at a discount compared to buying separately. If you operate with tools, inventory, or have a small workshop, a BOP may be more cost‑effective.
For example:
- General liability alone: ~$500/year.
- BOP with property coverage: maybe $1,000/year—but covers multiple scenarios and can lower your overall risk.
Make sure you check eligibility: many BOPs require your business to have few than 100 employees, revenue under $1–5 million, and low-risk operations.
Tips to Choose the Right Policy
Here’s how to choose confidently:
a. Assess your potential risks
Ask: Could someone fall or get hurt during your service? Do you work on someone’s property? Do you advertise or post about your business?
If the answer is yes, a general liability policy is important.
b. Know your industry norms
If you are a contractor, personal trainer, or host events, liability risk is higher. Vendors often need you to show insurance before hiring you.
c. Compare costs and services
The Hartford, NEXT, Simply Business, and Nationwide offer good rates for sole proprietors—most under $75/month for liability alone.
d. Understand policy terms
- Does the insurer defend you even for false claims?
- Is the policy occurrence-based (covers incidents during policy period even after it ends) or claims-made?
e. Look for discounts
Ask insurers about bundling (liability with property), paying annually, or higher deductibles to lower premiums.
Example Scenario: Jane the Florist in Sacramento
Jane runs a small flower‑delivery and event decoración business in Sacramento. A guest trips over her cart at a wedding and breaks a wrist. Medical bills and a lawsuit total $50,000.
- Without insurance, Jane might pay from savings or risk bankruptcy.
- With general liability insurance with $1 million per occurrence, her insurer pays medical fees, legal defense, and settlement—protecting her personal assets.
Her policy cost was about $45/month with a $1,000 deductible. Her client venues also required proof of insurance before booking.
Final Checklist for California Sole Proprietors
| Step | What to Do |
| 1. Recognize your risks | Slip‑and‑falls, property damage, advertising complaints |
| 2. Know state context | Not required, but lawsuits have no caps in CA; clients often require it |
| 3. Find the right limits | Aim for at least $1 million per occurrence / $2 million aggregate |
| 4. Consider a BOP | If you have tools, inventory, or a workspace |
| 5. Compare insurers | Shop rates from at least three providers (e.g., Hartford, NEXT) |
| 6. Review terms | Occurrence vs. claims-made; read coverage exclusions |
| 7. Ask about cost‑saving options | Bundling, annual payment, deductibles, discounts |
| 8. Maintain proof | Keep your certificate of insurance—clients may ask anytime |
In Summary
As a California sole proprietor, general liability insurance for sole proprietor isn’t legally required—but it is critical. Lawsuits in California can be very costly, and personal assets are at risk. Many clients will require proof of insurance before they work with you. With monthly costs often as low as $30–$60, and reputable providers offering policies under $75/month, this coverage is affordable and wise.
By picking the right policy limits, understanding your risks, comparing insurers like Hartford, NEXT, and Simply Business, and knowing how to lower costs, you can protect your business and your life. It gives you peace of mind—and the freedom to focus on what you love doing.
