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California Workers' Compensation Insurance

California requires all businesses to carry workers’ compensation insurance for its employees. As the most populated state in the country, California has an extensive workers’ compensation system: It provides coverage to nearly 700,000 businesses and delivers work comp benefits to almost 800,000 injured workers every year (2017 State of the Workers' Compensation Insurance System).

The state’s higher cost of living is reflected in insurance rates, but premiums have held fairly flat the past couple years. Below, we outline workers’ comp requirements for California small businesses.

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Small Business Work Comp Requirements in California

You are required to carry workers' compensation insurance in California if:

  • You have any employees working in California.
  • You are a roofer, even if you don’t have any employees.

Contractors: If you are an independent contractor, you might not be covered by the hiring company’s insurance policy and may need to provide proof of work comp. Are you an employee or an independent contractor?

Owners: Sole proprietors may choose to include themselves, and should do so by clearly stating this inclusion on the policy, or adding a coverage endorsement. Directors and officers must be included in coverage, unless the corporation is fully owned by the directors and officers.

Employers must comply with the state where employees perform work - not necessarily where the business is located. If workers are in multiple states or temporarily working out-of-state, business owners may need to purchase additional coverage.

How to Buy Small Business Workers’ Compensation Insurance

California has a private market. You can purchase a workers' compensation policy from any private insurance carrier or agency that is licensed to write in that state. Get started on a policy with WorkCompOne >>

California has a state fund that competes with the private market, and also provides a last resort for businesses that can’t secure coverage elsewhere.

In the past, self-insurance was a viable option for only large companies. However, group self-insurance, which allows several employers to jointly self-insure, has increased in popularity. All self-insurance programs must meet state guidelines.

Coverage and Rates in California

According to the 2017 State of the Workers' Compensation Insurance System report, premiums are holding fairly steady, in contrast to the double-digit growth in 2010 through 2014, and rates decreased slightly in 2017. That said, California has the highest rates in the country, as a result of higher medical, legal and administrative costs, and a high frequency of permanent disability claims.

The nature of your business, number of employees being covered and past coverage and claims are all factors in how much your premium will cost. Learn more about workers' comp insurance rates >>

If you have questions about who needs to be covered by the policy and other questions about work comp, California’s Information and Assistance (I&A) Unit helps employers and employees understand their rights and responsibilities.

Work comp covers wage replacement and medical bills for employees injured on the job. To protect against other injuries at your place of business, you may need general liability insurance. Learn more about general liability >>

California Work Comp Resources

Editor's note: Last updated on May 1, 2018

Here's What You Need to Get Started

To buy workers compensation insurance, you need to request a quote from a licensed insurance agent and provide some details about your business.

Here’s what to have in front of you:

  • Number of employees in each class code.
  • Total payroll for all employees. You may be able to exclude yourself if you don't wish to be covered under the policy. 
  • Federal ID Number. If you are a sole proprietor, you can use your Social Security Number.
  • Copy of your workers comp insurance policy, if you've had coverage or claims in the past few years. If you know your company's experience mod, please have your experience mod rating sheet or policy in front of you. Otherwise, you will be assigned a default rating of 1.0.
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The information on this page has been interpreted and summarized for your convenience. Please consult your state's governing authority for the most current and complete legislation.