Running a restaurant in California is exciting—but it’s also risky. Between busy kitchens, employees moving fast, and customers coming and going all day, accidents can happen at any time. California also has some of the strictest labor and liability laws in the U.S., which means being underinsured can shut your business down faster than you think.
This guide takes a risk-based approach to explain the most important business insurance for restaurants, why each one matters in California, and what can happen if you skip it.
General Liability Insurance
General liability insurance protects your restaurant when someone outside your business gets hurt or their property is damaged.
Why It Matters in California:
Slip-and-fall claims are extremely common in California restaurants. According to industry data, customer injury claims make up a large portion of restaurant lawsuits, and average settlements can range from $20,000 to over $75,000 depending on severity.
Real-World Example:
A customer slips on a wet floor near the drink station and breaks their wrist. Without general liability insurance, you could be personally responsible for medical bills, legal fees, and a settlement.
What Happens If You Skip It:
One lawsuit can wipe out years of profits—or force you to close permanently.
Workers’ Compensation Insurance
Workers’ compensation covers medical bills and lost wages when employees get injured on the job.
Why It Matters in California:
California law requires workers’ compensation for every business with at least one employee—even part-time or family members. Penalties for not carrying coverage can reach $100,000, plus criminal charges.
Real-World Example:
A line cook suffers a severe burn from hot oil. Workers’ comp covers their medical care and time off work.
What Happens If You Skip It:
You’ll pay medical costs out of pocket, face state penalties, and may be sued by the injured employee.
Commercial Property Insurance
Commercial property insurance protects your building, kitchen equipment, furniture, and inventory from damage.
Why It Matters in California:
Kitchen fires are one of the leading causes of restaurant losses. California fire codes are strict, but accidents still happen—even in well-run kitchens.
Real-World Example:
A grease fire damages your stove hood, walls, and electrical system. Repairs cost $60,000.
What Happens If You Skip It:
You may not be able to reopen due to repair costs, lost equipment, and spoiled inventory.
Business Interruption Insurance
Business interruption insurance helps replace lost income if your restaurant must temporarily close due to a covered event.
Why It Matters in California:
Closures due to fires, water damage, or even mandated repairs can last weeks or months.
Real-World Example:
A small kitchen fire forces you to close for 45 days. Business interruption insurance helps cover rent, payroll, and utilities while you’re closed.
What Happens If You Skip It:
Even a short closure can drain cash reserves and lead to permanent shutdown.
Commercial Auto Insurance
Commercial auto insurance covers vehicles used for business purposes, including food delivery.
Why It Matters in California:
Personal auto insurance often does not cover business use. California requires proper coverage if vehicles are used for deliveries.
Real-World Example:
An employee causes an accident while delivering food. The injured driver sues your restaurant.
What Happens If You Skip It:
You could be liable for injuries, vehicle damage, and legal costs with no protection.
Employment Practices Liability Insurance (EPLI)
EPLI protects against claims related to wrongful termination, discrimination, or harassment.
Why It Matters in California:
California is one of the most employee-friendly states in the country. Even small restaurants face high exposure to employment lawsuits.
Real-World Example:
A former employee claims wrongful termination and files a lawsuit.
What Happens If You Skip It:
Legal defense costs alone can exceed $25,000, even if you did nothing wrong.
Why Insurance Is Not Optional in California
California restaurants operate in a high-risk, high-regulation environment. Skipping coverage doesn’t just increase risk—it creates guaranteed exposure. The most important business insurance for restaurants isn’t about checking boxes; it’s about staying open, protecting employees, and avoiding financial disaster.
Bottomline: How Humano Helps Restaurants Get Properly Covered
Humano specializes in helping California restaurant owners get the right coverage without overpaying.
Here’s how Humano helps:
- Access to hundreds of insurance carriers for better pricing
- Low down payment, pay-as-you-go options for cash-flow flexibility
- Coverage tailored specifically to California restaurant risks
- Clear guidance so you understand what you’re buying—and why it matters
If you’re serious about protecting your restaurant, your staff, and your future, Humano helps make sure you have the most important business insurance for restaurants—before something goes wrong.