Short answer: California law requires every restaurant with employees to carry workers' compensation (Labor Code §3700), and any business-owned vehicle needs at least $30,000/$60,000/$15,000 liability. General liability, property and liquor liability aren't required by state statute, but leases, landlords and venues usually require them by contract.
What the law requires vs. what's just smart
| Coverage | Required in California? | Source |
|---|---|---|
| Workers' compensation | Yes, for every employer with even one employee, including part-time staff | Labor Code §3700 |
| Penalty for going without it | Misdemeanor: up to 1 year in county jail and/or a fine of at least $10,000 (at least $50,000 for a repeat conviction) | Labor Code §3700.5 |
| Auto liability on business vehicles (delivery cars, catering vans) | Yes. At least $30,000/$60,000/$15,000 for policies issued or renewed on or after Jan. 1, 2025 | Vehicle Code §16056 |
| General liability, property, liquor liability | Not required by state statute, but leases, lenders and event venues often require them by contract | Your lease or contract |
Liquor liability in California: what the statute says
California's dram shop rule is narrower than many states'. Business and Professions Code §25602 makes serving an obviously intoxicated person a misdemeanor but says the seller generally isn't civilly liable for injuries the drinker later causes. The main exception is §25602.1: a licensee who serves an obviously intoxicated minor can be sued. Liquor liability coverage still matters because lawsuits cost money to defend, and many leases and ABC-licensed venues ask for proof of it.
A practical checklist for California restaurant owners
- Get workers' comp before the first shift, including for family members on payroll and part-time dishwashers.
- Read your lease for the liability limits, additional insured wording and waiver of subrogation it requires.
- Ask about food spoilage and equipment breakdown if your walk-in cooler is a big part of your inventory.
- Check delivery exposure. If staff deliver in their own cars, ask about hired and non-owned auto coverage.
- Keep proof of coverage where you can find it for inspections, landlords and event organizers.
See also our restaurant insurance overview and restaurant workers' comp and liquor liability insurance.
Frequently asked questions
Is workers' comp required for a California restaurant?
Yes. Labor Code §3700 requires every California employer to secure workers' compensation, even with one part-time employee. Failing to do so is a misdemeanor under §3700.5 with a minimum fine of $10,000.
Is liquor liability insurance required in California?
No state statute requires it, but leases, venues and lenders often do. California's §25602 generally shields sellers from civil liability for what an intoxicated adult later does, with an exception for serving an obviously intoxicated minor under §25602.1.
Is general liability insurance legally required for a restaurant in California?
Not by state statute. It is usually required by your lease, landlord or contracts, so check those documents for the limits they ask for.
What auto insurance does a restaurant delivery vehicle need in California?
A business-owned vehicle needs at least $30,000/$60,000/$15,000 liability under Vehicle Code §16056 for policies issued or renewed since Jan. 1, 2025. If employees use their own cars, ask about hired and non-owned auto coverage.
Alishahi Insurance · 439 N Canon Dr, Penthouse, Beverly Hills, CA 90210 · (877) 711-4545 · CA License #4348151. General information only. Not legal, tax or financial advice, and not a coverage determination. Coverage depends on policy language and underwriting, and rules vary by state.
Related guide: Insurance for Los Angeles restaurants, step by step