If you're running a home healthcare business in California, you're stepping into one of the most heavily regulated industries in the state. And for good reason—you're responsible for the wellbeing of vulnerable people in their own homes. That responsibility comes with strict insurance requirements that can feel overwhelming if you're just starting out. But here's the thing: understanding these requirements isn't just about staying compliant. It's about protecting your business, your employees, and the people you serve.
California has different rules depending on whether you're providing skilled medical care (like nursing or physical therapy) or non-medical care (like companionship and assistance with daily activities). The type of service you offer determines which state agency licenses you and what insurance you need. Let's break down exactly what's required so you can focus on what matters most—caring for your clients.
Understanding the Two Types of Home Healthcare Businesses in California
California makes an important distinction between home health agencies and home care organizations. Home health agencies provide skilled medical services—think registered nurses, physical therapists, or occupational therapists coming to someone's home. These agencies are licensed by the California Department of Public Health. On the other hand, home care organizations offer non-medical support like help with bathing, dressing, meal preparation, and companionship. These businesses are licensed by the California Department of Social Services through the Home Care Services Bureau.
This distinction matters because each type has different insurance requirements. Home health agencies must submit proof of insurance as part of their licensing application with the Department of Public Health, including general liability and professional liability coverage. Home care organizations, meanwhile, face very specific minimum coverage amounts that are spelled out in California law. If you're starting a business or expanding your services, figuring out which category you fall into is your first step.
Workers' Compensation: The Non-Negotiable Requirement
Let's start with the big one: workers' compensation insurance. In California, if you employ home healthcare workers—whether they're certified nursing assistants or non-medical caregivers—you're required to carry workers' comp if those employees work at least 52 hours in a 90-day period or earn at least $100 during that same timeframe. Here's the reality: that threshold is so low that it effectively means all household employers need coverage. If you have even one part-time employee, you need this insurance.
Why is this so important? Because home healthcare is physically demanding work. Your employees are lifting patients, helping them move around, and working in environments that may not be set up for safety the way a hospital is. If a worker gets injured on the job—say they hurt their back transferring a client from a bed to a wheelchair—workers' comp covers their medical bills and lost wages. Without it, you could be personally liable for those costs, which can quickly run into tens of thousands of dollars. Plus, operating without required workers' comp coverage can result in serious fines and even criminal charges in California.
You can get workers' compensation coverage through several channels: some homeowner's insurance policies offer it as an add-on rider, you can go through the California State Compensation Insurance Fund, or you can purchase a policy from private insurers who specialize in coverage for household employers. Home healthcare businesses should expect to pay average premiums that reflect the physical nature of the work and the associated injury risks.
Professional and General Liability Insurance Requirements
For home care organizations licensed by the Department of Social Services, California law is crystal clear about liability insurance. You must maintain combined professional and general liability insurance with at least $1,000,000 per occurrence and $3,000,000 in the aggregate. This isn't optional—it's a condition of licensure. You'll need to submit a certificate of insurance proving you have this coverage when you apply for your license and again at renewal.
General liability insurance protects you if a client or third party gets injured due to your business operations. Picture this: your caregiver accidentally leaves a client's walker in the hallway, and the client trips over it and fractures their hip. That's exactly the kind of claim general liability covers—bodily injury caused by your operations. Professional liability insurance (sometimes called errors and omissions insurance) covers claims of negligence or mistakes in the care you provide. If a family alleges that your caregiver failed to follow medication instructions and it harmed their loved one, professional liability steps in.
Home health agencies providing skilled medical care have to submit proof of insurance to the Department of Public Health as part of their licensing application, though the specific minimum amounts aren't as explicitly defined in regulation as they are for home care organizations. That said, most healthcare facilities and client contracts will require you to carry substantial coverage—often in the same $1 million to $3 million range. Even if the state doesn't mandate a specific minimum for your license type, your clients will. Insurance carriers often offer bundled policies that combine both general and professional liability coverage, which can streamline your coverage and sometimes reduce costs.
Employee Dishonesty Bonds and Additional Coverage
Here's something many new home care business owners don't realize they need: an employee dishonesty bond. California requires home care organizations to carry a bond with a minimum of $10,000 that includes third-party coverage. This protects your clients if one of your employees steals from them—unfortunately, a real risk when workers have access to clients' homes and personal belongings.
The bond requirement reflects the trust inherent in home healthcare work. Your caregivers are often alone with vulnerable seniors and people with disabilities. They're in homes where valuables, medications, and personal information are accessible. A dishonesty bond reassures clients and their families that they have recourse if theft occurs, and it protects your business reputation. The cost is relatively modest—usually a few hundred dollars annually—but the protection it provides is invaluable.
Navigating Rising Insurance Costs in 2025-2026
If you've shopped for home healthcare insurance recently, you've probably noticed that premiums aren't cheap—and they've been climbing. The COVID-19 pandemic, rising claims, and increased regulatory scrutiny have all pushed costs upward over the past few years. Industry data shows that home health aides and small agencies pay average monthly premiums ranging from $42 to $51 for liability insurance, though your actual costs will depend on factors like your revenue, number of employees, services offered, and claims history.
Looking ahead to 2025 and 2026, expect California to increase regulatory oversight of home healthcare businesses. The state's population of residents over 65 is projected to nearly double over the next two decades, driving enormous growth in demand for home care services. With that growth comes more regulation. Staying ahead of compliance requirements—including maintaining adequate insurance coverage—will be critical for business sustainability. Working with an insurance broker who specializes in healthcare businesses can help you find coverage that meets California's requirements without overpaying.
How to Get Started and Stay Compliant
Getting your insurance in order starts with understanding which type of home healthcare business you're running. If you provide skilled medical services, contact the California Department of Public Health to understand their specific insurance documentation requirements for licensing. If you offer non-medical care, the California Department of Social Services Home Care Services Bureau has detailed application instructions that spell out exactly what insurance certificates you need to submit.
Once you're licensed, staying compliant means keeping all your policies current. Your California Department of Public Health or Department of Social Services license requires annual renewal, and you'll need to prove you still have adequate insurance coverage. Set calendar reminders well before your policy renewal dates so you never have a lapse in coverage. A gap in insurance—even a short one—can put your license at risk and leave you exposed to catastrophic liability.
Finally, don't cut corners on coverage to save money. The insurance requirements exist because home healthcare involves real risks—to your employees, to your clients, and to your business. A single serious injury or negligence claim can bankrupt an underinsured business. The peace of mind that comes with proper coverage is worth the premium. If you're ready to get quotes, reach out to multiple insurers or work with a broker who can compare options. Make sure any policy you purchase specifically covers home healthcare operations and meets California's minimum requirements for your license type.
