Opening a salon or spa in California is exciting—until you hit the insurance requirements. Here's what catches most new owners off guard: the state itself doesn't mandate liability insurance to operate. But try signing a commercial lease without it. Try booking a contract with a hotel or event venue. You'll hit a wall fast. The real insurance requirements come from landlords, commercial clients, and basic business protection, not state law.
This guide breaks down exactly what insurance you need to run a salon or spa in California, what the state actually requires versus what you'll need in practice, and how to avoid the costly mistakes that trip up new business owners.
What California Law Actually Requires
Let's start with the one non-negotiable: workers' compensation insurance. If you employ anyone—even a single part-time shampoo assistant—California requires workers' comp coverage from day one. There's no exemption for small businesses, no grace period, and no threshold. First employee equals mandatory coverage.
Salons and spas typically fall under California workers' compensation class code 9586 for 'Barber Shops, Hair Styling Salons and Personal Appearance Services.' This covers standard salon services like haircuts, styling, manicures, pedicures, facials, and massage. If you operate a full spa with facilities like saunas, steam rooms, hydrotherapy baths, or soaking tubs, you're classified under code 9054 for spas and baths.
The classification matters because it affects your premium rates. But here's the critical detail: independent contractors don't require coverage under your policy. However, California has strict rules about who qualifies as an independent contractor. They must be free from your control and direction, perform work outside your core business, and maintain an independently established trade or business. If you're misclassifying employees as contractors to avoid workers' comp, you're exposing yourself to serious penalties.
General Liability: Not Required, But Essential
The California Board of Barbering and Cosmetology doesn't require liability insurance to obtain your cosmetology or esthetician license. But that's where the technicality ends. In practice, you absolutely need general liability coverage.
Commercial landlords won't lease space to you without proof of coverage. The industry standard is $2 million per occurrence with a $3 million aggregate limit for the policy year. Premium locations—think high-end shopping districts in Beverly Hills or San Francisco—often require even higher limits. Your lease agreement will specify the exact coverage amounts, and you'll need to name your landlord as an additional insured on the policy.
General liability protects you when a client slips on your wet floor and breaks a wrist, when chemical fumes from your salon irritate the neighboring business, or when you accidentally damage property during an off-site event. It covers bodily injury, property damage, and advertising injury claims. Without it, a single lawsuit could shut down your business.
Professional Liability: Protecting Against Service Claims
Professional liability insurance—sometimes called errors and omissions coverage—handles claims arising from your actual services. A client has an allergic reaction to your facial products. A chemical peel causes scarring. A color treatment damages someone's hair. These aren't covered by general liability because they're the result of professional services, not accidents.
Again, California doesn't legally mandate professional liability insurance. But you're operating without a safety net if you skip it. One lawsuit over damaged hair or a botched service can cost tens of thousands in legal fees alone, even if you win. Most professional liability policies include both coverage for claims and legal defense costs.
Medical spas face heightened risk here. If you're offering services like laser treatments, injectables, or other procedures that cross into medical territory, you need higher coverage limits and specialized policies. California requires that a licensed physician be a majority shareholder in medical spa companies, and your insurance needs to reflect the medical nature of your services.
Special Considerations for Booth Renters and Suite Salons
If you operate a booth rental salon or suite concept, the insurance landscape changes. California requires written rental agreements with each booth renter, and those renters must carry their own insurance. Your policy doesn't extend to cover their activities or their clients.
As the salon owner, you still need general liability coverage for the common areas and your property. But each independent renter needs their own professional and general liability policy. Many stylists rent booths specifically to avoid being classified as employees, which means they're responsible for their own insurance, taxes, and licensing. Make proof of insurance part of your rental agreement, and collect updated certificates annually.
Additional Coverage to Consider
Beyond the core policies, smart salon owners in California consider these additional coverages:
Business property insurance protects your equipment, furniture, and inventory. Styling chairs, dryers, treatment tables, and product inventory represent a significant investment. If a fire or break-in destroys your space, property insurance replaces what you've lost.
Business interruption insurance covers lost income if you're forced to close temporarily due to a covered event. A burst pipe floods your salon and you're shut down for three weeks during repairs. This coverage pays for lost revenue and ongoing expenses like rent and utilities while you're closed.
Products and completed operations coverage is often included in general liability policies but worth verifying. This extends your coverage beyond the moment a service is performed. If a client has a delayed allergic reaction to a product you sold them, or skin damage appears weeks after a facial treatment, this coverage responds.
How to Get the Right Coverage
Start by reviewing your commercial lease requirements. Your landlord's insurance requirements establish your baseline coverage. Then assess your specific risks based on the services you offer. A basic hair salon has different exposure than a medical spa offering laser treatments.
Many insurers offer Business Owner's Policies that bundle general liability, property coverage, and business interruption insurance into one package, often at a lower cost than purchasing each separately. Compare quotes from multiple carriers, but don't make decisions based solely on price. A cheap policy with inadequate limits or significant exclusions isn't actually saving you money.
If you employ staff, secure workers' compensation coverage before your first employee starts work. Operating without it exposes you to substantial fines and penalties, plus you're personally liable for any workplace injuries. New employment laws in 2026 also require you to provide employees with workplace rights notices, including information about workers' compensation, by February 1, 2026 and annually thereafter.
Insurance might feel like just another expense when you're launching your salon or spa, but it's the foundation that protects everything you're building. Get the right coverage in place before you open your doors, and review your policies annually as your business grows and changes.
