Running a business in San Francisco comes with unique challenges—and unique insurance needs. Whether you're launching a tech startup in SoMa, running a consulting firm in the Financial District, or operating a small retail shop in the Mission, you're facing risks that businesses in other cities might not think twice about. Earthquake exposure. Skyrocketing commercial rents. Cyber threats that target the Bay Area's concentration of tech companies. Your business insurance needs to address all of it.
Here's what most San Francisco business owners don't realize until it's too late: the insurance you need isn't just about protecting your assets. It's about meeting the requirements that keep your doors open. Can't sign that office lease without general liability? Can't close your Series A without D&O coverage? Can't sleep at night knowing a data breach could bankrupt your startup? This guide walks you through exactly what you need—and why it matters for your specific situation.
The Five Essential Coverages for SF Businesses
Let's start with the basics. If you're running a business in San Francisco, you'll almost certainly need these five types of coverage. Some are legally required. Others are practically required—meaning you won't be able to operate without them, even if the law doesn't technically mandate them.
General liability insurance is your foundation. This coverage protects you if someone gets injured at your business or if you accidentally damage someone else's property. In San Francisco, you'll need this to sign virtually any commercial lease or co-working space agreement. Landlords aren't going to risk a lawsuit because someone slipped on your wet floor. Costs vary based on your industry and revenue, but this is non-negotiable if you want physical business space.
Workers' compensation is legally required the moment you hire your first employee—even if they're remote. California doesn't mess around with workers' comp requirements. If your employee lives in another state, you might need coverage there too. The good news? This protects both you and your employees. If someone gets injured on the job, workers' comp covers their medical bills and lost wages, and in return, they typically can't sue you.
Professional liability insurance (also called errors and omissions or E&O) covers you if a client claims your work caused them financial harm. For consultants, developers, designers, and anyone selling expertise, this is critical. Did your code have a bug that caused downtime? Did your marketing advice lead to a failed campaign? Professional liability has your back when clients blame you for their losses.
Why Tech Startups Need Different Coverage
San Francisco's tech scene creates specific insurance demands you won't find in other industries. If you're building software, handling user data, or raising venture capital, you need coverage that addresses those unique risks.
Cyber liability insurance isn't optional for tech companies—it's essential. Data breaches are expensive, and California law requires you to notify residents if their personal information is compromised. For San Francisco tech companies, cyber insurance typically costs between $1,000 and $5,000 annually for $1 million in coverage. Tech companies often pay 30-50% more than other industries because of the higher risks around intellectual property and third-party data. The good news? Strong cybersecurity practices can lower your premiums. Insurers will evaluate your security measures before setting rates, so investing in proper security tools and protocols pays off twice—it protects your business and reduces insurance costs.
Directors and officers (D&O) insurance protects your leadership team from lawsuits related to their business decisions. This might seem like overkill for a small startup, but here's the reality: most VCs require D&O insurance before they'll close a funding round. It protects your board members, executives, and investors if someone sues over decisions made on behalf of the company. Think employment practices claims, alleged mismanagement, or disputes with shareholders. D&O insurance makes sure these lawsuits don't personally bankrupt your leadership team—and it shows investors you're serious about protecting everyone involved in your company's growth.
The Earthquake Risk Nobody Talks About
Standard commercial property insurance doesn't cover earthquake damage. Read that again, because it's important. If the Big One hits and your office is damaged, your regular property policy won't help. You need separate earthquake coverage—and more specifically, you need earthquake business interruption coverage.
Here's why business interruption coverage matters more than the property coverage itself. Almost half of small businesses affected by a disaster never reopen. Another 29% go out of business within two years. It's not the physical damage that kills them—it's the lost income while they're shut down. Earthquake business interruption insurance covers your lost revenue, payroll, taxes, and debt payments while you're unable to operate. Think about it: if an earthquake forces you to close for three months, can your business survive without income during that time? For most SF businesses, the answer is no.
Earthquake insurance isn't cheap, and the deductibles are high—typically 5% to 20% of your building's value for commercial policies. But when you're looking at $6.14 billion in average annual earthquake losses across the U.S., and you're sitting directly on major fault lines, this isn't a risk you can ignore. The question isn't whether San Francisco will experience a major earthquake. It's when—and whether your business will survive it.
What You'll Actually Pay
Insurance costs in San Francisco are higher than in other California cities. Higher cost of living, denser population, and increased liability risks all drive premiums up. A business in San Francisco typically pays more than one in Fresno for the same coverage.
That said, 2024 brought some relief for tech companies. Average E&O and cyber premiums decreased by 4% compared to 2023, thanks to increased competition among insurers and strong reinsurance capacity. IT businesses pay an average of $148 per month ($1,776 annually) for cyber liability coverage, though your actual cost depends on your revenue, the type of data you handle, and your security measures.
Several factors influence what you'll pay. Your industry matters—a software company faces different risks than a retail shop. Your revenue matters—higher revenue typically means higher coverage limits and higher premiums. Your claims history matters—past claims signal higher risk to insurers. And for cyber insurance specifically, your security posture matters tremendously. Strong security controls, employee training, and incident response plans can significantly reduce your premiums.
How to Get Started
Start by identifying what's required versus what's recommended. If you have employees, workers' comp is mandatory. If you're signing a lease, general liability is required. If you're raising funding, D&O is expected. Everything else depends on your specific risks and industry.
Talk to an insurance broker who specializes in your industry. San Francisco has several brokers who focus specifically on tech startups and understand the unique coverage needs of high-growth companies. They can help you bundle policies (often through a Business Owner's Policy or BOP) to reduce costs while ensuring you have complete coverage.
Don't wait until you need insurance to buy it. Once you've signed that lease, hired that employee, or closed that funding round, you're already exposed. Get quotes early, compare coverage options, and make sure you understand what's covered and what's not. The worst time to discover you don't have earthquake business interruption coverage is when you're standing in your damaged office with no income and three months of payroll to cover.
Business insurance in San Francisco isn't just about checking boxes or meeting requirements. It's about making sure your business survives the unexpected—whether that's a data breach, a lawsuit, or the earthquake everyone knows is coming eventually. Start with the essentials, add coverage as your risks grow, and work with professionals who understand your specific industry and challenges. Your business is worth protecting.
