California Restaurants Just Took a Double Insurance Hit -- and Most Owners Only See Half of It, Says Los Angeles Broker

Workers' compensation rates rose September 1 for the second straight year, while commercial property insurance increases quietly flow into restaurant leases. Broadway Insurance Services explains what operators should check before their next renewal.

LOS ANGELES, Sept. 9, 2026 /PRNewswire/ -- California restaurant owners are absorbing two insurance cost increases this fall, and according to Los Angeles insurance broker William Lemmon, most only see one of them coming.

On September 1, California's new workers' compensation advisory pure premium rate took effect: $1.65 per $100 of payroll, a 6.6% increase approved by Insurance Commissioner Ricardo Lara in July. It marks the second consecutive annual increase after roughly a decade of declining rates, driven by rising cumulative trauma claims, higher medical costs, and growing claims-adjustment expenses.

No industry absorbs a workers' comp increase faster than restaurants, which run some of the highest payroll-to-revenue ratios of any business in the state.

"Workers' comp is priced on payroll, and restaurants carry more payroll per dollar of revenue than almost any business in California," said Lemmon, Principal Broker at Broadway Insurance Services. "When that rate moves, a restaurant feels it on the very next renewal. Some industries barely notice."

The second increase is harder to spot. Commercial property insurance costs have climbed sharply across California, and in the triple-net (NNN) leases most restaurants sign, the building's insurance bill passes directly through to the tenant.

"Most restaurant owners have never read the insurance clause in their lease," Lemmon said. "The landlord's premium jumps, and it lands in their CAM charges a few months later. They end up paying for California's property insurance problem twice — once on their own policy and once through the lease."

Lemmon notes that the state's advisory rate is a benchmark, not a mandate — carriers remain free to set their own workers' compensation rates. That makes this fall a critical window for restaurant operators to act rather than auto-renew.

Broadway Insurance Services recommends restaurant owners take four steps before their next renewal: verify that every employee is coded under the correct workers' comp classification, document safety training and claims-prevention programs, obtain competing workers' comp quotes rather than accepting the renewal, and review the insurance pass-through language in their lease.

"The carriers that want restaurant business right now are pricing for it," Lemmon said. "If your renewal comes in high and you never shop it, that's money left on the table."

A full breakdown for restaurant operators is available at https://broadwayinsurance.agency/blog/california-restaurant-insurance-double-hit-2026 

About Broadway Insurance Services

Broadway Insurance Services is an independent property and casualty brokerage based in Los Angeles (CA License #0H45461). The agency specializes in insurance for restaurants and hospitality businesses, commercial property, and habitational risks, with access to both admitted and surplus lines markets. Learn more at broadwayinsurance.agency.

Media Contact: William Lemmon, Principal Broker, Broadway Insurance Services, (213) 221-1247, [email protected] 

SOURCE Broadway Insurance Services