North San Jose business takes hit as insurance bails

San Jose small businesses dependent on liability insurance have fallen on hard times as insurance carriers exit California or increase premiums by double digits.

Laine’s Bait and Rentals, one of the most recognizable family-owned storefronts in North San Jose’s Alviso neighborhood, is one of those businesses. The mom and pop shop opened in the 1950s for anglers heading out on the San Francisco Bay. But the “rentals” in Laine’s Bait and Rentals hasn’t been part of the business since its liability insurer dropped their kayak coverage. Owner Kyle Laine said they’ve taken a financial hit — leading them to put the storefront building up for sale.

“We haven’t been able to rent out kayaks in over a year,” Laine told San José Spotlight. “We could make a couple hundred thousand dollars a year if we could rent out, and it would be run by four or five employees.”

The storefront on 907 Elizabeth St. built in 1925 is listed at $1,050,000, according to Zillow. The building is listed as a historical landmark in San Jose’s historic resources inventory.

Residents in the Alviso neighborhood have long said the area is one of the most neglected by city officials.

Longtime resident and advocate Richard Santos said the unaddressed illegal dumping and blight hurts the perception of Alviso small business owners, and could be one of the reasons why insurance companies are dropping them.

A 2021 fire destroyed the historic H.G. Wade Warehouse in Alviso, which residents said was poorly maintained.

“We’ve had at least 10 fires in the last few years … I’ve taken code enforcement officials with me around the neighborhood to show everything that should be addressed, and they did nothing,” Santos told San José Spotlight. “I said, ‘You’re going to let our town burn down one day.'”

The storefront will close, but there will be a small building next door where the owners will have a fish and game machine for customers that need licenses and tags. Laine said they will be getting a refrigerated machine for worms and other tackle. He urges customers to call ahead so the business can arrange services.

“We will be relocating the vending machine down to Vahl’s Restaurant,” Laine said. “Again, not my fault, just California insurance policies.”

Tom Manzo, founder of California Business and Industrial Alliance, said general liability and property insurance statewide has skyrocketed as much as 400%. He said state officials like California Insurance Commissioner Ricardo Lara need to get a handle on the increasing insurance rates, because small business owners and their customers will suffer the most.

“Many small businesses aren’t able to absorb those costs,” Manzo told San José Spotlight. “Our organization advocates for small- to medium-sized businesses — we want them to succeed. But unfortunately our own government is making it more and more difficult daily to survive.”

San Jose Chamber of Commerce President and CEO Leah Toeniskoetter echoed similar sentiments, saying rising cost and limited availability of liability insurance is forcing small businesses to scale back operations, or even shut down altogether.

“In industries like outdoor recreation, where businesses rely on access to affordable coverage, these challenges are particularly severe,” she told San José Spotlight. “Addressing this issue requires collaboration at the state level to ensure insurers remain in the market and businesses can access the protection they need to operate successfully.”