Contractors Insurance Experts

What does the CSLB require before it will issue or renew a contractor license?

A surety bond from everyone, a second bond from some, a workers’ compensation certificate or exemption from everyone, and liability insurance only from limited liability companies. Business and Professions Code section 7071.6 requires a $25,000 contractor’s bond on file as a condition of issuing, renewing or maintaining a license. Section 7071.9 requires a second $25,000 bond of qualifying individual when the license is qualified by a responsible managing employee, or by an officer or member who owns less than 10 percent. An LLC licensee also needs a $100,000 worker bond under section 7071.6.5 and liability insurance under section 7071.19. That means $1,000,000 for five or fewer people on the personnel of record, plus $100,000 for each additional person, capped at $5,000,000. Section 7125 requires a workers’ compensation certificate or a no-employee exemption from every licensee. Everything else on a contractor’s insurance list is a contract requirement, not a license requirement.

Does California require general liability insurance for contractors?

Not by statute, except for LLC licensees under section 7071.19. What the law does require is disclosure. Section 7159 makes every home improvement contract over $500 carry a notice stating one of four things. The contractor carries commercial general liability insurance with a named insurer and a number to call, does not carry it, is self-insured, or is an LLC that carries the insurance the law requires. The same contract must state whether the contractor carries workers’ compensation or is exempt, and must cap the down payment at $1,000 or 10 percent, whichever is less, under section 7159.5. The general liability requirement itself lives in the contract or the permit: general contractors, owners and public agencies set the limits in their insurance exhibits, and no statewide statute sets a number.

What does a contractor’s general liability policy cover, and what does it leave out?

The Department of Insurance describes the three parts. Premises liability covers injury or damage from a condition on your premises or your operations in progress. Products liability and completed operations cover injury or damage arising out of your completed work, with their own aggregate limit. What it leaves out matters more on a job site. Injury to your own employees is excluded, because Labor Code section 3700 puts that obligation on the workers’ compensation policy. Damage to your own completed work is excluded, with an exception when the damaged work was done by a subcontractor on your behalf. Contractual liability is covered only as far as the policy’s definition of an insured contract reaches. California contractor policies commonly add two endorsements to read before you sign. A subcontractor warranty removes coverage for a sub’s work unless the sub had its own liability policy, named you as additional insured and signed an indemnity. A residential or condominium exclusion is tied to the construction defect exposure below. Professional liability, pollution and faulty workmanship that has not yet damaged other property sit outside the form and are sold separately.

Why does completed operations coverage matter for ten years after the job closes?

Because California gives an owner that long to sue. Code of Civil Procedure section 337.15 bars an action for a latent construction defect more than ten years after substantial completion. Section 337.1 sets four years for a patent defect, five where the injury happens in the fourth year. The Right to Repair Act in Civil Code sections 895 to 945.5 governs new residential units sold since 2003, with a ten-year outside limit in section 941. Section 896 sets shorter component limits: one year for inter-unit noise, two for untreated wood in soil, four for plumbing, electrical and hardscape, five for paint. An occurrence-based liability policy responds to damage that happens during its term, so a claim in year eight lands on the policy that was in force when the damage occurred. That is why completed operations has to stay in force year after year, and why a lapse or a switch to a policy with a completed operations exclusion leaves a gap the statute will find. Our wrap-up insurance page covers the same question on a project policy.

Why do general contractors put insurance demands in the subcontract instead of relying on indemnity?

Because California limits what an indemnity clause can do. Civil Code section 2782 voids any construction indemnity for the promisee’s sole negligence or willful misconduct. For residential work since 2009, subdivision (d) makes a subcontractor’s indemnity of the builder unenforceable to the extent the claim arises from the builder’s own negligence or from work outside the sub’s scope. That rule cannot be waived. Section 2782.05 does the same for non-residential contracts since 2013 for the general contractor’s active negligence. So the general contractor asks for what the statute leaves alone. That means an additional insured endorsement on your liability policy that includes completed operations, and primary and non-contributory wording so your policy pays before theirs. It usually adds a waiver of subrogation on liability, auto and workers’ compensation. Our specialty trade contractors page covers what each of those demands requires the policy to include.

What can a certificate of insurance not do for you?

Change the policy, or give the holder any rights. A certificate is evidence that a policy existed on the date shown. The additional insured status, the primary wording and the waiver come from endorsements, and California law says the certificate cannot alter the coverage it describes. The CSLB has its own rules for the certificate it receives. It wants the insured name exactly as licensed, the license number in the description box, and the CSLB as certificate holder. The certificate must be less than 90 days old, with the auto and umbrella sections marked not required. Our certificate of insurance page covers the certificate itself and our CSLB workers’ comp certificate page covers the filing.

Who does California treat as your employee, even if you call them a sub?

Anyone doing licensed work without their own license. Labor Code section 2750.5 presumes that a worker performing work for which a contractor’s license is required is an employee. Holding a valid license is a condition of being treated as a contractor rather than an employee. A 1099 helper without a CSLB license is therefore your employee for workers’ compensation, whatever the paperwork says. Labor Code section 3351 counts working partners and members, and officers rendering service for pay, as employees. Section 3352 lets an officer or director owning at least 10 percent, or a general partner or managing member, sign a waiver under penalty of perjury to be excluded. Section 7125 currently lets a licensee with no employees file an exemption unless it holds a C-8, C-20, C-22, C-39 or D-49 classification. On January 1, 2028 that exemption ends for every licensee except a no-employee joint venture under section 7029, and section 7125.7 requires the CSLB to have a verification process in place by January 1, 2027. A lapse suspends the license by operation of law under section 7125.2.

What covers your trucks, your tools and the building while it is still under construction?

Three different policies. Commercial auto for the trucks, with the Vehicle Code section 16056 minimums of $30,000 per person, $60,000 per accident and $15,000 property damage as the floor and the contract as the ceiling. Add hired and non-owned auto for the employee who drives their own truck to the supplier. Inland marine for the tools and equipment, because the property form stays at the shop and tools live on job sites and in vehicles. Our inland marine page explains scheduled and blanket limits, rented equipment and the theft conditions. Builders’ risk for the structure while it is under construction, written for the project term and naming every party with an interest. The construction contract says who buys it, usually the owner on a remodel and the general contractor on ground-up work.

What bonds will a project ask for beyond the license bond?

Payment, performance and bid bonds, and they are different animals from the license bond. The $25,000 license bond protects the homeowners, employees and fraud victims listed in section 7071.5, with a $7,500 cap on most claims. A payment bond protects the subcontractors and suppliers on one project, and Civil Code section 9550 requires one from every direct contractor on a public works contract over $25,000. Section 9554 sets the amount at not less than 100 percent of the contract. A performance bond protects the owner if you do not finish, and a bid bond guarantees you will sign if you win. Private owners and public agencies set those in the bid documents. A contractor who files a blanket performance and payment bond with the CSLB under section 7159.5 is freed from the home improvement down payment cap. A surety underwrites all of them on your financial statements, which is why bonded work changes the quote list below.

How do you get a contractors insurance quote from us?

Start a business insurance quote and tell us your license number and classifications, your entity type and personnel of record. Add payroll by class and by hourly wage, because the rating bureau verifies wage rates at audit. Add the split of your work: residential against commercial, new construction against remodel, the share subcontracted, and any tract or condominium work. Send the insurance exhibits from the subcontracts and owner contracts you have to satisfy, the vehicle list and drivers, and the tool and equipment schedule. Include any project that needs builders’ risk, three to five years of loss runs and your current declarations. For bonded work, add business and personal financial statements. Some contractors we can write directly and quickly. Others go to underwriting for approval, or need a wholesale market, and those take longer. Either way you know before you decide.

Statutory references current as of September 2026 and specific to California, including the SB 1455 timeline for workers’ compensation. Form descriptions are general; the policy and its endorsements control.