Quick answer: California requires every licensed contractor with employees to carry workers' compensation, and roofing (C-39), concrete (C-8), HVAC (C-20), asbestos abatement (C-22) and tree service (D-49) licensees must carry it even with no employees. Under current law, every active licensee will need a workers' comp certificate on file with the Contractors State License Board (CSLB) from January 1, 2028. Every active license also needs a $25,000 contractor's bond, some need a $25,000 bond of qualifying individual, and LLC licensees need a $100,000 employee/worker bond plus liability insurance of $1 million to $5 million depending on how many people are on the license. General liability is not a license requirement for most contractors, but owners, general contractors and public agencies almost always require it by contract, usually with additional insured and waiver of subrogation endorsements. Aiden Risk, an AI-native independent commercial insurance broker licensed in California, places the insurance side of that list; the bonds come from a surety provider.
Every California contractor insurance and bond requirement in one table
California has two sets of rules: what the state requires to hold a license, set by the Business and Professions Code (B&P) and enforced by the CSLB, and what your customers require in their contracts. Most guides blur the two. This table separates them.
| Requirement | Who it applies to | Amount | Source |
|---|---|---|---|
| Workers' compensation certificate (or exemption) on file with CSLB | Every active licensee; an exemption is allowed only with no employees and not for C-8, C-20, C-22, C-39 or D-49 | Statutory benefits; no dollar limit to choose | B&P 7125; Labor Code 3700 |
| Workers' comp for all licensees | Every active licensee, with or without employees | Starts January 1, 2028 under current law | SB 216 (2022), delayed by SB 1455 (2024) |
| Contractor's bond | Every active license | $25,000 | B&P 7071.6 |
| Bond of qualifying individual | Licenses qualified by a responsible managing employee (RME), or by a responsible managing officer who owns less than 10% of the voting stock | $25,000 | B&P 7071.9 |
| LLC employee/worker bond | Active LLC licenses | $100,000 | B&P 7071.6.5 |
| LLC liability insurance | LLC licenses | $1 million aggregate for 5 or fewer personnel of record, plus $100,000 per additional person, capped at $5 million | B&P 7071.19 |
| Commercial general liability disclosure | Contractors building a single-family home for an owner who will keep it at least a year | Written statement of whether you carry CGL, with insurer name and phone | B&P 7164 |
| Commercial general liability | Not a license requirement for most licensees | Set by contract, commonly $1 million per occurrence and $2 million aggregate | Your contracts |
| Auto liability | Every vehicle on California roads | State minimum $30,000 / $60,000 / $15,000; contracts often require $1 million | Insurance Code 11580.1b; your contracts |
Aiden Risk does not sell surety bonds. For the three bond lines you will work with a surety provider, which the CSLB says must be licensed through the California Department of Insurance. Everything else on the list is insurance.
Workers' comp: the requirement that suspends the most licenses
Labor Code 3700 requires every employer except the state to secure workers' compensation, through an insurer authorized in California or a certificate of consent to self-insure. The CSLB's workers' compensation page adds the licensing layer: to hold, reactivate or apply for an active license, you must have on file a valid Certificate of Workers' Compensation Insurance, a Certification of Self-Insurance, or a signed exemption stating you have no employees.
When the exemption is allowed, and when it is not
According to the CSLB, you cannot file an exemption if you employ anyone subject to California workers' comp law, if your license is qualified by a responsible managing employee, or if you hold one of five classifications: C-8 Concrete, C-20 HVAC, C-22 Asbestos Abatement, C-39 Roofing, or D-49 Tree Service. Those trades must carry coverage even when the owner works alone. Roofing has the longest-standing rule; the CSLB's October 2022 announcement says SB 216 added the other four from January 1, 2023.
The exemption is not a one-time form. Under B&P 7125.5, an exempt licensee must recertify it on the renewal form, or file a valid certificate, or the license will not be renewed.
What happens when an exempt contractor hires
The day you hire someone covered by workers' comp law, the exemption on file stops being valid. Bind a policy before the first employee starts, not after. The CSLB wants proof of coverage at its headquarters within 90 days of the hire, and B&P 7125.4 makes it cause for discipline to employ a covered worker after filing an exemption without first filing a certificate, or to employ anyone without coverage.
Be careful with who counts as an employee. Under Labor Code 2750.5, a worker performing services that require a contractor's license is presumed to be an employee, and an unlicensed worker cannot be an independent contractor for that work. Our guide to workers' comp for 1099 subcontractors covers California's ABC test in detail.
The 2028 change: workers' comp for every licensee
SB 216 originally required every licensed contractor, with or without employees, to carry workers' comp by January 1, 2026. That date did not hold. The CSLB's board analysis of SB 1455, its 2024 sunset bill, confirms the bill delayed the all-licensee requirement to 2028. The current version of B&P 7125, which still carries the no-employee exemption, is set to be repealed on January 1, 2028.
The legislative digest of SB 291 (Chapter 455, Statutes of 2025) sums up current law: starting January 1, 2028, the no-employee exemptions are removed, and only a joint venture with no employees can file an exemption statement. SB 291 also requires the CSLB to build a process, including audits or proof, to verify that anyone claiming an exemption really has no employees.
The story may not be finished. In its March 2026 SB 291 report to the Legislature, the CSLB said about 100,000 licensees have an exemption on file and proposed a narrower exemption instead of the universal mandate: individual owners only (not partnerships, corporations or LLCs), no RME or registered home improvement salesperson, none of the mandatory classifications, an attestation, a business plan, and a fee the report estimated at about $500. That is a proposal, not law. Plan on January 1, 2028; LLCs and corporations would not qualify even under the proposal.
Penalties and suspension
- Automatic suspension. Under B&P 7125.2, the license is suspended by operation of law on the date required coverage lapses. The CSLB treats work performed while suspended as unlicensed work.
- Roofers lose the classification. For C-39 licenses, and for C-8, C-20, C-22 and D-49, current B&P 7125 has the registrar remove that classification from the license if no valid certificate is received. If the licensee is then found to have uninsured employees, the license is suspended.
- CSLB civil penalties. Since January 1, 2026, B&P 7125.4 sets a minimum civil penalty of $10,000 per violation for a sole owner and $20,000 for a partnership, corporation, LLC or tribal business that employed workers without coverage, with more for later violations, up to $30,000 per occurrence. The license cannot be renewed or reinstated until a valid certificate is on file.
- State penalty assessments. Labor Code 3722 allows $1,500 per employee when a stop order is served or, for an employer uninsured for more than a week, the greater of twice the premium it would have paid or $1,500 per employee for the uninsured period.
- Criminal and civil exposure. Labor Code 3700.5 makes knowingly going uninsured a misdemeanor, with a fine of at least $10,000. Under Labor Code 3706, an injured employee of an uninsured employer can sue for damages as if workers' comp did not apply.
A five-person LLC crew uninsured for a few weeks faces at least $7,500 in Labor Code 3722 assessments, a CSLB penalty starting at $20,000, a suspended license, and an uncovered injury claim.
Getting the certificate filed correctly
The CSLB returns certificates with the wrong business name or policy number, or without the CSLB as certificate holder. Under B&P 7125.1, a certificate received within 90 days of its effective date reinstates the license retroactively. The CSLB also asks for your top three classification codes by payroll, the same codes that drive your premium; our contractor premium audit guide explains how misclassified payroll becomes a year-end bill.
CSLB bond requirements: contractor, qualifier and LLC bonds
Bonds are not insurance. A license bond protects consumers and workers, and the surety expects you to repay any claim it pays. Aiden Risk does not sell surety bonds, so you will get these from a surety provider.
- Contractor's bond, $25,000. B&P 7071.6 requires it for every active license, effective January 1, 2023 under SB 607; older guides still quote the previous, lower amount. The CSLB's bond requirements page says it must be received within 90 days of its effective date. It is not required while a license is inactive.
- Bond of qualifying individual, $25,000. Under B&P 7071.9, required when the qualifier is not the proprietor, a general partner or a joint licensee. A corporate RMO with at least 10% of the voting stock, or an LLC qualifier with at least a 10% membership interest, can certify that instead.
- LLC employee/worker bond, $100,000. B&P 7071.6.5 requires it for an LLC license, to protect employees hurt by unpaid wages or fringe benefits.
- Disciplinary bond. To reinstate a revoked license, the CSLB can require a bond of $25,000 to $250,000, kept on file for at least two years.
One detail most guides skip: under B&P 7071.6, claims against the contractor's bond by anyone other than homeowners who hired you for home improvement on their own residence (the first group protected under B&P 7071.5) are capped at $7,500 in total. A $25,000 bond is no substitute for liability insurance, and owners and GCs know it.
California LLC contractor liability insurance requirement (B&P 7071.19)
If an LLC holds your license, liability insurance is a license condition. B&P 7071.19 requires an LLC licensee to insure against liability for claims based on acts, errors or omissions arising out of its contracting services. The minimum aggregate depends on the personnel of record, meaning every officer, member, responsible manager and director, as the CSLB's LLC page explains.
| Personnel of record on the LLC license | Minimum aggregate liability limit |
|---|---|
| 5 or fewer | $1,000,000 |
| 6 | $1,100,000 |
| 8 | $1,300,000 |
| 10 | $1,500,000 |
| Each additional person | Another $100,000 |
| Maximum required | $5,000,000 |
The statute has rules that rarely make it into summaries:
- Claims-made or occurrence. Either form is allowed, from a California-licensed insurer or an eligible surplus lines insurer, and a deductible or self-insured retention is permitted.
- Restore the aggregate every period. Claims that erode the aggregate do not force a mid-period purchase, but the full limit must be back by the start of the next policy period of up to 12 months, or the license is suspended by operation of law.
- The insurer reports to the CSLB. The insurer files a signed certificate and reports policy dates, claim payments and cancellation. The CSLB may post the insurer, policy number and aggregate on your public license record.
- Closing the LLC has a tail. On dissolution, the LLC must keep the coverage or buy an extended reporting period endorsement for at least three years, if reasonably available.
The common failure is a policy that exists but does not satisfy the statute: an aggregate too low for the personnel count, or a claims-made form with no tail plan. Ask your broker to confirm in writing that the policy meets B&P 7071.19, and recheck whenever you add an officer or member. See our contractor general liability page.
Is general liability required for contractors in California?
For a sole proprietor, partnership or corporation, no: the license law does not require commercial general liability (CGL), whatever some online guides say. The CSLB's own CGL notice for single-family homes says it is not required, but the board strongly recommends that all contractors carry it.
What the law requires is disclosure. Under B&P 7164, a contract to build a single-family home for an owner who will keep it at least a year must include a board-prepared statement on CGL and a check box stating whether you carry it, with the insurer's name and phone number if you do. Checking no is legal. Few owners will sign past it.
Know what CGL does not do. The CSLB's notice says it can protect against third-party bodily injury and accidental property damage, and is not intended to cover the contractor's own work. That gap is the subject of our guide to faulty workmanship insurance for contractors. For the policy itself, see our commercial general liability guide.
What contracts require: the real California insurance requirements
For most contractors, the binding requirements are in the contract. The California Department of General Services publishes sample contract insurance requirements for state work. It tells contractors to send the insurance section to their insurance provider before bidding, warns that missing proof can delay work or cost the award, and says a statement on a certificate does not replace the actual endorsement.
| What the contract asks for | Typical wording or limit | What to check |
|---|---|---|
| General liability | $1,000,000 per occurrence, $2,000,000 aggregate, occurrence form, including products-completed operations | Occurrence vs claims-made, completed operations, residential or subcontractor exclusions |
| Additional insured | Owner, agency or GC named as additional insured for your work | The endorsement covers ongoing and completed operations if the contract requires both |
| Primary and noncontributory | Your policy pays first and does not seek contribution from theirs | The endorsement says so, not just the certificate |
| Waiver of subrogation | Waiver in favor of the owner on GL, auto and workers' comp | Workers' comp needs its own waiver endorsement |
| Commercial auto | $1,000,000 combined single limit covering owned, hired and non-owned vehicles | Hired and non-owned auto is included if crews drive their own trucks |
| Workers' comp and employer's liability | Statutory workers' comp plus $1,000,000 employer's liability | Employer's liability limit matches; the waiver is attached |
| Umbrella or excess | Required on larger jobs, at the limit the contract sets | The umbrella follows form over each required underlying policy |
| Certificate of insurance | Delivered before work starts, with endorsements attached | Names, dates and limits match the contract |
Note the auto gap. The state minimum, per the California DMV, is $30,000 per person, $60,000 per accident and $15,000 for property damage, a small fraction of the $1,000,000 limit in the DGS sample. Our contractor commercial auto page covers trucks and trailers.
Each line has a trap. An additional insured endorsement limited to ongoing operations leaves the owner exposed once the job ends, the additional insured problem. A waiver on GL but not workers' comp fails the contract, as our waiver of subrogation guide explains. An umbrella that does not follow form can drop coverage the contract assumes. The certificate of insurance guide walks through every box.
The requirements also flow down. As the GC, you are usually responsible for subs carrying matching coverage, and a sub without a valid certificate can land on your own audit. Check subs before they start with the COI checker, which grades a certificate from your answers about it and the contract and flags gaps like a missing additional insured or a short limit.
Requirements by trade: GCs, roofers, electricians and plumbers
The state rules apply to every classification, with one big difference: whether you can claim the workers' comp exemption before 2028.
- General contractors (B). Exemption only with no employees and no RME, until 2028. The bigger exposure is contractual: you carry the owner's requirements and pass them to every sub. See general contractor insurance.
- Roofing (C-39). Workers' comp is mandatory even with no employees, and a lapse removes the C-39 classification. See roofing contractor insurance.
- Electrical (C-10). Exemption only with no employees until 2028; commercial contracts drive the limits. See electrical contractor insurance.
- Plumbing (C-36). Exemption only with no employees until 2028; check completed operations coverage for residential work. See plumbing contractor insurance.
- Concrete, HVAC, asbestos and tree service (C-8, C-20, C-22, D-49). Workers' comp is mandatory now, with or without employees.
On cost, workers' comp is priced per $100 of payroll by classification code, then adjusted by your experience modification. The California Insurance Commissioner adopted an average advisory pure premium rate of $1.65 per $100 of payroll for policies starting on or after September 1, 2026, a 6.6% increase. It averages all industries, it is advisory, and insurers set their own rates, so your class codes and mod matter far more. Estimate your mod with our EMR calculator, and see our California workers' comp page.
How Aiden Risk Solves Each of These Problems
Most failures are accidental: a lapse, a hire before the policy is bound, or a new LLC member added without rechecking the limit. Aiden Risk pairs an AI risk engine built for commercial insurance, which analyzes 140+ signals about a business, with a licensed broker on every account.
| The problem | How Aiden Risk solves it |
|---|---|
| Hiring your first employee while an exemption is on file | Our AI monitors your risk year-round, and a licensed broker acts on every change it flags, including binding workers' comp before the first hire and issuing the certificate with the CSLB as holder. |
| The 2028 requirement for every licensee | Your broker advises on classification and coverage options ahead of the deadline, and shops 100+ carriers, including admitted and surplus lines carriers. |
| A lapse that suspends the license or removes a C-39 classification | Your broker manages renewals and the CSLB certificate with the carrier, and acts on changes the AI flags before coverage runs out. |
| An LLC policy that does not meet B&P 7071.19 | Your broker checks the aggregate against your personnel of record in a coverage gap analysis before binding, and manages retro dates and tail coverage on claims-made forms. |
| Contracts asking for additional insured, waiver of subrogation and primary and noncontributory wording | Your broker reviews the insurance clauses in your contracts with you, confirms the endorsements are on the policy, and issues certificates that match. |
| Subcontractors with missing or short coverage | The COI checker grades a sub's certificate from your answers and flags gaps; your broker reviews the requirements in your subcontracts. |
| Misclassified payroll and a high workers' comp bill | Your broker reviews class codes against actual duties before binding and negotiates with carriers on your behalf. |
| Needing bonds as well as insurance | Aiden Risk does not sell surety bonds; your broker coordinates the insurance side while you work with a surety provider. |
Aiden Risk charges no fee to work with it, with no platform fee or subscription; it is paid through standard carrier commissions. We place coverage across 100+ carriers and 13 commercial lines, including contractor workers' comp and contractor general liability. Intake takes 5 minutes, and most straightforward businesses are placed in as little as 48 hours. California is one of the 16 states where we are licensed, listed on our licenses page. Aiden Risk does not give legal advice; confirm license questions with the CSLB.
Key Takeaways
- California contractors with employees must carry workers' comp, and C-8, C-20, C-22, C-39 and D-49 licensees must carry it even without employees.
- Under current law, every active licensee needs workers' comp from January 1, 2028; the CSLB has proposed a narrower exemption, but it is not law.
- Every active license needs a $25,000 contractor's bond; some need a $25,000 qualifier bond, and LLCs need a $100,000 employee/worker bond, all from a surety provider.
- LLC licensees must carry $1 million to $5 million in aggregate liability insurance, based on personnel of record, restored each policy period.
- General liability is not a license requirement for most contractors, but contracts nearly always require it with additional insured, waiver of subrogation and primary and noncontributory endorsements.
- Aiden Risk handles the insurance side in one place: AI that monitors your risk year-round, and a licensed broker who acts on every flag, reviews contract requirements, and issues certificates that match.
FAQs
Does a contractor need insurance in California?
Yes, in most cases. Any licensee with employees must carry workers' comp and file the certificate with the CSLB, five classifications must carry it even without employees, and LLC licensees must carry liability insurance. General liability is not a license requirement for most contractors, but nearly every owner, GC and public agency requires it by contract.
Can I be exempt from workers' comp as a California contractor?
Until January 1, 2028, you can file an exemption if you have no employees, your license is not qualified by an RME, and you do not hold a C-8, C-20, C-22, C-39 or D-49 classification. You must recertify at each renewal. Under current law, the exemption ends on January 1, 2028 for everyone except joint ventures with no employees.
What happens if I have a workers' comp exemption and hire someone?
The exemption stops being valid, and you need coverage in place for the new employee. Employing someone without coverage is cause for discipline, with minimum CSLB civil penalties of $10,000 for a sole owner and $20,000 for an entity, plus state penalty assessments under Labor Code 3722.
What are the CSLB bond requirements?
Every active license needs a $25,000 contractor's bond. Licenses qualified by an RME, or by an RMO owning less than 10% of the voting stock, also need a $25,000 bond of qualifying individual, and LLCs need a $100,000 employee/worker bond. Aiden Risk does not sell surety bonds; they come from a surety provider.
How much liability insurance does a California LLC contractor need?
Under B&P 7071.19, an LLC with five or fewer personnel of record needs at least $1 million in aggregate, plus $100,000 for each additional person, up to $5 million. The policy can be claims-made or occurrence, and the full aggregate must be restored each policy period.
Is general liability insurance required for a California contractor's license?
Not for most licensees; LLCs are the main exception. Contractors building single-family homes for owner-occupants must disclose in the contract whether they carry CGL, and owners, GCs and public agencies commonly require $1 million per occurrence and $2 million aggregate before work starts.
How do I check a contractor's insurance in California?
Look up the license on the CSLB website, which shows workers' comp status and, for an LLC, may show the liability insurer and limit. Then ask for a certificate of insurance with the endorsements attached, and grade it against the contract with Aiden's free COI checker.
Licensing in California, hiring your first employee, or bidding a job with a long insurance exhibit? Start with our contractor insurance page: a 5-minute intake, a licensed broker on your account, and coverage matched to what the CSLB and your contracts require.
