Every licensed California contractor needs a baseline set of coverage to legally operate and to qualify for most general contractor and owner insurance requirements. What that baseline should look like changes as a contractor moves from residential remodels to larger commercial and multifamily work. This handbook walks through the core coverages, the CSLB bonding requirement, and how the picture changes with project size. Running a small crew? See whether small contractors need their own insurance, even when a GC’s policy or a wrap-up covers the project.
The Core Coverages
General Liability (GL)
Covers third-party bodily injury and property damage claims arising from your work. This is the coverage every GC and owner will ask for a certificate of insurance for before you can start on a job site. Standard limits start around $1M per occurrence / $2M aggregate, though larger projects and GCs increasingly ask for $2M/$4M or higher. For jobsite examples, see what general liability covers on a construction site.
Workers’ Compensation
Mandatory in California for any contractor with employees — no exceptions, no minimum headcount threshold. This isn’t optional the way it is in some states; California requires it from employee number one.
Commercial Auto
Covers vehicles used for business purposes — trucks, vans, trailers. A personal auto policy typically excludes business use, which is a gap contractors discover only after an accident.
Tools & Equipment (Inland Marine)
Covers your own tools and equipment against theft and damage — jobsite tool theft is common and expensive, and neither GL nor builders risk covers a contractor’s own tools.
Umbrella / Excess Liability
Sits above your GL and auto limits and responds when a claim exceeds them. Increasingly required by GCs and owners on larger projects, and inexpensive relative to the protection it adds.
What We See in the Real World
The most common gap among smaller contractors isn’t missing GL — it’s missing or underinsured commercial auto, discovered only after a work truck accident. A personal auto policy usually excludes business use outright, and the contractor finds out at the worst possible moment.
CSLB License Bond
California’s Contractors State License Board requires a contractor’s license bond (currently $25,000 for most license types) as a condition of holding an active license. This is a surety bond, not insurance — it protects consumers and the state if a contractor violates licensing law, and the contractor is on the hook to reimburse the bond company for any claim paid out. It doesn’t substitute for GL or workers’ comp.
How Requirements Scale With Project Size
- Small residential jobs: $1M/$2M GL is usually sufficient to satisfy homeowner and small-GC requirements
- Larger commercial or multifamily subcontract work: expect GCs to require $2M/$4M GL plus a $2M-5M umbrella, and additional insured / waiver of subrogation endorsements as standard contract terms
- Enrollment on an OCIP or CCIP wrap-up project: your own GL and workers’ comp requirements change entirely — see our Ultimate Guide to Wrap-Up Insurance for how enrollment and bid credits work
- Public works / prevailing wage projects: expect additional bonding requirements (performance and payment bonds) on top of standard insurance
Kavana’s Recommendation
Review your coverage every time your average project size jumps meaningfully — the $1M/$2M GL that was fine for $200K remodels won’t satisfy a GC on a $5M commercial job, and finding that out during contract negotiation costs you the bid, not just the premium difference.
Certificates of Insurance and Additional Insured Status
Almost every GC and owner will require a certificate of insurance (COI) before you start work, and most will require additional insured status on your GL policy — meaning their entity is covered under your policy for claims arising from your work. Contractors who don’t understand this often lose time scrambling to get endorsements added mid-negotiation instead of having them ready in advance.
Frequently Asked Questions
Is workers’ compensation required if I only have 1099 subcontractors, no employees?
If you have no employees, you can usually file a workers’ comp exemption with CSLB, except for C-8 (concrete), C-20 (HVAC), C-22 (asbestos abatement), C-39 (roofing) and C-61/D-49 (tree service) licensees, who must carry workers’ comp even with no employees. Starting January 1, 2028, every CSLB licensee must carry workers’ comp; only joint ventures with no employees are exempt.
What’s the difference between additional insured and a certificate of insurance?
A certificate of insurance is just proof a policy exists. Additional insured status is a policy endorsement that actually extends coverage to the other party. GCs and owners typically want both.
Do I need separate coverage for each state I work in?
Licensing and bonding requirements are state-specific, and your policy needs to actually extend coverage to work performed in each state you operate in — confirm this explicitly with your broker rather than assuming a CA policy automatically covers TX work.
Next Step
Send us the insurance exhibit from your next subcontract. A licensed agent will check limits, additional insured wording, and completed-operations terms before you sign.