California contractor insurance requirements

Workers' comp in California

Every California employer with one or more employees must carry workers' comp. Going without it is a crime. An uninsured employer faces a misdemeanor with a fine of at least $10,000, penalties of up to $100,000, and a stop order that bars using employee labor until coverage is in place.

The agency in charge is the California Division of Workers' Compensation. It can tell you whether a specific business needs coverage, and most states let you look up an employer's policy online.

Contractor licensing and insurance

The Contractors State License Board (CSLB) requires a workers' comp certificate, or an exemption if the contractor has no employees, and a $25,000 license bond. Roofing (C-39) contractors must carry workers' comp even with no employees. A law passed in 2021 (SB 216) set January 1, 2026 as the date every licensee would need workers' comp, employees or not. A 2024 law (SB 1455) pushed that to January 1, 2028. Contractors licensed as LLCs must also carry at least $1 million in liability insurance (up to $5 million, depending on how many people are listed on the license).

Indemnity and additional insured clauses

California Civil Code § 2782 voids construction clauses that make a contractor indemnify another party for that party's sole negligence or willful misconduct, with stricter limits on residential projects. For most private contracts signed since 2013, § 2782.05 also voids clauses that make a lower-tier contractor cover the active negligence of the contractor above it.

The CSLB license is a quick check

A CSLB license lookup shows whether a contractor has a workers' comp certificate or an exemption on file. A contractor claiming an exemption has told the state it has no employees, so if it shows up with a crew, ask.

What to check on a contractor COI for a California project

1. Workers' comp. Nearly every contractor with employees needs it in California. A contractor with a crew and no workers' comp on its COI is a gap. For an out-of-state contractor, confirm California is listed on the workers' comp policy.
2. General liability. A California license only shows the contractor met the state's floor. Compare each limit on the COI with your project requirements, which are usually higher.
3. Additional insured. The endorsement is a separate promise from the indemnity clause, so check both. Ask for the endorsement itself, not just a box ticked on the certificate.
4. Dates. Every policy should run through the end of the job. A COI only shows coverage on the day it was issued, so check again at each renewal.

Forsured checks every contractor COI against your project requirements, then keeps checking for the life of the project. Send us one project's requirements and a contractor COI or two for a free COI risk check.