Business Insurance Requirements for General Contractors in California

Whether you specialize in remodeling homes in San Diego or developing commercial real estate in San Francisco, you’ll need contractors insurance to protect your business. All employers are required to have workers' compensation insurance in California. That’s true whether you have one employee or a team of 15. In order to be a licensed contractor in California, you must be bonded, too. Your clients may ask for proof of general liability insurance and professional liability insurance before they hire you. Lastly, if you have business-owned vehicles, you must have commercial auto insurance to cover them.

Insureon makes shopping for insurance easy with industry-leading technology that finds policies from top U.S. carriers that fit your business needs. Read more to learn which policies are most common for general contractors in California, and start an application to get your free quotes today.

Find the right insurance policy for your general contracting business

The most common policies for California general contractors vary depending on a variety of factors, including revenue, client contracts, and partnerships. The table below illustrates which policies might work best for your business size.

 

Business type General liability / BOP Bond Workers' comp Commercial auto
Sole proprietor X X X X
Partner X X X X
Contractor / freelancer X X   X
Employer X X X X

 

General liability insurance: General liability insurance is the foundation of a general contractor’s protection. This coverage can address bodily injury, client property damage, product liability, and the cost of legal defense.

License/permit bond: General contractors often need a license or permit bond before they can start construction projects. This bond offers project stakeholders a guarantee that you will perform your work and adhere to state or municipal regulations. If you fail to uphold that agreement, the insurance company reimburses the stakeholders for their losses. Unlike a typical insurance policy, you are obligated to pay the insurer back. California general contractors must be bonded in order to get their license in the state.

Professional liability insurance: Many clients require proof of professional liability insurance before entering contracts for professional services. This policy, also called errors and omissions insurance, can help cover legal expenses if you’re sued over contract disputes.

Business owner's policy (BOP): General contractors sometimes qualify for a business owner’s policy. This package helps your business save money by bundling commercial property insurance with general liability at an affordable rate.

Inland marine insurance: While property insurance can cover equipment that stays at your primary business location, inland marine insurance can cover items you use in the field, such as tools and any other equipment you use on the job. These items move from location to location, which subjects them to more opportunities for loss, damage, and theft. That’s why they require special coverage.

Commercial auto insurance: Commercial auto insurance can cover vehicles your business owns or uses for business purposes. If your vehicle is involved in an accident, this policy can cover your liability for the other person's bodily injuries and property damage. It can also pay to repair your car when it is damaged by theft, weather events, or vandalism.

Builder’s risk insurance: Builder's risk insurance addresses unique property exposures that property insurance can’t cover. Primarily, it protects structures in progress from damage caused by fire, vandalization, and non-severe weather events. It can also cover building materials and equipment that must stay on site.

California workers' compensation insurance: California state law requires all employers to carry workers’ comp even if they have one employee. If an employee is injured on the job, workers’ comp can help pay for medical fees and lost wages.

Although general contractors aren’t typically exposed to the same physical risks as their subcontractors, accidents do happen, especially on worksites. According to the Bureau of Labor Statistics, general contractors most often experience overexertion; slips, trips, and falls; contact with objects or equipment; and transportation incidents. When they experienced these injuries, they missed a median of four work days in 2016.

Common workplace injuries for general contractors in the U.S.

Business insurance costs for general contractors in California  

Insurance costs for California general contractors are slightly higher than the national median, according to an analysis of Insureon applications.

While California general contractors may save on their commercial auto coverage ($1,717 versus the national median of $2,417), they typically pay considerably more for their workers’ comp and bonds than the national median. California workers’ comp costs general contractors about $7,330 (or $610/month) and surety bonds cost $1,010 (or $84/month). However, the cost of California contractors’ general liability is comparable to the national median at $1,642 versus $1,342.

Median business insurance costs for California general contractors

Save time and money with Insureon

Insureon’s industry-leading technology helps general contractors in California save time and money shopping for insurance by comparing policies from dozens of top U.S. carriers. Simply apply online and review quotes for the policies that best fit your business needs. Our insurance specialists are licensed in California and can answer your questions as you consider coverage.

To make the application go even quicker, have this information ready:

  • Workforce details, such as the number and types of employees.
  • Current and projected revenue.
  • Business partnerships.
  • Insurance history and prior claims.
  • Commercial lease insurance requirements.

Apply for free general contractor insurance quotes today.