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General contractor insurance in California
Learn about business insurance requirements and the most common policies for general contractors in California.
Which policies are required for general contractors in California?
All general contractors in California are required to carry a surety bond and general liability insurance, which protects your business from expenses associated with common mishaps, such as customer injuries and property damage.
Depending on the specifics of your work, general contractors may be required to purchase additional types of insurance. For example, if your business owns a vehicle, you likely need to purchase commercial auto insurance.
To meet state requirements in California, general contractors with employees must provide workers’ compensation insurance, which covers lost wages and medical bills for work injuries.
In some cases, general contractors may also be required to carry builder’s risk insurance.
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What are the most common policies for general contractors in California?
General contractors may need different types of insurance depending on the work they do and their client contracts. These policies are the most popular for general contractors in Los Angeles, San Diego, San Jose, and elsewhere in California.
General liability insurance
State laws in California require general contractors to show proof of general liability insurance. Most commercial leases also require businesses to carry this coverage.
This policy is the foundation of a general contractor’s protection. It covers damage to client property, as well as client injuries. Adding commercial umbrella insurance can boost your coverage on general liability insurance and other policies.
Business owner's policy
General contractors who work independently or own a small company often qualify for a business owner’s policy (BOP). This policy bundles general liability coverage and commercial property insurance together at a discount.
A BOP is the top policy recommended by Insureon's expert agents, as it offers protection against common liability claims and business property coverage at an affordable price.
Workers' compensation insurance
If you own a construction or home improvement business in California with one or more employees, your business is required to carry workers’ compensation insurance. Workers’ compensation can help pay for medical bills and lost wages when an employee is injured on the job.
Commercial auto insurance
Commercial auto insurance protects vehicles owned by your general contracting company. It covers property damage and medical bills in an accident, along with vehicle theft, weather damage, and vandalism.
Contractor’s tools and equipment insurance
Contractor’s tools and equipment insurance protects a general contractor’s saws, nail guns, drills, and other construction equipment. Look to this policy or inland marine insurance to protect equipment that moves from place to place.
Professional liability insurance
Professional liability insurance provides protection when a general contractor is sued for a professional mistake, such as missing a deadline on a construction project. This policy is also called errors and omissions insurance (E&O).
Contractor surety bonds
Surety bonds guarantee reimbursement for the client if a general contractor is unable to fulfill the terms of a contract. Common types of surety bonds include bid bonds, performance bonds, and payment bonds.
In California, general contractors are required to have a $25,000 contractor license bond or cash deposit in that amount, as part of their licensing requirements.
Builder’s risk insurance
Builder’s risk insurance can cover fires, vandalism, equipment theft, and other damage done to a structure still under construction.
How much does business insurance cost for general contractors in California?
According to an analysis of Insureon applications, the typical general contractor in California can expect to pay more than the national median for some types of business insurance, but less for other types.
For example, the median annual cost of commercial auto insurance for general contractors in California is $1,717, significantly less than the national median of $2,417.
The median annual premium for a business owner’s policy is just $525, almost half the national median premium. However, general contractors in California can expect to pay more for general liability insurance and surety bonds.
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 top U.S. providers.
Start a free online application to review quotes for the policies that best fit your business. Our insurance agents are licensed in California and can answer your questions as you consider coverage.
To make the application go 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 insurance quotes for general contractors today.
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Updated: February 27, 2024
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