California Contractor Bond and Insurance Requirements

Every California contractor license requires a bond. Depending on how your business is structured and who qualifies the license, you may need two or three. Getting this wrong delays your application, and the bonding requirements changed meaningfully in recent years.

The contractor license bond

Every California contractor license requires a $25,000 contractor’s bond. This amount was set by Senate Bill 607 effective January 1, 2023, raised from the previous $15,000.

A bond is not insurance. It protects consumers and employees, not you. If a valid claim is paid out, the surety will look to you for reimbursement.

What it costs

You pay an annual premium rather than the full bond amount. Premiums typically run from about $100 to $750 per year depending on credit history, license history, and years in business. Contractors with strong credit generally sit at the lower end, often $100 to $250.

The Bond of Qualifying Individual

If the license is qualified by a Responsible Managing Employee rather than a corporate officer, LLC member, or sole owner, a separate $25,000 Bond of Qualifying Individual is also required.

This is one of the practical reasons businesses often structure the arrangement as an RMO instead of an RME. See RMO vs RME for the full comparison.

Additional requirements for LLCs

Licensed LLCs carry heavier obligations than corporations:

• LLC Employee/Worker Bond of $100,000, required under Business and Professions Code section 7071.6.5. The requirement scales with membership, at $100,000 per member up to a maximum of $500,000 for five or more members.
• General liability insurance of at least $1 million cumulative, increasing by $100,000 for each additional person on the personnel of record, up to $5 million.

If you are choosing between a corporation and an LLC, these costs belong in the comparison.

Insurance

Bonds and insurance are different things and you generally need both.

General liability

Not universally mandated for every license type, but most California contractors carry general liability at $1 million per occurrence, and many project owners and general contractors require it before you can work. LLCs have the specific statutory minimums noted above.

Workers’ compensation

Required if you have employees. Certain classifications require it regardless. If you have no employees you may file an exemption, but that exemption ends the moment you hire.

Common mistakes

Assuming the bond covers you. It protects the public. You reimburse the surety for paid claims.

Letting the bond lapse. A lapse suspends the license. Diary the renewal.

Missing the qualifier bond. Easy to overlook when the qualifier is an RME.

Underestimating LLC costs. The $100,000 worker bond and the insurance minimums surprise people who chose the LLC for other reasons.

Filing an exemption then hiring. A workers’ comp exemption is not permanent.

Frequently asked questions

How much is the California contractor bond?

$25,000, effective January 1, 2023 under Senate Bill 607.

What does the bond cost per year?

Typically $100 to $750 annually depending on credit and history, with good credit often in the $100 to $250 range.

Do LLCs need extra bonds?

Yes. A licensed LLC must file a $100,000 LLC Employee/Worker Bond, scaling to a maximum of $500,000 for five or more members, plus carry at least $1 million in general liability.

When is a Bond of Qualifying Individual required?

When the qualifier is a Responsible Managing Employee rather than an officer, member, or sole owner. It is $25,000.

Is general liability insurance required?

LLCs have statutory minimums. Other license types are not universally required to carry it, but most clients and general contractors will insist on it.

Need help with bonds and insurance?

We handle bonding and insurance alongside the licensing process, so the pieces arrive in the right order.

See our insurance and bond solutions, learn about RMO matching, or contact us.

This page is general information about California contractor licensing, not legal or insurance advice. Bond and insurance requirements depend on your license type and structure. Confirm current requirements with CSLB at cslb.ca.gov.