General Contractor Insurance In California

In California, if you're a builder or involved in construction, you know how unpredictable the job can be. That's where general contractor insurance in California steps in. Think of it like a safety net, catching the unexpected issues—be it an injury on-site, damage to someone's property, or legal hiccups. Getting general contractor insurance in California isn’t just about ticking a box; it's about building with assurance and sleeping a bit easier at night.

Contractor License Requirements in California

License Types

  • Class A General Engineering Contractor License: Required for engineering-related projects.
  • Class B General Building Contractor License: Needed for most general construction work.
  • Class C Specialty Contractor License: For specialized trades and services.

Residential and Commercial

  • Class B General Building Contractor License covers both residential and commercial projects.

Insurance Emphasis

  • All licensed contractors are mandated to maintain general liability insurance.
  • Liability insurance provides protection against potential accidents or damages during construction.

General Liability For General Contractors In California

In California, state regulations mandate that general contractors present evidence of general liability insurance. Moreover, many commercial lease agreements stipulate that businesses maintain this insurance.

This policy serves as the bedrock of protection for a general contractor in California. It safeguards against damages to a client's property and potential injuries to clients. To elevate your coverage even further, consider pairing it with commercial umbrella insurance, which enhances the limits of your general liability insurance and other associated policies.

Tools Insurance For General Contractors In California

In California, General contractors rely on their tools and equipment to complete their projects. Typically, these essential items move with them from one job site to another, often being transported in a work truck or van. An inland marine policy steps in to shield these tools and equipment, ensuring they're protected during their journey from one location to the next.

Workers Compensations Insurance For General Contractors In California

Workers' compensation insurance covers the medical expenses and missed wages for employees injured while working. Imagine an apprentice accidentally hurting himself with a power saw and needing an emergency room visit for stitches. If the injury also means he can't work for a while, California workers' compensation insurance steps in to handle these financial burdens.

Surety Bond For General Contractors In California

In California, general contractors must have a surety bond as a part of their licensing requirements. Beyond just being a mandate, this bond elevates your credibility among potential clients and industry peers. Without being bonded, you might find it challenging to secure contracts. Investing in a surety bond is a cost-effective approach to boost your professional opportunities.

Things To Know About California Contractor Insurance

Q: Are my tools and equipment covered under contractor insurance?
A: Not always, make sure you have an inland marine policy that covers this risk.

Q: Are my employees protected?
A: Not always, make sure you have workers compensation insurance policy in place for your W2 employees. Additionally, all W2 employees must be on your general liability insurance policy.

Q: Are sub-contractors insured under my policy?
A: No. Sub-contractors must have their own insurance.

Q: Is public work coverage included?
A: Not always. Check with your insurance agent to clarify.

General Contractor Insurance Cost In California

FAQ For General Contractor Insurance In California

Minimum insurance requirements for general contractors in California?

In California, General Liability insurance is almost always mandatory for general contractors. The industry standard limit for liability insurance is $1,000,000.

Does California require general contractors to have workers' compensation ?

Yes! This is mandated by the state of California for any business that has employees, including contractors. If a contractor doesn't have employees, they may be exempt from this requirement but will often need to file an exemption form with the Contractors State License Board (CSLB).

What's the difference between occurrence-based and claims-made policies?

Claims-Made Policy: This policy covers you only if both the incident and the claim occur while your policy is active.

Occurrence Policy: This policy covers incidents that happen while it's active, even if the claim is filed after it ends. So, if something happens during the policy's duration, you should be covered, no matter when you make the claim.

Are all my employees covered under workers' compensation ?

To have coverage for your employees under the workers' compensation insurance, they need to be on a W2 payroll. Those not on W2 payroll won't be covered by this insurance.

Does general liability cover subcontractors ?

Not in most cases. Subcontractors have their own business and must carry their own general liability insurance. 

Do I need a separate commercial auto insurance policy for vehicles used for business?

Yes, if you use vehicles for business purposes, you typically need a commercial auto insurance policy. Here's why:

  1. Vehicles used for business often face different risks compared to personal vehicles.
  2. Commercial auto insurance can offer higher liability limits suitable for business needs, protecting the company's assets in case of a significant claim.
  3. Commercial policies often offer additional coverage options tailored to business needs, such as coverage for equipment, rental replacement vehicles, or coverage for employees driving their own vehicles for business purposes

What is excess liability insurance, and do I need it?

Excess liability insurance, offers extra liability protection beyond the scope of primary policies. It becomes active once the coverage limits of foundational policies (like general, auto, or employers' liability) are reached.

How is the cost of insurance determined for general contractors in California?

In California the cost of insurance for general contractors in California, as in other locations, depends on various factors. While the specifics can vary among insurance providers, here are some common factors that influence the cost:

  1. Annual revenue
  2. Number of employees
  3. Type of work
  4. Other risk factors, such as: claim history, industry experience, etc.

What factors might increase my insurance premiums?

Several factors can lead to increased insurance premiums across various types of insurance. Here's a general overview:

  • Claim history
  • Carrier rate changes
  • Change of class codes
  • Risk location
  • Other factors

What happens if there's a lapse in my insurance coverage?

If there's a lapse in your business insurance coverage, several consequences can arise:

  1. Loss of Protection: The most immediate concern is that you'll be without coverage. If any claims, losses, or damages occur during the lapse, your business will have to cover all expenses out of pocket, which can be financially devastating.
  2. Difficulty in Re-establishing Coverage: Insurers often view lapses unfavorably. You might find it challenging to get a new policy, or you may be offered coverage at a higher premium. Some insurance providers might also deny specific coverages based on the lapse.
  3. Contractual Violations: If you have contracts or agreements in place that require your business to maintain continuous insurance (e.g., with clients, landlords, or lenders), a lapse can put you in breach of those contracts. This could lead to penalties, fines, or even termination of agreements.
  4. License Suspension: The state you are licensed to conduct business in may suspend your contractor's license.

General Contractor Insurance In Los Angeles

If you are a general contractor in Los Angeles, California, or you're planning to hire one, having the right insurance is crucial. California has specific requirements and considerations when it comes to insurance for contractors.

Here’s a general breakdown of the types of insurance that a general contractor might consider in Los Angeles:

  1. General Liability Insurance: This is fundamental for most contractors. It protects against financial loss resulting from bodily injury, property damage, medical expenses, libel, slander, defending lawsuits, and settlement bonds or judgments.

  2. Workers' Compensation Insurance: If you have employees, the State of California requires you to have workers’ compensation insurance. It covers medical treatment, disability, and death benefits if an employee is injured or dies as a result of their work.

  3. Builders Risk Insurance (Course of Construction Insurance): This insurance is for buildings during construction. It covers damage to the building itself, materials, fixtures, and sometimes equipment being used in the construction.

  4. Commercial Auto Insurance: For contractors who use vehicles for their business, including transporting tools, equipment, employees, or materials.
  5. Equipment & Tools Insurance (Inland Marine Insurance): Protects the tools and equipment you use to get the job done, whether they're stored on a site, in transit, or at your home.

  6. Surety Bonds: While not insurance in the traditional sense, surety bonds are often required for contractors in California. They assure your client that you'll adhere to the terms of your contract and comply with local laws and regulations.

  7. Umbrella Insurance: Provides additional liability protection beyond what your other policies might cover.

General Contractor Insurance In San Diego

General contractor insurance is crucial for those operating in San Diego, just as it is throughout California. While some aspects of insurance requirements remain consistent across the state, San Diego may have its specific local nuances. Here’s a breakdown of the insurance types a general contractor in San Diego might consider:

Local Considerations for San Diego:

  • Local Regulations and Permits: San Diego might have local construction regulations, codes, and permit requirements unique to the area. It's essential to be aware of these, as non-compliance can lead to fines or legal issues which could necessitate claims on your insurance.

  • Fire Risk: San Diego County often faces significant wildfire risks. Depending on the nature and location of your projects, you might want to consider how this risk is covered in your insurance.

General Contractor Insurance In San Francisco

In San Francisco, as with the rest of California, general contractors need to have specific insurance coverages to protect themselves, their clients, and their workers. The densely populated urban environment, unique geographical challenges, and the city's regulatory landscape require specific considerations. Here's what general contractors in San Francisco should consider when it comes to insurance:

Local Considerations for San Francisco:
San Francisco is well-known for its seismic activity. Special construction materials or methods may be required to meet local codes and standards. This may affect the insurance coverage you need.

The city has strict building codes that are designed to meet its specific challenges. Be sure to comply with all building codes and avoid any legal or claim complications.

Regulations and permits in San Francisco. Because San Francisco has a densely populated urban environment, certain zoning laws and permit requirements must be adhered to by residents.

General Contractor Insurance In Bakersfield

General contractors in Bakersfield, like the rest of California, need to ensure they have the right insurance coverages in place to protect their business, employees, clients, and projects. Let's delve into the types of insurance Bakersfield contractors should consider and some local nuances to bear in mind:

  • General Liability Insurance
  • Workers' Compensation Insurance
  • Builders Risk Insurance (Course of Construction Insurance)
  • Commercial Auto Insurance
  • Equipment & Tools Insurance (Inland Marine Insurance)
  • Surety Bonds
  • Umbrella or Excess Liability Insurance

Bakersfield general contractors often have similar needs as contractors elsewhere in California; however, to ensure adequate insurance, it is vitally important that they take into account local factors and any regional specifics when choosing insurance coverage.