Do I need insurance to get a California general contractor license?
The most popular type of general contractor insurance is usually a combination of general liability, worker’s comp and commercial auto insurance. However, you may need other types of California business insurance depending on the services you offer.
General Liability insurance
California general liability insurance helps cover third-party bodily injury and property damage, as well as libel, slander and defamation.
Whether a client trips over your toolbox, you drop your hammer and dent a customer’s floor, or you say something disparaging about your biggest competitor, general liability can help protect you from financial risk.
Learn more about general liability for contractors.
Workers’ Compensation insurance
Workers’ compensation insurance is required if you have employees, as well as for all concrete, HVAC, asbestos abatement, tree service or roofing contractors in California. This coverage will protect you and your employees if there is an on-the-job injury or illness.
Note: By January 1, 2026, all active California contractor license holders will be required to carry workers’ compensation insurance — even if they don’t have employees. This change — the second phase of California Senate Bill 216 — aims to ensure every licensed contractor has coverage in place for potential job-related injuries.
Learn more about Workers’ Comp for construction workers.
Tools and Equipment insurance
The tools and equipment you need to complete contractor jobs can be costly. Tools and equipment insurance can protect your gear by paying for repairs and replacement if damaged or stolen. At NEXT, this is an add-on to a general liability policy.
Commercial Property insurance
If your contracting business owns or rents property, commercial property insurance in California protects the physical assets of a business, such as inventory, fixtures, furniture, building structures and other business property.
Commercial Auto insurance
Business use of a vehicle is not typically covered by personal auto insurance. Any vehicles owned by your company should be covered by a commercial auto insurance policy.
Depending on the specifics of your policy, commercial auto insurance may include bodily injury and property damage to someone else, personal injury to you or your employees, collision damage to the vehicle, and coverage for non-collision damage to the vehicle.
Contractor license renewal requirements
Active general contractor licenses in California expire every two years. You’ll get a renewal application about two months before your license expires. After submitting the form and paying the $450 renewal fee, you can check your license status online to track its progress.
Keep in mind that the business name on your license renewal must match the CSLB’s records and the name on file with the Secretary of State.
Local California general contractor business license requirements
In addition to statewide rules, many California cities have their own licensing and insurance requirements for contractors.
Los Angeles
Before launching your general contractor business in Los Angeles, you’ve got to have a Business Tax Registration Certificate. It’s a rule under Section 21.188, and the Los Angeles Office of Finance ensures everyone’s playing by the book by checking construction sites.
Part of the process involves filling out and submitting a list of your subcontractors, which helps speed up the review.
In Los Angeles, contractors are subject to specific insurance mandates. For commercial projects, you need to have a minimum general liability limit of $1 million per occurrence and $2 million in total. And the City of Los Angeles should be listed as the certificate holder and additional Insured.
For residential projects, the minimum personal liability limit is $300,000. You’ll need to show proof of this insurance by uploading it to KwikComply, the city’s insurance risk management system.
Lastly, LA is a mixed bag. It’s got high-rise buildings, complex infrastructure projects, and a variety of commercial and residential work. But it’s also got its share of high crime rates, earthquakes, wildfires and mudslides. So, when researching general contractor insurance coverage in LA, consider these important factors.
San Diego
Thinking of opening up shop in San Diego? You’ll need a Business Tax Certificate, which functions as a business license and shows you’ve paid your business taxes. But remember, this certificate doesn’t replace any other permits or licenses you might need under state or local law.
If you contract with the Housing Commission in San Diego, expect contract-specific insurance and endorsements (e.g., additional insured, waiver of subrogation). Requirements vary by contract. This includes:
San Jose
If San Jose is where you’ll be based, you’ve got to get a Business Tax Certificate within 90 days of starting your operations. But keep in mind, this certificate doesn’t mean you’ve met all the other permits or licenses you might need from the city, county, state or federal government.
San Francisco
General contractors operating in San Francisco are required to have a valid San Francisco Business License. Alternatively, contractors can present a temporary Business Tax Certificate in place of the business license.
In San Francisco, contractors must adhere to specific city mandates beyond state requirements in 2023. The Minimum Compensation Ordinance sets rates at $21.54/hour for for-profits. Effective January 1, 2026 the rate increases to $23.00/hour for non-profits and $23.00/hour for public entities.
The Health Care Accountability Ordinance requires payments of $7.50/hour to San Francisco General Hospital, capped at $300/week. (This rate is adjusted for inflation annually on July 1.)
When it comes to insurance, it’s important to keep in mind that the city is located near two major earthquake faults (San Andreas and Hayward), making commercial earthquake insurance a wise precaution.
