Insurance & liens: CSLB Law & Business Practice Questions

What must an active licensee with employees keep on file with CSLB at all times?

Section 7125(a) requires a current Certificate of Workers' Compensation Insurance or Certification of Self-Insurance in the business name, unless a valid exemption applies.

In 2026, which licensees must carry workers' compensation even if they have no employees?

Under the current §7125(b), an exemption is allowed only for a licensee with no employees that does not hold the concrete (C-8), HVAC (C-20), asbestos (C-22), roofing (C-39) or tree service (D-49) classifications.

A C-10 electrical sole owner has no employees. How can the license stay active without a workers' comp policy?

A licensee without employees, and not in the C-8, C-20, C-22, C-39 or D-49 classes, may file a statement certifying it employs no one subject to workers' comp (§7125(b)).

A licensee's workers' comp policy lapses while it has employees. When is the license suspended?

Section 7125.2 suspends the license by operation of law effective on the date the required coverage lapses (or the date it was first required). It is reinstated once proof of coverage is filed.

A sole-owner licensee filed a workers' comp exemption but is found employing workers without coverage. What is the minimum civil penalty per violation?

Section 7125.4 sets a minimum $10,000 per violation for a sole owner and $20,000 for a partnership, corporation, LLC or tribal business, besides other discipline.

At renewal, what must a licensee with a workers' comp exemption on file do?

Section 7125.5 bars renewal unless the licensee recertifies the exemption on the renewal form or provides a current certificate of workers' comp or self-insurance.

Is a workers' comp certificate or exemption required while a license is inactive?

Section 7125(d) does not require a workers' comp certificate or exemption for a license while it is inactive.

An unlicensed person acting as a contractor hires workers and buys no workers' compensation. What is the legal classification of that failure?

Section 7126(b) makes it a misdemeanor for an unlicensed person acting as a contractor to violate Labor Code §3700 (failing to secure workers' comp).

What does a commercial general liability (CGL) policy mainly cover for a contractor?

CGL covers liability for bodily injury and property damage to others. Employee injuries fall under workers' comp, and the cost of redoing one's own defective work is generally excluded.

A general contractor asks a subcontractor to name it as an additional insured. What does that do?

An additional-insured endorsement extends the subcontractor's liability policy to protect the GC against claims arising from the sub's work.

How does a claims-made liability policy differ from an occurrence policy?

As §7071.19(c) describes, a claims-made policy covers claims first asserted during the policy period, while an occurrence policy covers events that happen during the policy period, whenever the claim is made.

What does builder's risk insurance protect?

Builder's risk is property insurance on the building and materials during construction. Liability, workers' comp and performance bonds cover the other risks.

A contractor's workers' comp experience modification rate (EMR) is 1.30. What does that mean?

An EMR of 1.00 is average. Above 1.00 means worse-than-expected losses and higher premiums; below 1.00 earns a credit. Many owners screen bidders by EMR.

A drywall supplier first delivers to a job on May 1. By when should it give its preliminary notice to fully protect its lien rights?

Civil Code §8204(a) requires preliminary notice no later than 20 days after the claimant first furnishes work on the project.

A subcontractor starts work on March 1 but sends its preliminary notice on April 10. For which work can it still record a lien?

A late notice is still allowed, but under §8204(a) lien, stop-notice and bond rights cover only work performed within 20 days before the notice was served and afterward.