Contractor Insurance in California

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Balancing the inherent risks and liabilities that come with the construction and contracting business is a non-negotiable aspect of your professional life. Such risks include job-related injuries, damage to client property, or potential lawsuits stemming from unforeseen incidents during a project. 


Fortunately, there are several types of contractor insurance coverage policies available in California to protect you and your business. These include but are not limited to property, liability, workers' compensation, and auto insurance.


Who Needs Contractors Insurance in California?


Most contractors in California are legally mandated to carry certain types of contractor insurance coverage. Here are some types of businesses that can benefit from California contractor's insurance:


  • General Contractors
  • Home Builders
  • Renovation Contractors
  • Plumbing Contractors
  • Electrical Contractors
  • Landscaping Contractors
  • Roofing Contractors
  • HVAC Contractors
  • Masonry Contractors
  • Painting Contractors
  • Carpentry Contractors
  • Flooring Contractors
  • Drywall Contractors
  • Excavation Contractors
  • Window & Door Installation Contractors


Whether you're installing windows, laying the foundation of a building, or beautifying a landscape, contractor insurance in California can help safeguard against a wide range of potential business risks.

California Contractor's Surety Bonds


A Contractor's Surety Bond in California is a legally binding contract ensuring that a contractor will fulfill their obligations as per the bond's terms. If a contractor fails to adhere to these terms, the party that the bond protects can file a claim. This bond acts as a safety net, offering financial protection to clients and the state in case of contractor non-compliance, fraud, or bankruptcy. 


There are several types of surety bonds available for contractors in California:


  1. Bid Bonds: These guarantee that if a contractor wins a bid, they will honor the contract at the bid price and provide a performance bond. It protects the project owner if the contractor fails to follow through.
  2. Performance Bonds: This bond assures that the contractor will complete the project according to the contract's terms and conditions. It safeguards the project owner against financial loss due to a contractor's inability to fulfill the contract.
  3. Payment Bonds: These bonds guarantee that all subcontractors, laborers, and material suppliers involved in the project will be paid, protecting them from non-payment by the contractor.
  4. License Bonds: Required by the state, these bonds ensure that the contractor adheres to the laws and regulations relating to their specific license.


Many contractors in California are required to have Contractor's Surety Bonds as part of their insurance package. It is important for business owners and contractors alike to understand the risks associated with these bonds, and how they can help protect them from costly liabilities. Having an adequate contractor's surety bond in place is essential for any successful contracting business operating in California.

General Liability Insurance for California Contractors


General Liability Insurance is a critical safeguard for contractors in California, shielding businesses from the financial impact of potential claims. This type of insurance, often referred to as commercial liability insurance, specifically covers property damage, bodily injury, and advertising injury claims. 


For example, if a contractor unintentionally damages a client's property while carrying out a project, the General Liability Insurance kicks in to cover the repair or replacement costs. Similarly, if a visitor gets injured at a construction site due to negligence, this insurance would take care of the medical bills and any associated legal costs. Additionally, if a contractor's advertising unintentionally infringes on another business's copyright, the insurance can help manage the legal expenses. 


Having General Liability Insurance is a must-have for any contractor to ensure protection against potential financial losses. It will also help show potential clients that the business has taken the necessary steps to secure its operations and protect its customers.

Workers' Compensation Insurance for Contractors in California


California law requires most contractors to carry Workers' Compensation insurance, which covers medical expenses as well as lost wages for employees injured on the job. This type of insurance provides a financial safety net in case an employee is injured or becomes ill due to work-related activities, ensuring they can receive the necessary treatment and compensation without causing any financial hardship for the contractor.

Business Vehicle Insurance


Contractors who use trucks or vans as part of their operations should also consider getting vehicle insurance. Depending on the size and number of vehicles being used, the coverage can provide protection from damage or loss caused by accidents, theft, fire, natural disasters, and other events. 


Business Vehicle Insurance will cover repairs to the vehicle as well as liability costs such as medical expenses for other parties involved in an accident. It can also provide coverage for towing and storage, as well as replacement parts and materials.

Business Liability Insurance


Business Liability Insurance is a good option for contractors who are exposed to potential liability claims arising from their work activities. This type of insurance provides coverage against losses resulting from bodily injury or property damage that occur on the contractor’s premises or due to the negligence of the contractor. It also covers losses from libel, slander, and other personal injury claims. 



This type of coverage is important for contractors because it protects them should a third party file a lawsuit against them. Without liability protection, the contractor may be forced to pay court costs and settlements out-of-pocket.

Builder's Risk Insurance


Builder’s Risk Insurance is a good option for contractors who are involved in construction or renovation projects. This insurance covers the contractor against risks associated with new construction, refurbishment work, and other types of building activities. It can provide cover for damage caused by storms, fire, vandalism, and theft during the project. 



For projects that involve remodeling or renovating existing buildings, Builder’s Risk Insurance can also provide coverage for losses resulting from the demolition and rebuilding process. This type of insurance is important to have as it can protect against financial losses that may arise due to unexpected events during the course of a construction project.

Inland Marine Insurance


Inland Marine Insurance is another important form of coverage for contractors. The insurance provides protection against the loss or damage of equipment and tools used in business operations. It can cover losses resulting from accidental breakages, theft, transport damage, fire, storm damage, and other unexpected events.

Commercial Property Insurance for California Contractors


Also known as Property Insurance, Commercial Property Insurance is a type of coverage that can provide financial protection for businesses in the event of damage to their premises or property. The insurance typically covers the repair and/or replacement costs associated with losses caused by fire, windstorms, theft, and vandalism. 



Commercial Property Insurance is especially important for contractors who are renovating an existing structure as it can cover the cost to repair or replace any damaged or stolen property resulting from the project.

Equipment Breakdown Insurance


Equipment Breakdown Insurance is a specialized form of coverage designed to protect businesses from the financial losses associated with equipment failure. It can help cover the repair and/or replacement costs associated with breakdowns, malfunctions, or power surges that occur in tools, machinery, and other equipment used in the business. 



Contractors who heavily depend on specialized equipment to complete projects can greatly benefit from Equipment Breakdown Insurance. It offers essential coverage in case of mechanical or electrical failures, power surges, and more, ensuring that contractors are protected when their tools fail.

Employment Practices Liability Insurance


Every business that employs individuals should have Employment Practices Liability Insurance (EPLI). The insurance is designed to protect employers from legal costs associated with claims made by employees, such as discrimination or harassment. 



Contractors who hire subcontractors and employees can greatly benefit from EPLI as it offers financial protection in the event of a lawsuit. It also provides coverage for the contractor's legal defense costs, no matter how groundless a claim might be. EPLI can help contractors rest assured knowing that they are protected in case of any employment-related claims filed against them.

Business Interruption Insurance


The cost of intangibles such as lost customers, disruption to the production process, or a decrease in sales can be significant for contractors. Business Interruption Insurance provides coverage for these costs by providing financial protection in the event that operations are disrupted due to an insured peril such as a fire or other covered hazard. 



Business Interruption Insurance helps protect contractors from the indirect losses associated with such events. This coverage can provide income lost due to the disruption, as well as help cover any additional expenses that may occur during the recovery process.

How Much Does Insurance for A Contractor Cost in California?


The cost of insurance for contractors varies significantly based on the type of insurance, the specific risks associated with the work, the number of employees, and other factors. On average, General Liability Insurance for contractors in California can range anywhere from $375 to $5000 per year. Professional Liability Insurance premiums typically fall in the range of $1000 to $2000 annually for small businesses. 


The cost for Employment Practices Liability Insurance (EPLI) and Business Interruption Insurance are highly dependent on the size and nature of the business. On average, a small to medium-sized business might pay anywhere from $800 to $3000 per year for EPLI, while Business Interruption Insurance typically costs 10% to 15% of the business's total property insurance cost.



Regarding surety bonds, the price you pay for a California surety bond depends on the size of the contract being bonded. However, in general, the cost usually ranges between 1% and 15% of the bond amount. Contractors with good credit might pay premiums as low as 1-3%, while those with poorer credit could pay anywhere from 5% to 15%. This means for a $10,000 bond, a contractor might pay anywhere from $100 to $1500.

Compare California Contractors' Insurance Quotes


Western Insurance Marketing Corporation, an independent insurance agency in California, provides free online quotes for contractors' insurance. Simply fill out our online form with your contact information, business type, desired coverage limits, and more to get a free quote. We provide quotes from top-rated insurance carriers in the state, ensuring that you get the most competitive rates for contractors' insurance. 



We look forward to working with you to get the coverage you need at an affordable rate.

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