CSLB Law & Business ExamBusiness Organization and LicensingMedium
A newly formed LLC applying for a CSLB contractor's license lists a single RME as its qualifying individual. In addition to the standard LLC employee/worker bond, what insurance must the LLC carry?
- ACommercial general liability insurance of at least $1,000,000 per occurrence
- BNo additional insurance is required beyond the LLC bond
- CErrors and omissions insurance of at least $500,000
- DWorkers' compensation insurance only, regardless of employee count
Show answer & explanationAnswer & explanation
Correct answer: A. Commercial general liability insurance of at least $1,000,000 per occurrence
California law requires LLC contractors to carry commercial general liability (CGL) insurance of at least $1,000,000 per occurrence, in addition to the LLC surety bonds, to protect against construction-related liability.
Why the other options are wrong
- B. LLCs face additional insurance requirements beyond bonds precisely because members have limited liability.
- C. Errors and omissions insurance is not a CSLB requirement for LLC licensure.
- D. Workers' comp is a separate requirement tied to having employees, not a substitute for CGL insurance.
LLC Liability Insurance Requirement
LLC contractors must carry commercial general liability insurance of at least $1,000,000 per occurrence in addition to their required surety bonds.
- Minimum $1,000,000 CGL per occurrence
- Required because LLC members have limited personal liability
- Separate from the LLC employee/worker bond
Memory trick: Limited liability means extra insurance liability coverage.