California small business insurance requirements: workers' compensation, contractor bonds and insurance, and auto minimums

California: what the state requires of a small business

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In California, every employer with one or more employees must carry workers' compensation, and failing to do so is a misdemeanor with stop orders and penalties. Vehicles must carry at least 30/60/15 liability for policies issued or renewed from January 1, 2025. Licensed contractors must hold a contractor bond, carry workers' compensation when they have employees (with specific classifications required to carry it regardless), and LLC licensees must carry at least $1,000,000 of liability insurance.

Reviewed by CoverMatch licensed agents, Licensed property & casualty agents · Reviewed Oct 11, 2026 Updated Oct 30, 2026

California rules with sources
Topic	The rule in California	Source
Workers' compensation	Every employer with one or more employees must secure workers' compensation through a licensed insurer or the State Compensation Insurance Fund, or by certified self-insurance; corporate officers and directors who own the business can elect out only under narrow conditions.	California Labor Code §§ 3700, 3351; Department of Industrial Relations
Penalty for being uninsured	Operating without coverage is a misdemeanor; the Labor Commissioner issues stop orders and assesses penalties, and uninsured employers are liable for benefits plus a surcharge.	California Labor Code §§ 3700.5, 3710.1, 3722
Auto liability minimums	Bodily injury $30,000 per person / $60,000 per accident and property damage $15,000 for policies issued or renewed on or after January 1, 2025 (previously 15/30/5), with further increases scheduled for 2035.	California Vehicle Code § 16056 as amended by SB 1107 (2022); California DMV
Contractor license bond	Every licensed contractor must maintain a contractor bond on file with the Contractors State License Board, currently $25,000, plus a bond of qualifying individual where applicable.	California Business and Professions Code § 7071.6; Contractors State License Board
Contractors — workers' compensation	Licensees with employees must have workers' compensation on file with the Board or certify exemption; certain classifications must carry it regardless of whether they have employees, and the Board has announced that the exemption ends for all classifications in 2026.	California Business and Professions Code § 7125; Contractors State License Board
Contractors — LLC liability insurance	A limited liability company licensed as a contractor must maintain general liability insurance of at least $1,000,000 (rising with the number of members) and a $100,000 LLC employee/worker bond.	California Business and Professions Code §§ 7071.19 and 7071.6.5

Topic

The rule in California

Source

Workers' compensation

Every employer with one or more employees must secure workers' compensation through a licensed insurer or the State Compensation Insurance Fund, or by certified self-insurance; corporate officers and directors who own the business can elect out only under narrow conditions.

California Labor Code §§ 3700, 3351; Department of Industrial Relations

Penalty for being uninsured

Operating without coverage is a misdemeanor; the Labor Commissioner issues stop orders and assesses penalties, and uninsured employers are liable for benefits plus a surcharge.

California Labor Code §§ 3700.5, 3710.1, 3722

Auto liability minimums

Bodily injury $30,000 per person / $60,000 per accident and property damage $15,000 for policies issued or renewed on or after January 1, 2025 (previously 15/30/5), with further increases scheduled for 2035.

California Vehicle Code § 16056 as amended by SB 1107 (2022); California DMV

Contractor license bond

Every licensed contractor must maintain a contractor bond on file with the Contractors State License Board, currently $25,000, plus a bond of qualifying individual where applicable.

California Business and Professions Code § 7071.6; Contractors State License Board

Contractors — workers' compensation

Licensees with employees must have workers' compensation on file with the Board or certify exemption; certain classifications must carry it regardless of whether they have employees, and the Board has announced that the exemption ends for all classifications in 2026.

California Business and Professions Code § 7125; Contractors State License Board

Contractors — LLC liability insurance

A limited liability company licensed as a contractor must maintain general liability insurance of at least $1,000,000 (rising with the number of members) and a $100,000 LLC employee/worker bond.

California Business and Professions Code §§ 7071.19 and 7071.6.5

Workers' compensation in California

California requires coverage from the first employee and enforces it hard: stop orders, penalties and misdemeanor exposure. The State Compensation Insurance Fund writes coverage for employers who cannot find it elsewhere. Owners who think of themselves as exempt should check the narrow conditions in the Labor Code before going without.

Auto liability in California

The minimums doubled for policies issued or renewed from January 1, 2025, to 30/60/15. Business vehicles carry more in practice, and California platforms and clients routinely require a $1M combined single limit.

Contractors in California

The Contractors State License Board ties the license to insurance: a contractor bond for everyone, workers' compensation for licensees with employees and for specified classifications regardless, and liability insurance plus a worker bond for LLC licensees. The Board checks these at renewal and suspends licenses when proof lapses.

How CoverMatch uses these rules

A California business in the wallet is checked for workers' compensation once employees are reported, for auto limits on scheduled vehicles, and for the Board's bond, workers' compensation and LLC liability requirements when the class is a licensed contractor. Each rule links to its source; a licensed agent reviews this page before publication and when the rules change.

Sources

Questions people actually ask

I am the only officer of my California corporation. Am I an employee for workers' compensation?

Officers and directors who own the business can file an exemption waiver under narrow conditions; otherwise they are employees and must be covered. Confirm with a licensed agent before relying on an exemption.

Did California's auto minimums really double?

The 2022 law raised the minimums from 15/30/5 to 30/60/15 for policies issued or renewed from January 1, 2025, with another step in 2035. Business vehicles usually carry a combined single limit well above these.

What insurance does the CSLB check at license renewal?

The contractor bond, workers' compensation status (policy or exemption, with the exemption narrowing to none in 2026), and for LLC licensees the liability insurance and worker bond. The live certificate can keep proof current for the Board.

By business type in California