Bonds, Insurance, and the License Requirement

Running a licensed contracting business means carrying the right bonds and insurance and knowing when a license is even required. Edition note: the bond amount changed recently — use the current figure.

1. The contractor license bond — $25,000

Every active California contractor must maintain a $25,000 contractor license bond. (B&P §7071.6) This was increased from $15,000 to $25,000 effective January 1, 2023 (SB 607). The bond protects consumers and the public (and certain claimants) harmed by license-law violations — not the contractor.

Related bonds:

• Bond of Qualifying Individual (for an RMO/RME): $25,000.
• LLC contractors carry additional requirements, including $1,000,000 liability insurance (B&P §7071.19) and an added employee/worker bond.

2. When a license is required — the $1,000 rule (2025 update)

A contractor's license is required for construction work where the combined labor and materials is $1,000 or more. The "minor work" / handyperson exemption applies only when the total is $1,000 or less, no building permit is required, and the worker has no employees. (B&P §7048 / §7027.2, as amended by AB 2622, effective January 1, 2025 — raised from the old $500 figure.)