Liability insurance, workers' comp and bond rules for a contractor license in 27 states, each checked at the state board or statute, with the qualifier rules that sit beside them.
No national rule sets contractor insurance: each state's licensing law decides whether you must show general liability insurance, workers' compensation and a bond before a license issues. In the 27 states below, 16 require liability insurance for at least one license type, every state except Texas makes workers' comp mandatory once you reach its employee count, and Nevada's board sets bonds anywhere from $1,000 to $500,000.
For who needs a license at all, start with our contractor license guide.
At a glance The licensing board sets liability and bond minimums; the state workers' comp law decides who must carry coverage. Liability minimums on this list start at $20,000 (Connecticut home improvement) and reach $5 million in aggregate for a large California LLC. Workers' comp starts with the first employee in most of these states; Alabama waits until five, South Carolina four, Georgia, North Carolina and Virginia three, and Arkansas two for building work. Bonds: $30,000 for a Washington general contractor, $25,000 in California, and $1,000 to $500,000 in Nevada. Every row was checked at the board or statute on September 28, 2026.
The Three Things a Licensing Board Checks
A state can require any one of them alone.
General liability insurance pays third party claims for injury and property damage caused by your work. Florida asks a general contractor for $300,000 in public liability and $50,000 in property damage.
Workers' compensation pays medical care and lost wages for employees hurt on the job. The trigger is an employee count, given for each state in the table. Construction often gets a tighter rule: Florida, New Mexico and Tennessee require coverage from the first employee for construction businesses. Premiums run per $100 of payroll by job class; the Texas Department of Insurance puts the July 1, 2026 roofing loss cost (code 5551) at 1.946 before the insurer's multiplier.
A license bond protects the public, not your company. In California, homeowners, people harmed by a willful and deliberate contract violation, and unpaid employees can all claim against it. Some states test your finances instead: Georgia wants a $150,000 net worth for a general contractor and Virginia $45,000 for Class A. For states outside this table, see our contractor bond requirements by state.
The State by State Table
Each row is the state rule for the license, not what a client may demand.
Pick your state above to see its details, or show all 27 states.
| State | Liability insurance for the license | Workers' comp starts at | Bond or financial test |
|---|---|---|---|
| Alabama | Commercial board: proof required; residential: none | 5 employees | Roofers $10,000 bond; commercial $10,000 net worth |
| Arizona | Not a license condition | Any regular employee | $1,000 to $100,000 by class and volume |
| Arkansas | HVACR Class A to E: $250,000; ACLB: none | Building work: 2 employees; subcontracting: 1 | Commercial net worth $5,000 to $50,000, or bond |
| California | LLCs: $1 million aggregate and up | First employee; every licensee in 2028 | $25,000 bond; another $25,000 with an RME |
| Colorado | No state license for GCs or roofers | 1 employee, part time included | Set by the city or county |
| Connecticut | $20,000 for home improvement and new homes | All employers, few exceptions | None listed |
| Florida | GC $300,000 + $50,000; residential $100,000 + $25,000 | Construction: 1; others: 4 | None; FICO 660 or a 14 hour course |
| Georgia | $300,000 residential basic; $500,000 other tiers | 3, officers counted | Net worth $150,000 GC; $25,000 limited tier |
| Illinois | Roofing $500,000; plumbing $100,000 per occurrence | 1 employee, even part time | Roofing $10,000 limited, $25,000 unlimited; plumbing $20,000 |
| Indiana | State licenses only plumbers | Every employer | Set by the city or county |
| Louisiana | $500,000 residential, home improvement, mold | Any employee | Net worth $50,000; $25,000 home improvement |
| Michigan | None in the license law | 3, or 1 working 35+ hours a week | None in the license law |
| Montana | None for the license | Any employee; owners without coverage hold an ICEC | None listed; $70 license fee |
| Nevada | None in NRS 624 | Proof, or a no employee affidavit | $1,000 to $500,000, set by the board |
| New Mexico | None in the license rule | Every licensed business | $10,000 license bond |
| New York | NYC home improvement: none listed | Virtually all employers | NYC home improvement: $20,000 bond or fund |
| North Carolina | Not a board requirement | 3 employees | $17,000 to $150,000 working capital, or bond |
| Ohio | $500,000 for state licensed trades | 1 employee; state fund | None listed by the board |
| Oklahoma | $50,000 trade contractors; $500,000 residential roofing | Any employee | $5,000 trade contractor bond |
| Oregon | $100,000 to $2 million by endorsement | 1 worker | $15,000 to $80,000 by endorsement |
| Pennsylvania | Home improvement: $50,000 + $50,000 | 1 employee, part time included | None for registration |
| South Carolina | Not in the licensing statutes | 4 employees | GC net worth $20,000 to $350,000 |
| Tennessee | $100,000 to $1 million by monetary limit | Construction: first employee | Home improvement license: bond |
| Texas | Electrical, A/C Class A: $300,000 per occurrence | Optional for most private employers | None for electrical contractors |
| Utah | $1 million per incident; $2 million total | Any employee; no employees needs a waiver | Proof of financial responsibility |
| Virginia | Not in the board rules | 3 employees | Net worth $45,000 A, $15,000 B, or $50,000 bond |
| Washington | $100,000 one person; $200,000 two or more; $50,000 property | All employers; L&I or self insured | $30,000 general, $15,000 specialty |
State Notes
- Alabama. The Home Builders Licensure Board says the residential law does not address insurance; its roofers file a $10,000 license and permit bond. The commercial board wants liability insurance in the applicant's exact name and a CPA or LPA statement, no more than one year old, showing $10,000 in net worth and working capital. Workers' comp counts part timers, officers and LLC members.
- Arizona. ARS 32-1122 asks for a workers' comp attestation and a bond, with no liability insurance line. Under ARS 32-1152, a small commercial specialty contractor posts $2,500, residential specialty work runs $1,000 to $7,500, and a commercial general contractor doing $10 million or more posts up to $100,000. ARS 23-902 covers anyone who regularly employs workers.
- Arkansas. The contractors board's commercial and residential laws set no liability minimum but require proof of workers' comp to issue or renew (A.C.A. 17-25-316, 17-25-514); HVACR Class A to E holders show $250,000. Commercial net worth runs $5,000 to $50,000 by classification, and a bond of 10 times that amount can replace the financial statement (A.C.A. 17-25-304). Comp starts at two employees in building work, or one for a contractor who subcontracts or is a subcontractor (Ark. Code 11-9-102).
- California. A second $25,000 bond applies when the qualifier is an RME or an officer owning under 10 percent. LLC licensees add $100,000 of insurance for each person of record past five, up to $5 million, and a $100,000 employee and worker bond. C-8, C-20, C-22, C-39 and D-49 licensees must carry workers' comp even without employees, and CSLB says every licensee needs it from January 1, 2028.
- Colorado. The Department of Regulatory Agencies points consumers to the city for contractor licensing. Workers' comp counts full time, part time and family employees.
- Connecticut. The $20,000 minimum covers home improvement and new home construction registrations; the major contractor application lists credit references instead.
- Florida. Rule 61G4-15.003 gives the $300,000 liability and $50,000 property damage minimum to general and building contractors, and $100,000 and $25,000 to residential contractors and most specialties. Rule 61G4-15.006 replaces a bond with a credit test. Construction owners who are officers or LLC members count toward workers' comp.
- Georgia. The $300,000 minimum is for residential basic; residential light commercial, general contractor and limited tier applicants show $500,000. Workers' comp counts exempt officers toward the three.
- Illinois. Roofers carry $500,000 injury and $250,000 property limits per occurrence, plus a $10,000 bond for a limited license (residential, 8 units or fewer) or $25,000 for an unlimited one (68 Ill. Adm. Code 1460, 225 ILCS 335/3). Plumbing contractors show $100,000 per occurrence and $300,000 aggregate, plus a $20,000 bond (225 ILCS 320/13.1). The Workers' Compensation Commission applies coverage from one employee.
- Indiana. Plumbers are the only construction contractors the state licenses; cities and counties handle the rest (Business Owner's Guide). IC 22-3-5-1 makes every employer insure, and a true independent contractor can file for a clearance certificate.
- Louisiana. The $500,000 minimum took effect August 1, 2026 under Act 757 (LSLBC memo). Commercial applicants file no insurance (checklist). Residential and commercial net worth is $50,000, mold and home improvement $25,000 (financial statement), and La. R.S. 23:1168 requires comp for any employee.
- Michigan. MCL 339.2404 has no insurance or bond requirement, and the state does not license commercial builders (LARA FAQ). Under MCL 418.115, the single full time employee must have worked 13 weeks or longer in the past 52.
- Montana. Since January 1, 2026, Montana construction contractors hold a state license instead of a registration, and it requires proof of compliance with workers' comp law (MCA 37-45-201). Owners who work without coverage hold an independent contractor exemption certificate, or ICEC (MCA 39-71-401). The license checklist lists no liability insurance or bond, only the $70 fee in ARM 24.227.401.
- Nevada. The board sizes the bond to your finances and operations, and the comp affidavit must also say you will not work or bid as a subcontractor (NRS 624).
- New Mexico. The $10,000 bond is in 14.6.3 NMAC. The Construction Industries Division requires comp for every licensed entity, and the Workers' Compensation Administration applies it to licensed construction work regardless of employee count.
- New York. A sole proprietor or LLC with no employees needs no workers' comp. New York City's home improvement license takes a comp certificate or exemption plus Trust Fund enrollment or the bond.
- North Carolina. The licensing board accepts $17,000 working capital, $80,000 net worth or a $175,000 bond for limited; $75,000 or a $500,000 bond for intermediate; and $150,000 or a $1,000,000 bond for unlimited. Workers' comp counts officers.
- Ohio. The licensing board covers electrical, HVAC, refrigeration, plumbing and hydronics contractors (ORC 4740.02). Comp reaches one employee (ORC 4123.01) and is paid into the state insurance fund (ORC 4123.35).
- Oklahoma. Plumbing, electrical and mechanical licenses stay inactive until the Construction Industries Board has the bond and a liability certificate naming the board. Roofing contractors carry $1 million if they do any commercial roofing and show workers' comp or an exemption, and the comp act reaches any employer (85A O.S. 2).
- Oregon. The CCB endorsement chart pairs $25,000 with $500,000 per occurrence for a residential general contractor and $80,000 with $2 million aggregate for a Level 1 commercial general contractor; two endorsements mean two bonds and one policy. One worker makes you an employer.
- Pennsylvania. Home improvement contractors register with the Attorney General; under $5,000 of work a year is exempt. Workers' comp counts family members.
- South Carolina. A bond equal to the group's net worth can replace the financial statement (Title 40, Chapter 11), and a residential builder posts at least $15,000 or shows financial responsibility (Chapter 59). The four employee floor is in Title 42.
- Tennessee. Rule 0680-06-.02 sets $100,000 for home improvement and for limits up to $500,000, $500,000 for limits up to $1,500,000, and $1,000,000 above that. Home improvement licensees also file a bond (board insurance summary), and construction comp starts with the first employee, part time and family included (T.C.A. 50-6-902).
- Texas. Workers' comp is optional for most private employers (TDI). Electrical contractors and Class A air conditioning contractors add $600,000 aggregate and $300,000 completed operations; Class B carries $100,000, $200,000 and $100,000 (16 TAC 73.40, 16 TAC 75.40). A responsible master plumber shows $300,000, and the electrical contractor application asks for no bond.
- Utah. Rule R156-55a-302d has set $1 million for each incident and $2 million in total since June 25, 2026, with DOPL as certificate holder (DOPL). A firm with no employees files a Labor Commission waiver instead, and Utah Code 58-55-302 also asks for evidence of financial responsibility.
- Virginia. The net worth tests are in the Class A and Class B rules; Class C has none. Employers with fewer than three employees are exempt from workers' comp.
- Washington. The bond is in RCW 18.27.040 and the insurance limits in RCW 18.27.050. Washington allows no private workers' comp: coverage comes from L&I or certified self insurance.
What Your Certificate of Insurance Must Show
Florida's rule lists what a certificate must carry:
- the date issued, the agent and the insurance company
- the insured's exact business name, plus any d/b/a
- the policy number with effective and expiration dates
- the required liability and property damage amounts
- the board as certificate holder, with a 30 day cancellation notice
- the agent's signature and your license number
Alabama's commercial board, the Oregon CCB, the Oklahoma CIB and the Louisiana board also want to be named as certificate holder. Louisiana accepts proof only from the agent, broker or insurer, and Illinois requires a roofing policy that cannot be canceled without 30 days' written notice to the state.
When Coverage Lapses
Washington suspends a registration automatically when the policy is canceled, and California suspends a license when workers' comp lapses or when a canceled bond is not replaced within 30 days of CSLB getting the notice (CSLB bond basics). New Mexico requires 30 days' notice before a bond cancels and moves to cancel the license if no new bond is filed, and Louisiana requires continuous coverage while the license is active.
Working in More Than One State
Florida makes out of state employers tell their carrier they are working in Florida, Connecticut requires out of state employers to cover employees working there, and Montana wants a Montana policy for businesses working there with employees.
Bonds add up: Arizona totals the bond amount for each license a contractor holds.
Where the Qualifier Fits
The license also rests on a qualifying individual. California adds a $25,000 Bond of Qualifying Individual when the qualifier is a Responsible Managing Employee, Louisiana makes every license designate a qualifying party, and Nevada's NRS 624.260 requires the qualifier to be a bona fide member or employee who supervises and controls the work. New Mexico licenses businesses that employ or are owned by a certified qualifying party, and a Texas electrical contractor must employ a master electrician of record.
A qualifying agent qualifies a company as that real employee or officer, with the experience and exams the board requires and genuine supervision of the work. If your company has the insurance, the bond and the crews but not the qualifier, The Licensing Company can match you with one. Our founders, Marshall Schofield and Jeremiah Jaskulski, built that practice around what each state board actually requires.
The Insurance Steps in Order
- Confirm the license and class you need in our contractor license guide. The class or monetary limit often sets the insurance amount, as in Tennessee, Oregon and Georgia.
- Read the insurance line for that class. Note per occurrence, aggregate and completed operations limits, as in Texas.
- Buy liability coverage in the exact business name. Florida and Alabama require the insured name to match the business being qualified.
- Set up workers' comp or file the exemption before the first job.
- Post the bond or file the financial statement. Some states take a bond in place of net worth, as in Virginia, North Carolina and South Carolina.
- Have your agent send the certificate to the board, named as certificate holder.
- Calendar every renewal separately. CSLB notes that most bond and license renewals run on different cycles and suggests arranging a new bond four weeks before the old one expires.
Frequently Asked Questions
Do contractors need general liability insurance?
Only where the state license rule says so. Of the 27 states in the table, 16 require it for at least one license type, including Florida, Georgia, Louisiana, Oregon, Tennessee, Utah and Washington. Arizona, Michigan, Nevada, North Carolina and Virginia set no liability minimum for the license.
Do I need workers' comp if I have no employees?
Usually not, but construction is the exception in several states. Florida counts a construction sole proprietor as an employee (Florida Statute 440.02) and exempts only corporate or LLC officers owning at least 10 percent, three per company (Florida DFS). Five California classifications must carry it now and every licensee from 2028, and Montana and Tennessee want uncovered owners to hold an exemption. Indiana issues clearance certificates, Nevada takes an affidavit, and a Texas contractor who opts out files a notice of no coverage.
Is there an LLC employee or worker bond in Indiana or Florida?
The $100,000 LLC employee and worker bond is a California rule, required of LLC licensees on top of the $25,000 contractor bond to cover unpaid wages. Florida's board has no license bond and uses a credit score or a course instead, and Indiana licenses only plumbers statewide, so any general contractor bond is set locally.
Does California require contractor insurance?
Every licensee posts a $25,000 bond, and anyone with employees carries workers' comp. General liability is required only of LLC licensees, at $1 million or more in aggregate.
What does a flooring or tile contractor need in Louisiana, New Mexico or South Carolina?
In Louisiana, residential and home improvement licensees carry $500,000 in liability insurance and workers' comp for any employee. New Mexico requires a $10,000 license bond and workers' comp for every licensed business. South Carolina sets no license insurance rule, but a residential specialty contractor needs a bond when a job for a homeowner exceeds $5,000.
What insurance does an HVAC contractor need in Oklahoma, Texas or Ohio?
An Oklahoma mechanical contractor posts a $5,000 bond and carries $50,000 in liability. A Texas Class A air conditioning contractor carries $300,000 per occurrence and $600,000 aggregate, and an Ohio HVAC contractor needs $500,000 in contractor liability.
Talk to The Licensing Company
If you need a qualifier as well as the right coverage, call The Licensing Company at 615-219-2110 or tell us what you need. For the full rules state by state, browse our licensing guides.
Sources
All sources retrieved 2026-09-28.
- California: CSLB Bond Requirements, CSLB LLC Licenses, CSLB Workers' Compensation, CSLB Bond Basics, CSLB Stakeholder Packet
- Florida: Rule 61G4-15.003, Rule 61G4-15.006, DFS Coverage Requirements, DFS Construction Exemptions, Florida Statute 440.02
- Washington: RCW 18.27.040, RCW 18.27.050, L&I Workers' Comp Account
- Ohio: OCILB Contractor Application, ORC 4740.02, ORC 4123.01, ORC 4123.35
- Arizona: ARS 32-1152, ARS 32-1122, ARS 23-902
- Alabama: HBLB FAQ, HBLB Licensing Steps, ALBGC Application Instructions, Alabama Workers' Comp FAQ
- Georgia: Rule 553-3-.01, Rule 553-3-.02, Rule 553-4-.02, Rule 553-4-.06, SBWC Employer Information
- Tennessee: Rule 0680-06-.02, Board Insurance Summary, Workers' Comp for Construction, T.C.A. 50-6-902
- Virginia: 18VAC50-22-40, 18VAC50-22-50, 18VAC50-22-60, Va. Code 65.2-101
- North Carolina: NCLBGC Classifications, G.S. 97-2, Industrial Commission Employers
- Louisiana: LSLBC 2026 Law Changes, LSLBC Checklist, LSLBC Financial Statement, La. R.S. 23:1168
- Nevada: NRS Chapter 624
- Michigan: MCL 418.115, MCL 339.2404, LARA Builder FAQ
- Illinois: 68 Ill. Adm. Code 1460, 225 ILCS 335/3, 225 ILCS 320/13.1, IWCC Insurance
- Colorado: DORA Home and Repair, CDLE Insurance Requirements
- Pennsylvania: Attorney General HIC FAQ, L&I Workers' Comp
- New York: WCB Coverage Requirements, NYC DCWP Home Improvement Checklist
- Texas: TDI Employer Resources, TDI Rate Guide, 16 TAC 75.40, 16 TAC 73.40, TDLR Electrical Contractor, TSBPE Responsible Master Plumber
- Indiana: Business Owner's Guide, Indiana Code Title 22, Article 3, WCB Independent Contractors
- New Mexico: 14.6.3 NMAC, CID License Application, WCA FAQ
- South Carolina: Title 40, Chapter 11, Title 40, Chapter 59, Title 42, Chapter 1
- Connecticut: DCP Home Improvement, DCP New Home Construction, DCP Major Contractor, WCC Insurance
- Montana: DLI Construction Contractor License, License Checklist, License FAQ, MCA 37-45-201, MCA 39-71-401
- Oklahoma: CIB Active Contractor Requirements, CIB Roofing Requirements, 85A O.S. 2
- Arkansas: ACLB Commercial Law, ACLB Residential Law, HVACR Insurance Rule, Ark. Code 11-9-102
- Utah: R156-55a Amendment, May 2026, Effective Notice, July 2026, DOPL Specialty Contractor License, Utah Code 58-55-302
- Oregon: CCB Endorsement Chart, CCB License Steps, WCD Insurance Overview
Disclaimer: This article is provided for educational and informational purposes only. It does not constitute legal advice, licensing guidance, or an offer of services. Licensing requirements vary by jurisdiction. For specific compliance questions, contact The Licensing Company for a confidential consultation.