Distinguishing License Bonds From Insurance: The Contours of California Contractor License Bonds
By: Ravi R. Mehta
September 30, 2016
A commonly overlooked potential for recovery when a claim arises is the license bond. Distinct from insurance, a license bond is intended to respond to liability related to a contractor’s violation of Contractors State License law. It is mandatory for all California contractors to procure a license bond, or alternatively to place a cash deposit with the Contractors State License Board (“CSLB”). The license bond requirement is currently $15,000.00. However, in the event of license suspension or revocation, the CSLB may require a separate disciplinary bond in an amount between $15,000.00 and $150,000.00. The types of claims to which a license bond may be subject, as well as the types of persons who are eligible to submit a claim against a license bond, are limited. However, if a claimant’s circumstances fit within the confines of the following limitations, a license bond claim may be better suited to provide redress as compared to an insurance claim. The following list contains the most common types of allowable license bond claims.