The CSLB §7071.19 $1M GL Rule, Decoded

Understanding B&P Code §7071.19

If you operate your contracting business as a Limited Liability Company (LLC) in California, the CSLB has strict financial requirements designed to protect consumers. Business and Professions (B&P) Code §7071.19 is the rule you need to know.

The $1 Million Minimum

Under §7071.19, an LLC must maintain a policy of commercial general liability insurance with a cumulative limit of at least $1,000,000 for claims arising out of the LLC's operations. This covers five or fewer persons listed as personnel of record.

If your LLC has more than five personnel of record, you must add $100,000 in coverage for each additional person, up to a maximum required limit of $5,000,000.

It Must Be on File

You cannot simply buy the policy and keep it in your desk. Your insurance broker must submit the Certificate of Liability Insurance directly to the CSLB. If the policy cancels or lapses, the insurance company notifies the CSLB, and your LLC license is suspended immediately.

What Triggers an Audit?

The CSLB routinely audits LLCs to ensure compliance. Triggers include:

• A lapse in coverage reported by your carrier.
• Adding new personnel to your LLC without increasing your GL limits.
• Consumer complaints that lead to a broader review of your file.

The TWT Advantage

At TWT Insurance, we automatically structure every LLC quote to meet the §7071.19 requirements. We handle the CSLB filings so you don't have to worry about an administrative suspension stopping your work.