Home improvement contract insurance notice in California

What the law requires in the contract

Under Business and Professions Code §7159 and §7159.10, home improvement contracts and service-and-repair contracts must include a notice titled "Commercial General Liability Insurance". The notice does one of two things:

• States the name of your insurance company and its telephone number, so the homeowner can check that you are covered, or
• States that you do not carry commercial general liability insurance.

Either way, the homeowner sees it in writing before the job starts. Saying you have coverage when you do not, or leaving the notice out, is not an option.

This is general information, not legal advice. For the exact contract wording, check the CSLB website or your own legal counsel.

Which contracts it applies to

Service-and-repair work is common for plumbers and HVAC contractors, who write a lot of short contracts. Each one needs the notice. A general contractor doing remodels writes home improvement contracts and needs it too.

Single-family home builders: the §7164 disclosure

If you build single-family homes, a related rule applies. Under B&P §7164, you must disclose in writing whether you carry commercial general liability insurance.

The idea is the same as the home improvement notice. The buyer or owner learns, on paper, whether there is a GL policy behind the work.

Builders often work with lenders, buyers and their agents who read every disclosure closely. Having an active GL policy, with the insurer name and phone ready, means the disclosure answers the question before anyone has to ask. It also lines up with what GCs and commercial owners want to see if you take on other kinds of work. If you do both remodels and new homes, check that your policy does not exclude new residential construction. See what general liability does not cover.

What to have ready to fill out the notice

If you carry GL, filling out the notice takes a minute once you have these on hand:

1. An active policy. The notice should reflect coverage that is in force on the contract date.
2. The insurance company's name. The insurer on your policy, as shown on your declarations page. This is the company, not your agent.
3. The insurer's phone number. A number the homeowner can call to confirm coverage.
4. Your policy dates. So you know when to update the notice in your contract template at renewal.

Once you are covered, your agent provides the insurer name and phone number for the notice. Keep a copy in your contract template so every new job picks it up.

If the homeowner or a GC also asks for proof, that is a certificate of insurance. See the certificate of insurance guide.

Notice vs certificate, and keeping it current

The contract notice and a certificate of insurance do different jobs:

Because the notice sits in your contract template, it is easy to forget about. A few habits keep it accurate:

• Check the notice at every renewal, and update it if the insurer changes.
• Make sure the policy is active on the day you sign each contract.
• Use the insurer's phone number from your policy documents, not your own office line.
• If you work under more than one business name or license, use the policy that matches the license on the contract.

Getting covered before you write the contract

For non-LLC licensees, CSLB does not require general liability by law but strongly recommends it. Many homeowners ask about it, and the notice puts the answer in front of them. A contract that says you carry GL reads very differently from one that says you do not.

With Aster:

1. Enter your CSLB license number and answer about a minute of questions.
2. Compare quotes from multiple A-rated programs, with limits, deductible and what is included and excluded.
3. Tap "Submit for approval." A licensed agent handles it and emails the final quote to sign. Nothing is bound until you sign.
4. Once covered, your agent gives you the insurer name and phone number for your contracts.

Want to know what drives the price first? See general liability cost in California.