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Insurance Premiums for Limited Liability Company (LLC) Contractors May Decrease

By August 23, 2013October 25th, 2018Construction Litigation Blog, Iman Reza

Iman Reza

In January 2011, contractors became eligible to operate under a Limited Liability Company (LLC).  Please see my previous blog on the benefits of operating under an LLC. Currently, the contractor must have insurance coverage at specified dollar levels issued by a California licensed insurer [1].

Governor Brown recently signed into law a bill [2] that allows contractors formed as LLC’s to obtain liability insurance from out-of-state surplus line carriers. Those are insurers not regulated by the California Department of Insurance.  

Beginning on January 1, 2014, LLC Contractors will be able to secure insurance from surplus line insurers who meet certain requirements [3]. What this means in terms of dollars and cents is that there will be more insurance carriers competing for the contractor’s business. This should help drive down premiums, which is yet another reason to operate under an LLC.

[1] Under Business & Professions Code Section 7071.19

[2] AB1236

[3] California Insurance Code Section 1765.1