July 1, 2016 cbstemp

What are the bond and insurance requirements for Limited Liability Companies (LLC)?

Limited Liability Companies are required to post a $100,000 LLC Employee/Worker Bond as well as $1 Million General Liability Insurance policy.

$100,000 LLC Employee/Worker Bond

In addition to the $15,000 contractor bond, a $100,000 LLC Employee/Worker Bond is required for the issuance, reissuance, reinstatement, reactivation, and renewal of an LLC license for the benefit of any employee or worker damaged by the LLC’s failure to pay wages, interest on wages, or fringe benefits, as well as other contributions (not required for inactive LLC licenses). (Business and Professions [B&P] Code section 7071.6.5)

$1 Million Liability Insurance Minimum

Liability insurance with the cumulative limit of at least $1 million for licensees with five or fewer persons listed as members of the personnel of record is required. Also, an additional $100,000 is required for each additional member of the personnel of record, not required to exceed $5 million total. (B&P Code section 7071.19)

Beginning January 1, 2014, B&P Code section 7071.19 (c) required that LLC liability insurance policies be written by insurers that are “duly licensed by this state or an eligible surplus line insurer.” According to the legal office of the California Department of Insurance (CDI), the only insurers that are duly licensed by the State of California are admitted insurers that are licensed by CDI, searchable on their website under Insurance Company Profiles. Eligible surplus line insurers include those listed on CDI’s List of Approved Surplus Line Insurers (LASLI) and other eligible carriers as determined by law.