Seven California laws affecting contractors took effect in 2026. The ones with direct insurance impact are SB 291, which significantly increased penalties for workers' compensation violations, SB 517, which requires home improvement contractors to disclose subcontractor details on request, and SB 779, which raised minimum CSLB civil penalties starting July 1, 2026. AB 1002 lets the Attorney General seek license discipline for unpaid wages, and AB 1327 lets homeowners cancel by email. Confirm details with the CSLB.
Every 2026 Change at a Glance
The CSLB published its list of new laws for 2026. Here they are in plain language, with the insurance angle for each.
| Law | What it does | Effective |
|---|---|---|
| AB 521 | CSLB is not liable for attorney fees in claims against a cash deposit posted instead of a license bond | Jan 1, 2026 |
| AB 1002 | Attorney General and CSLB can sue to suspend or revoke licenses over unpaid wages or wage judgments | Jan 1, 2026 |
| AB 1327 | Home improvement contracts must include your email; homeowners can cancel by email | Jan 1, 2026 |
| SB 291 | Significantly higher penalties for workers' comp violations; new exemption verification process | Jan 1, 2026 |
| SB 456 | Muralists painting hand-painted fine art murals no longer need a license | Jan 1, 2026 |
| SB 517 | Disclose subcontractor name, contact, license number, and class on request | Jan 1, 2026 |
| SB 779 | Higher minimum CSLB civil penalties, adjusted every five years | Jul 1, 2026 |
The Three That Should Change How You Buy Insurance
SB 291: Workers' comp penalties went up
This is the one to act on. Penalties for workers' comp violations increased significantly, and the CSLB now has to develop a process to verify exemption eligibility and report on it to the Legislature by 2027.
If you have a no-employee exemption on file and have since hired anyone, even part time, you are exposed. And on January 1, 2028, the exemption disappears for nearly every license class under SB 216. We cover that deadline in detail in our SB 216 guide.
SB 517: Your subcontractors are now visible
Homeowners can ask who your subs are, including license numbers. That makes it easier for a homeowner, an attorney, or an insurer to trace a claim to an unlicensed or uninsured sub.
The insurance takeaway: collect a certificate of insurance from every sub before they start, and keep it through the end of the job. An uninsured sub can land on your workers' comp audit and your general liability claim history. Our certificate of insurance guide walks through what to collect.
AB 1002: Wage disputes can now cost you the license
Unpaid wages and unsatisfied wage judgments can now lead to license discipline through a civil action by the Attorney General. Wage claims are generally not covered by general liability, and many policies exclude them entirely. Employment practices liability can respond to some employment claims, but coverage for wage and hour disputes is limited and varies by policy.
The Other Changes, Briefly
- AB 1327 means your home improvement contract needs your email address and must allow cancellation by email. Update your contract template now.
- SB 779 raised minimum CSLB fines. Unlicensed activity starts at $1,500.
- AB 521 matters only if you posted a cash deposit instead of a license bond. For most contractors, a surety bond remains the simpler route. See our California contractor bonds page.
- SB 456 exempts fine art muralists from licensing. Painted wall signs are not exempt.
Fines Are Not Insurable
Contractors sometimes assume insurance will pick up a penalty. It generally will not. Fines and penalties are typically excluded from general liability and most other contractor policies. The coverage that protects you is the coverage that keeps you compliant in the first place: active workers' comp, a current license bond, and general liability that meets your contract requirements.
Next Step
If you are not sure whether your current coverage lines up with the 2026 rules, a review takes about fifteen minutes. Request a free coverage review and quote, or read our overview of California contractor insurance requirements.
Frequently Asked Questions
What is the biggest 2026 change for California contractors?
For most small contractors, SB 291. It significantly increased penalties for workers' compensation violations and directed the CSLB to build a new process for verifying no-employee exemptions. Combined with the all-contractor workers' comp requirement arriving January 1, 2028, the state is clearly tightening enforcement.
Do I have to tell homeowners who my subcontractors are?
Under SB 517, contractors using subcontractors on home improvement projects must disclose the subcontractor's name, contact information, license number, and classification when asked. The prime contractor remains responsible for the project, and subcontractors can also face discipline for violations.
How much are CSLB fines now?
Under SB 779, starting July 1, 2026, minimum civil penalties for unlicensed activity start at $1,500, and other specified violations carry minimums of $500 or $1,500. Those amounts adjust every five years based on the Consumer Price Index.
Does insurance cover CSLB fines or penalties?
Generally no. Fines and penalties are typically excluded from general liability and most other contractor policies. That is why staying compliant, especially on workers' comp and licensing, matters more than any coverage you can buy after the fact.