Insurance & LiensQuestion 1499 of 1605
What is a direct consequence for a licensed contractor whose required workers' compensation insurance lapses?
a.The contractor's license may be automatically suspended by operation of law
b.The license fee is refunded
c.Nothing, as long as no injury occurs
d.The contractor gets an automatic 90-day grace period with no effect
Explanation
Under Business & Professions Code §7125.2, failure to maintain required workers' compensation coverage results in automatic suspension of the contractor's license by operation of law. Working while suspended is unlicensed contracting, with serious legal and payment consequences.
Law Reference: Bus. & Prof. Code §7125.2Practice all 1605 questions free — no signup required.
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Sen Lin, PrepPass Founder · Verified against California CSLB Contractor License Law & Business Exam · How we review
Reviewed by Abraham Chen — Licensed California General Contractor (CSLB License #1101856 — verify)