CSLB Contractor's Law & Business Practice Exam 2025 – All-in-One Resource for Exam Success!

Workers' compensation insurance is legally required for most contractors because it provides essential protection for employees who may suffer work-related injuries or illnesses. This type of insurance not only covers medical expenses and rehabilitation costs but also compensates workers for lost wages during their recovery. The law mandates that any business with employees must have workers' compensation coverage to ensure that workers receive the necessary support if they are injured on the job.

While general liability insurance is important for protecting against claims of property damage or bodily injury resulting from business operations, it is not a legal requirement for all contractors. Life insurance is more about personal financial planning rather than a business requirement, and property insurance may protect a contractor’s physical assets, but it is not mandated by law for businesses that employ workers. This highlights the critical nature of workers' compensation insurance in maintaining workplace safety and compliance with legal obligations.