Under California regulations, which of the following is an acceptable alternative to filing a surety bond for the contractor license bond requirement?
Correct Answer
B) Cash deposit with the Contractors State License Board
California B&P Code Section 7071.6 allows contractors to deposit cash with the CSLB in lieu of filing a surety bond. The cash deposit must equal the required bond amount. Certificates of deposit, insurance policies, and workers' compensation certificates are not acceptable alternatives to the contractor license bond requirement.
Why This Is the Correct Answer
California B&P Code Section 7071.6 allows contractors to deposit cash with the CSLB in lieu of filing a surety bond. The cash deposit must equal the required bond amount. Certificates of deposit, insurance policies, and workers' compensation certificates are not acceptable alternatives to the contractor license bond requirement.
Why the Other Options Are Wrong
Option A: Certificate of deposit in any federally insured bank
A certificate of deposit at a federally insured bank is NOT an acceptable substitute for the contractor license bond under California B&P Code Section 7071.6. Only a cash deposit directly with the CSLB is permitted as an alternative to the surety bond. A CD at a private bank does not provide the CSLB with direct access to the funds.
Option C: Workers' compensation insurance certificate
A workers' compensation insurance certificate serves an entirely different purpose — it covers employee on-the-job injuries. It is a separate mandatory requirement and cannot substitute for the contractor license bond, which protects consumers and the public from contractor fraud or failure.
Option D: General liability insurance policy with equivalent coverage
A general liability insurance policy, regardless of coverage limits, is not an acceptable substitute for the contractor license bond. Liability insurance and bonds are different instruments — bonds guarantee performance and consumer protection; liability insurance covers third-party injury and property damage claims.
Memory Technique
The only alternative to a bond is cash — and it must go directly to the CSLB, not sit in a private bank account. Think: 'CSLB cash = bond equivalent.' Any other financial instrument (CD, insurance policy) is a distractor.
More law-business Questions
Under B&P Code Section 7071.9, a contractor may deposit cash or securities instead of obtaining a surety bond. If a contractor chooses this option, where must the deposit be maintained and what happens to interest earned?
Under California's AB 5 law (Dynamex decision), which factor is NOT part of the ABC test for determining independent contractor status?
According to Business and Professions Code Section 7031, what is required when a licensed contractor supervises work performed by unlicensed employees on a construction project?
Under California Building Standards Code Title 24, which entity has the authority to issue building permits for most residential and commercial construction projects?
According to B&P Code 7159.5, service and repair contracts must include specific provisions. Which statement is correct regarding these contracts?
Which of the following activities is exempt from California contractor licensing requirements under Business and Professions Code Section 7048?
Under Cal/OSHA regulations in Title 8 CCR Section 5192, Safety Data Sheets (SDS) for hazardous chemicals used on construction sites must be readily accessible to employees during which hours?
Under California Business and Professions Code Section 7071.9, in lieu of a surety bond, what alternative security may a contractor provide to satisfy the contractor license bond requirement?
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