Insurance and Liens practice

All 13 free insurance and liens questions

1. The notice every employer covered by workers' compensation must keep conspicuously posted must show:

   • A The policy declarations page The section calls for a notice whose form and content the administrative director prescribes, not for the insurer's policy documents.
   • B Covered employees and policy numbers Nothing in the section asks for a list of covered employees or a policy number; it asks for the carrier's name or the self-insured status.
   • C A schedule of benefit amounts by injury The prescribed notice describes rights and how to get care, and it does not set out benefit amounts by type of injury.
   • D The carrier's name and who adjusts claims Correct

   The carrier's name and who adjusts claims: the posted notice names the current compensation carrier, or says the employer is self-insured, and says who handles claims (Lab. Code s. 3550(a)). It lists no covered employees and no policy numbers.

   Lab. Code s. 3550(a)

2. After a private work of improvement is completed, the owner may record an effective notice of completion:

   • A Within 10 days 10 days is the owner's deadline under s. 8190(a) for giving copies of the notice, not the window for recording it.
   • B Within 15 days Correct
   • C Within 20 days 20 days is the preliminary notice deadline in s. 8204(a) and has nothing to do with recording a notice of completion.
   • D Within 30 days 30 days is the cessation period in s. 8188(a) that lets an owner record a notice of cessation.

   Within 15 days, because an owner may record a notice of completion only on the completion date or within 15 days after it (Civ. Code s. 8182(a)). Thirty days is not the recording window.

   Civ. Code s. 8182(a)

3. A supplier first delivered March 1, gave no preliminary notice until June 20, and kept delivering. Its lien covers:

   • A Nothing at all Late service cuts the claim back rather than destroying it; s. 8204(a) expressly allows notice at any time after the deadline.
   • B Work from May 31 onward Correct
   • C Only work after June 20 The statute reaches back 20 days before service, so deliveries between May 31 and June 20 stay in the claim.
   • D Its whole account Nothing in s. 8204 cures the delay; the 20-day look-back is the whole of what a late claimant keeps.

   From May 31 on, because a late preliminary notice still supports a lien for work done in the 20 days before it was served and after (Civ. Code s. 8204(a)). Losing the whole claim overstates what serving late costs.

   Civ. Code s. 8204(a)

4. Work is completed May 28, and the owner records a notice of completion June 1. A subcontractor's last day to record its lien is:

   • A June 11 June 11 is 10 days after the recording, which is the owner's deadline for serving copies under s. 8190(a), not the claimant's lien deadline.
   • B July 1 Correct
   • C July 31 July 31 is 60 days after the recording, the figure s. 8412(b) gives the direct contractor rather than a subcontractor.
   • D August 26 August 26 is 90 days after completion, and s. 8414(b) takes the earlier of that and the 30-day date once a notice is recorded.

   July 1: a subcontractor must record before the earlier of 90 days after completion or 30 days after the owner records a notice of completion, and 30 days after June 1 is July 1 (Civ. Code s. 8414(b)(2)). August 26, 90 days after completion, is the later date and does not control.

   Civ. Code s. 8414(b)(2)

5. A claimant who has recorded a valid claim of lien must sue to enforce it within how many days of recording?

   • A 30 30 days is a lien recording window under s. 8414(b)(2), not the period for filing suit.
   • B 60 60 days is the direct contractor's recording window under s. 8412(b) once a notice of completion is recorded.
   • C 90 Correct
   • D 120 No 120-day period exists in the chapter; the only extension is the recorded credit agreement in s. 8460(b).

   90 days: a claimant must sue to enforce its lien within 90 days of recording, or the claim of lien expires (Civ. Code s. 8460(a)). Thirty and 60 days are recording windows, not the time to sue.

   Civ. Code s. 8460(a)

6. An active licensee with employees must keep a current workers' compensation certificate on file with the board:

   • A At issuance alone The section applies to reinstatement, reactivation, renewal and continued maintenance as well as issuance.
   • B At issuance and renewal Reinstatement and reactivation are named in the same list as issuance and renewal, so they carry the same condition.
   • C At all times Correct
   • D Not until its first renewal Issuance and reactivation are the first items on the same list, so the condition is not limited to renewal and maintenance.

   At all times: the certificate must be on file at all times, as a condition of issuing, renewing and keeping the license (Bus. & Prof. Code s. 7125(a)). Filing it only at issuance and renewal leaves the license uncovered in between.

   Bus. & Prof. Code s. 7125(a)

7. An employer with no workers' compensation coverage is served a stop order and requests a hearing. The order takes effect:

   • A On service Correct
   • B Once the hearing confirms it The order stands once it is served; the hearing comes afterward and can only affirm or dismiss it.
   • C Twenty days after service Twenty days is the period for requesting a hearing, and it does not delay the order.
   • D Ten days after service Ten days is the most lost pay the employer owes the affected employees, not a delay in the order.

   On service, because a stop order becomes effective immediately upon service and runs until the employer secures compensation (Lab. Code s. 3710.1). Asking for a hearing does not hold it off.

   Lab. Code s. 3710.1

8. Whose bodily injury does commercial general liability insurance protect a contractor against liability for?

   • A The contractor's own employees Employee injury is carved out of the description, which reaches the public other than employees.
   • B Employees and the public alike The cover is written for the public with employees excepted, so it does not run to both groups.
   • C The public, excluding the contractor's employees Correct
   • D Only the property owner and their family The description reaches members of the public generally, not only the owner and household.

   The public, excluding the contractor's employees: the cover protects the contractor from liability to members of the public other than employees (CSLB Law Book 2026, p. 43). Injury to the contractor's own employees is outside it.

   CSLB Law Book 2026, p. 43

9. When a private owner that has recorded no payment bond receives a stop payment notice, from which party's payments must it withhold enough to pay the claim?

   • A The direct contractor Correct
   • B The construction lender A construction lender has its own duty when it receives a notice; the owner's duty is to hold back what it owes the direct contractor.
   • C The claimant giving the notice The claimant giving the notice is the party the withheld money is meant to pay, not the party it is withheld from.
   • D The owner's architect The owner's architect may receive the notice on the owner's behalf, but the owner does not make payments to the architect for the work.

   The owner holds back money due to the direct contractor, because on receipt of a stop payment notice an owner must withhold from the direct contractor enough of what is due or will become due to pay the claim (Civ. Code s. 8522(a)). Only an owner that has recorded a payment bond may choose not to withhold, and the claimant is the one paid from those funds, not the one whose money is held.

   Civ. Code s. 8522(a)

10. If a contractor's only worker is his adult daughter, paid by the hour, what does workers' compensation require for her?

    • A None; family is exempt There is no family exemption for an employed relative. The employer's liability reaches relatives on the same basis as other employees.
    • B Coverage after 30 days Nothing delays coverage for a set number of days; the liability applies to an employed relative from the start.
    • C Coverage if full time Hours worked do not decide it. An employer with even one part-time employee must insure for workers' compensation.
    • D Coverage like any employee Correct

    She must be covered like any other employee, because an employer's workers' compensation liability extends to employed relatives on the same basis as any other employee (CSLB Law Book 2026, p. 44). No family exemption, waiting period or full-time test applies to a relative on the payroll.

    CSLB Law Book 2026, p. 44

11. A licensee with no employees files the certifying statement. Which classification on its license still bars it from the workers' compensation exemption?

    • A C-10 Electrical C-10 Electrical is not among the C-8, C-20, C-22, C-39 or D-49 classifications, so a licensee with no employees may take the exemption.
    • B C-36 Plumbing C-36 Plumbing is not on the list of classifications that keep the certificate duty, so the exemption stays open.
    • C C-39 Roofing Correct
    • D C-33 Painting C-33 Painting is not among the listed classifications, so a painting licensee with no employees may file for the exemption.

    C-39 Roofing: until January 1, 2028, when this version of the section is repealed (Bus. & Prof. Code s. 7125(i)), a licensee with no employees is exempt only if it also holds none of the C-8, C-20, C-22, C-39 or D-49 classifications (s. 7125(b)); from then only a joint venture with no employees is exempt. An electrical, plumbing or painting licensee with no employees can still file for the exemption until then.

    Bus. & Prof. Code s. 7125(b) and (i)

12. What does a performance bond on a construction job guarantee the property owner?

    • A Completion to plans and specifications Correct
    • B Payment of all labor and materials Payment of labor and material bills is what a payment bond secures, not a performance bond.
    • C Both completion and payment A bond guaranteeing both completion and payment is a contract bond.
    • D Cover for every job the contractor takes Covering any project the contractor agrees to perform describes the contractor license bond, not a project bond.

    Completion to plans and specifications, because performance bonds guarantee the project's completion according to the building plans and specifications (CSLB Law Book 2026, p. 42). Payment for labor and materials is the payment bond's job, and a bond covering both is a contract bond.

    CSLB Law Book 2026, p. 42

13. If no notice of completion or cessation is ever recorded, how many days after the job is completed does a subcontractor have to record its lien?

    • A 45 Forty-five days is an owner's time to release retention on a private job, not a claimant's lien deadline.
    • B 60 Sixty days is a direct contractor's limit after a recorded notice; a subcontractor with no notice recorded has 90 days.
    • C 90 Correct
    • D 120 No 120-day window appears in the rule; the outside limit is 90 days after completion.

    90 days: a claimant other than a direct contractor must record its lien before the earlier of 90 days after completion or 30 days after a recorded notice, and with no notice recorded only the 90-day limit applies (Civ. Code s. 8414(b)(1)). No 120-day window appears in the rule.

    Civ. Code s. 8414(b)(1)