The general liability minimums
Every license applicant must carry general liability insurance. The minimum depends on the category:
- Residential-basic: $300,000 (Rules 553-3-.01(4) and .03(4)).
- Residential-light commercial: $500,000 (Rules 553-3-.02(4) and .04(4)).
- Every general contractor category, unlimited and limited tier: $500,000 (Rules 553-4-.01, .02, .05 and .06).
The trap is mixing up the two residential figures. Residential-basic is the only category at $300,000; everything else on this list is $500,000. A limited-tier general contractor does not get a lower insurance figure: the limited tier lowers the net worth, not the insurance.
Figures that are not insurance
Wrong answers borrow numbers from elsewhere in the rules. Keep them separate:
- $150,000 is the unlimited general contractor net worth, not insurance.
- $25,000 is the limited-tier net worth, not insurance.
- $1,000,000 is the limited-tier contract cap, not an insurance minimum.
- $250,000 appears nowhere in the rule; it is simply half of $500,000.
When a question asks which category-and-amount pairing is wrong, look for residential-basic paired with $500,000. Residential-light commercial, unlimited general contractor and limited-tier general contractor at $500,000 are all correct.
Moving up a category
A residential-basic contractor carrying exactly the $300,000 minimum who adds residential-light commercial must reach $500,000. The increase is $500,000 − $300,000 = $200,000 (Rule 553-3-.04(4)). Answering $500,000 gives the new total, not the increase. Answering $0 assumes both residential categories share one minimum, which they do not.
Whose name and what else
The rules require the coverage in the applicant's name (Rule 553-4-.01). A policy in the project owner's name, the insurance agent's name or the local building department's name does not meet the rule.
Besides general liability, the rules require workers' compensation insurance as required by the laws of this state, also in the applicant's name (Rule 553-4-.02). Those are the only two coverages the licensing rule names. Builder's risk on every project, professional liability and commercial auto on company vehicles are not licensing requirements.