There are many different types of Insurance that deal with California Contractors, I'm a CA licensed contractor myself. One example is a PAYMENT and PERFORMANCE BOND, costs around 3% of the total job price.
If you hired a roofing contractor and they wanted 1/3 upfront for the Deposit, 1/3 upon tear off of the old roof and 1/3 upon completion, then the contractor would be in violation of Contracting Law in California and you the consumer would have nothing to protect yourself against fraud.
You see unless you contractor brought the materials on their owned truck, instead of the roofing material supplier, then without a payment bond, even if you paid the bill to your contractor and he never paid his supplier -- the supplier could put a lien on your house an auction if of unless you make payment again, but to the supplier. And if the roof was put on backwards, the contractor could run away and declare bankruptcy., unless you had a performance bond.
So besides having a "Builders Risk Insurance" coverage, you need to have a "Payment and Performance Bond" and the contractor needs to have valid license, a license bond and a great contract spelling out every detail of the job. --47.155.xx.xxx