Texas Business Insurance and Workers’ Comp Requirements

Who Needs Business Insurance in Texas?

• Any Business with Employees: While Texas does not require most private employers to carry workers’ compensation insurance, it is highly recommended. Some industries and government contracts do require it.

• Businesses That Own Vehicles: All Texas businesses with company-owned vehicles must have commercial auto insurance that meets state minimums.

• Professional Service Providers: Professions such as consultants, architects, engineers, real estate agents, and medical professionals often need professional liability (errors & omissions) insurance, especially when working on government contracts or in regulated industries.

• Contractors and Licensed Trades: Certain trades (e.g., HVAC, plumbing, electrical) may be required to carry general liability insurance to obtain or maintain a license.

• Most Other Businesses: While not all types of insurance are mandated, general liability and property insurance are strongly recommended for all Texas businesses to protect against lawsuits, property damage, and other common risks.

Workers’ Comp: When It’s Required

• Not Mandatory for Most: Texas is unique in that most private employers are not required by law to carry workers’ compensation insurance. However, public employers and businesses with government contracts must provide coverage.

• Benefits of Coverage: Workers’ comp covers medical expenses, income replacement, and death benefits for employees injured on the job. It also limits employer liability for workplace injuries.

• Opt-Out Rules: Employers who choose not to carry workers’ comp must notify employees and the Division of Workers’ Compensation. Without coverage, employers may be exposed to personal injury lawsuits from employees.

• Exceptions: Some high-risk industries and public entities are required to carry workers’ comp insurance.

Commercial Auto Insurance Basics

• Required for Business-Owned Vehicles: Texas law requires all business-owned vehicles to carry commercial auto insurance.

• Minimum Liability Coverage:

  • $30,000 bodily injury per person

  • $60,000 bodily injury per accident

  • $25,000 property damage per accident

• Additional Coverage: Policies can include collision, comprehensive, medical payments, and uninsured/underinsured motorist coverage.

• Personal Vehicles for Business: If employees use personal vehicles for work, consider hired and non-owned auto insurance (HNOA), as personal auto policies typically exclude business use.

Professional Liability for Certain Jobs

• Who Needs It: Anyone providing professional services or advice-such as consultants, engineers, architects, real estate agents, and healthcare providers-should consider professional liability insurance (also called errors & omissions or E&O).

• Legal Requirements: Not required for most Texas businesses, but mandatory for certain government contracts and some regulated professions.

• What It Covers: Legal costs, settlements, and damages related to claims of negligence, mistakes, or failure to deliver professional services as promised.

• Contractual Requirements: Many clients, especially in regulated industries, require proof of professional liability insurance before awarding contracts.

Is General Liability Insurance Mandatory?

• State Law: General liability insurance is not required by Texas law for most businesses.

• When It’s Needed:

  • Leases: Often required by landlords for commercial leases.

  • Contracts: Many clients and job sites require proof of coverage before work begins.

  • Licensing: Certain trades (e.g., HVAC, plumbing, electrical) must carry general liability insurance to be licensed.

• Why Carry It: Protects against third-party bodily injury, property damage, and advertising injury claims. Highly recommended for all businesses due to the risk of lawsuits and accidents.

Other Useful Coverages for Businesses

• Business Owner’s Policy (BOP): Bundles general liability and commercial property insurance for cost-effective, broad protection.

• Commercial Property Insurance: Covers damage to buildings, inventory, equipment, and furniture118.

• Cyber Liability Insurance: Protects against data breaches and cyberattacks-especially important for businesses handling sensitive data.

• Employment Practices Liability Insurance (EPLI): Covers claims related to wrongful termination, discrimination, and harassment.

• Umbrella/Excess Liability Insurance: Provides additional coverage limits above standard liability policies.

• Fidelity Bonds: Protects clients against employee theft.

• Product Liability Insurance: Essential for manufacturers and retailers to cover claims related to product defects or harm.

• Bailees Coverage: For businesses that hold customer property, such as repair shops or dry cleaners.

  Even though Texas gives businesses more flexibility than other states, having the right insurance coverage is essential for legal protection, financial security, and client trust.
  Whether you’re launching a new venture in San Antonio or growing a franchise in Fort Worth, working with an experienced insurance agent ensures you’re fully protected without overspending.

  Need help finding affordable Texas business insurance?
  👉 Get a Quote Today with Blake Insurance Group