Requirements for Commercial Insurance in Texas
Operating a business in Texas comes with certain insurance obligations designed to protect employees, customers, and your company’s assets. While Texas is more flexible than many states, there are still key insurance requirements that business owners must understand.
1. Texas Does Not Require General Liability Insurance — But It’s Highly Recommended
Unlike some states, Texas does not require most businesses to carry general liability insurance. However, many landlords, vendors, and clients do require it in contracts.
General liability protects the business from:
- Customer slip-and-fall injuries
- Property damage caused by employees
- Advertising injury or defamation claims
While not legally required, it is often considered essential for risk management.
2. Workers' Compensation Is Optional — Except in Certain Cases
Texas is the only state where private employers are not required to carry workers’ compensation insurance.
However, coverage becomes mandatory for:
- Public employers (state agencies, counties, cities)
- Government contractors
- Businesses working on public building projects
- Certain transportation and delivery companies
Even when optional, workers’ comp protects employers from lawsuits and covers employee injury benefits—making it a smart safety net.
3. Commercial Auto Insurance Is Required
If your business owns or operates vehicles, Texas law requires commercial auto insurance with minimum liability coverage:
- $30,000 bodily injury per person
- $60,000 bodily injury per accident
- $25,000 property damage
Personal auto policies do not cover work-related driving, so any company vehicle must be insured under a commercial auto policy.
4. Professional Liability Insurance Required for Certain Industries
Some licensed professions must carry specialized liability insurance, including:
- Doctors and healthcare providers
- Lawyers
- Real estate brokers
- Engineers and architects
- Insurance agents
These requirements vary by licensing board or regulatory agency.
5. Industry-Specific Insurance Requirements
Some industries must carry additional coverage, such as:
- Liquor liability for alcohol-serving businesses
- Cargo insurance for trucking companies
- Environmental liability for hazardous materials operations
- Garage liability for auto shops
These requirements protect the public and mitigate industry-specific risks.
6. Optional but Valuable Coverages
While not required, many Texas businesses choose:
- Commercial property insurance
- Business interruption insurance
- Cyber liability
- Employment practices liability (EPLI)
These cover financial losses that could shut down a business after a disaster or lawsuit.
