Requirements for Commercial Insurance in Texas
Texas offers more flexibility than many states when it comes to business insurance requirements, but some forms of coverage are still mandatory. Understanding what is required—and what is strongly recommended—helps business owners stay compliant and financially protected.
General Liability Insurance: Not Required but Highly Recommended
Texas does not legally require general liability insurance for most businesses. However, many landlords, clients, and vendors require it before signing a lease or contract.
General liability covers:
- Customer slip-and-fall injuries
- Property damage caused by your business
- Advertising or reputational claims
While optional, it is often considered essential for small and mid-sized businesses.
Workers’ Compensation: Optional for Most Employers
Texas is the only state where workers' compensation insurance is not required for private employers.
Still, it becomes mandatory in certain circumstances:
- Contractors on government projects
- Public employers, including city, county, and state agencies
- Some transportation businesses
- Businesses that want protection from employee injury lawsuits
Even when optional, workers’ comp can save a business from major legal and medical liability costs.
Commercial Auto Insurance: Required by Law
Any business that owns or operates a vehicle must carry commercial auto insurance with minimum liability limits:
- $30,000 bodily injury per person
- $60,000 bodily injury per accident
- $25,000 property damage
Personal auto insurance will not cover business-related driving, making commercial auto coverage mandatory for company vehicles, delivery vans, and work trucks.
Professional Liability: Required for Certain Licensed Professions
Some industries must carry professional liability insurance to maintain licenses or operate legally, including:
- Doctors and healthcare providers
- Lawyers
- Real estate agents
- Engineers and architects
These requirements are set by Texas regulatory boards.
Industry-Specific Requirements
Some businesses must carry specialized coverage, such as:
- Liquor liability for alcohol-serving businesses
- Cargo insurance for trucking operations
- Garage liability for auto repair shops
- Environmental liability for hazardous industries
Requirements vary by industry and risk exposure.
In summary, Texas offers businesses more flexibility than many states, but certain types of coverage—especially commercial auto and industry-specific insurance—remain mandatory. Even when not required, policies like general liability and workers’ compensation provide essential protection against costly accidents, lawsuits, and unexpected losses. By understanding the state’s insurance requirements and choosing coverage that matches your industry and risks, Texas business owners can operate confidently, stay compliant, and safeguard their company’s long-term stability.
