Commercial Insurance Requirements in Texas
General Liability Insurance
Texas law doesn't mandate general liability insurance for most businesses, but it's highly recommended for protection against third-party claims involving bodily injury, property damage, or advertising injuries. Many clients, landlords, and lenders require businesses to carry this coverage before entering into contracts or lease agreements.
Workers' Compensation Insurance
Texas is unique among U.S. states—it doesn't require private employers to carry workers' compensation insurance. However, businesses that choose to "opt out" lose certain legal protections and become vulnerable to employee lawsuits. Most employers voluntarily maintain coverage to protect both workers and the business. Government entities and construction companies working on public projects must carry workers' compensation.
Commercial Auto Insurance
Any vehicle used for business purposes must carry commercial auto liability insurance. Texas requires minimum coverage of $30,000 per injured person, $60,000 per accident for bodily injury, and $25,000 for property damage. Businesses using vehicles for deliveries, transportation, or sales calls must maintain this coverage.
Professional Liability Insurance
Certain licensed professionals in Texas must carry professional liability (errors and omissions) insurance. This includes architects, engineers, accountants, and healthcare providers. Coverage requirements vary by profession and licensing board regulations. Even when not mandated, professional service providers typically carry this insurance to protect against negligence claims.
Industry-Specific Requirements
Texas imposes additional insurance requirements on specific industries. Contractors often need surety bonds and general liability coverage. Restaurants and bars require liquor liability insurance. Transportation companies need higher commercial auto limits and cargo insurance. Healthcare facilities must maintain medical malpractice coverage.
Unemployment Insurance
Employers who paid wages of $1,500 or more in any calendar quarter, or who employed at least one person for 20 weeks during a calendar year, must register for unemployment insurance through the Texas Workforce Commission.
Best Practices
While Texas maintains relatively minimal mandatory insurance requirements, businesses should assess their specific risks and obtain appropriate coverage. Consulting with an insurance professional helps identify necessary policies based on industry, business size, and operational risks. Adequate insurance protection safeguards business assets and ensures long-term sustainability.
