What Every Texas Contractor Needs to Know About Insurance

Every contractor in Texas needs insurance — not just because GCs and project owners demand it before you step on site, but because one bad day without coverage can wipe out everything you've built. Whether you're an electrician wiring a new commercial build in Houston, a plumber running service calls across DFW, an HVAC crew swapping rooftop units in Austin, or a roofer tying down membrane in San Antonio heat — your insurance has to match your actual work. Not a generic policy. Not whatever was cheapest online. Coverage that holds up when it counts.

General Liability — Your Ticket Onto the Job Site

General liability is the baseline. Every GC, every project owner, every commercial lease requires it before you can even park your truck. It covers third-party bodily injury — somebody trips over your extension cord and breaks an arm. Property damage — your ladder goes through a window. And completed operations — something you built six months ago causes a problem. Texas standard is $1M per occurrence, $2M aggregate, but more and more GCs on mid-rise and industrial jobs are requiring $2M per. GL doesn't cover your own workmanship though — that's a different conversation.

Workers' Comp — Texas Is Different

Texas doesn't require workers' comp for private employers. That's the law. But here's the reality: most GCs won't let you on site without it. Most project owners won't either. And if one of your guys gets hurt and you don't have it, you're personally on the hook — no statutory cap on what they can sue you for. Workers' comp covers medical bills, lost wages, and employer liability if they claim negligence. It's not about the state requiring it — it's about protecting yourself and keeping your contracts.

Commercial Auto — Your Personal Policy Won't Cut It

Your personal auto insurance almost certainly excludes business use. If your crew drives to job sites in company vehicles — or even their own trucks that are used primarily for work — you need commercial auto. One accident with a loaded service van can easily run six figures in damages. Texas minimums are $30K per person, $60K per accident, $25K property — way too low for any contractor. You also want hired and non-owned coverage for when you rent vehicles or have employees running work errands in personal cars. For the full breakdown, see our Commercial Auto coverage guide.

Property & Equipment — Your Tools Are Your Livelihood

Your tools, your gear, your materials — that's capital. Commercial property covers theft, loss, or damage to your business property. For contractors, inland marine coverage (sometimes called a tool floater) is the real workhorse — it covers tools and equipment while they're in transit between job sites. A single theft of copper, power tools, or testing equipment from a truck or job site can set you back thousands. Make sure your policy covers replacement cost, not depreciated value, or you'll be short when you need to replace something.

Contractor Bonds — Required for Many Bids

A surety bond is a guarantee between you, the project owner, and the bonding company. It says you'll do the work and pay your subs and suppliers. License bonds, performance bonds, payment bonds, and bid bonds are the main types. In Texas, many cities and counties require specific bond amounts before issuing permits. Almost all public works require performance and payment bonds. If you're bidding government or large commercial work, budget for bonds — they're not optional.

Umbrella & Excess — Stacking Protection for Bigger Jobs

Umbrella insurance adds extra liability limits above your GL, auto, and employer's liability. It kicks in when your underlying policy maxes out. Typical umbrella adds $1M to $5M in coverage and is surprisingly affordable — a few hundred bucks per year per million in coverage. For contractors bidding larger commercial projects, umbrella coverage is often a contract requirement. It signals to GCs and project owners that you take your business seriously.

How to Get Coverage That Actually Works

Every contractor's situation is different. A one-man electrical shop running residential service calls isn't the same as a framing crew on multi-story commercial. The key is working with someone who understands Texas construction — not a call center reading off a script. You need someone who knows the contract norms, the weather risks, which carriers are competitive in your trade and region, and how to structure coverage that meets your current contracts while leaving room to grow. Never accept a policy without understanding the exclusions, deductibles, and additional insured endorsements. That fine print is what determines whether you get paid and stay compliant on site.